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Cango Inc.

Cango Inc.CANGEarnings & Financial Report

NYSE · Financials · Finance Services

Cango Inc. operates an integrated automotive transaction and service platform focused on the Chinese market. It provides new and used vehicle trading support, auto financing facilitation, after-sales service matching, and data-driven solutions for auto dealers, consumers, and industry partners across the entire automotive consumption value chain.

What changed in Cango Inc.'s 20-F — 2022 vs 2023

Top changes in Cango Inc.'s 2023 20-F

755 paragraphs added · 826 removed · 580 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

253 edited+55 added−76 removed536 unchanged
Public Company Accounting Oversight Board, or the PCAOB, thereunder, if we have retained a registered public accounting firm to issue an audit report where the registered public accounting firm has a branch or office that is located in a foreign jurisdiction and the PCAOB has determined that it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction, the SEC will identify us as a “covered issuer”, or SEC-identified issuer, shortly after we file with the SEC a report required under the Securities Exchange Act of 1934, or the Exchange Act (such as our annual report on Form 20-F), that includes an audit report issued by such accounting firm; and if we were to be identified as an SEC-identified issuer for two consecutive years, the SEC would prohibit our securities (including our shares or ADSs) from being traded on a national securities exchange or in the over-the-counter trading market in the United States.
Public Company Accounting Oversight Board, or the PCAOB, thereunder, if we have retained a registered public accounting firm to issue an audit report where the registered public accounting firm has a branch or office that is located in a foreign jurisdiction and the PCAOB has determined that it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction, the SEC will identify us as a “covered issuer”, or SEC-identified issuer, shortly after we file with the SEC a report required under the Securities Exchange Act of 1934, or the Exchange Act (such as our annual report on Form 20-F), that includes an audit report issued by such accounting firm; and if we were to be identified as a SEC-identified issuer for two consecutive years, the SEC would prohibit our securities (including our shares or ADSs) from being traded on a national securities exchange or in the over-the-counter trading market in the United States.
Currently, our PRC subsidiary may purchase foreign currency for settlement of “current account transactions,” including payment of dividends to us, by complying with certain procedural requirements. However, the relevant PRC governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions.
Currently, our PRC subsidiary may purchase foreign currency for settlement of “current account transactions,” including payment of dividends to us, by complying with certain procedural requirements. However, the relevant PRC governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions.
According to Article 177 of the PRC Securities Law which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC.
According to Article 177 of the PRC Securities Law which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC.
Risks Relating to Doing Business in China We are subject to risks and uncertainties relating to doing business in China in general, including, but are not limited to, the following: • changes and developments in the political and economic policies of the PRC government may materially and adversely affect the Group’s business, financial condition and results of operations and may result in our inability to sustain the Group’s growth and expansion strategies; • changes and developments in the PRC legal system and the interpretation and enforcement of PRC laws, rules and regulations may subject us to uncertainties; 15 Table of Contents • the M&A Rules and certain other PRC regulations establish required procedures for acquisitions conducted by foreign investors that could make it more difficult for the Group to grow through acquisitions; • uncertainties exist with respect to the interpretation and implementation of the Foreign Investment Law and its implementing rules and how they may impact our business, financial condition and results of operations; and • PRC regulations relating to investments in offshore companies by PRC residents may subject our PRC-resident beneficial owners or our PRC subsidiary to liability or penalties, limit our ability to inject capital into our PRC subsidiary or limit our PRC subsidiary’s ability to increase its registered capital or distribute profits.
Risks Relating to Doing Business in China We are subject to risks and uncertainties relating to doing business in China in general, including, but are not limited to, the following: ● changes and developments in the political and economic policies of the PRC government may materially and adversely affect the Group’s business, financial condition and results of operations and may result in our inability to sustain the Group’s growth and expansion strategies; ● changes and developments in the PRC legal system and the interpretation and enforcement of PRC laws, rules and regulations may subject us to uncertainties; 12 Table of Contents ● the M&A Rules and certain other PRC regulations establish required procedures for acquisitions conducted by foreign investors that could make it more difficult for the Group to grow through acquisitions; ● uncertainties exist with respect to the interpretation and implementation of the Foreign Investment Law and its implementing rules and how they may impact our business, financial condition and results of operations; and ● PRC regulations relating to investments in offshore companies by PRC residents may subject our PRC-resident beneficial owners or our PRC subsidiary to liability or penalties, limit our ability to inject capital into our PRC subsidiary or limit our PRC subsidiary’s ability to increase its registered capital or distribute profits.
If we are identified as an SEC-identified issuer again in the future, we cannot assure you that we will be able to change our auditor or take other remedial measures in a timely manner, and if we were to be identified as an SEC-identified issuer for two consecutive years, we would be delisted from the NYSE and our securities (including our shares and ADSs) will not be permitted for trading “over-the-counter” either.
If we are identified as a SEC-identified issuer again in the future, we cannot assure you that we will be able to change our auditor or take other remedial measures in a timely manner, and if we were to be identified as a SEC-identified issuer for two consecutive years, we would be delisted from the NYSE and our securities (including our shares and ADSs) will not be permitted for trading “over-the-counter” either.
However, the PRC government has recently promulgated new laws, regulations or relevant drafts and indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers. For more detailed information, see “Item 4. Information on the Company—B. Business Overview—Regulations—M&A Rules and Overseas Listings” and “Item 4. Information on the Company—B.
However, the PRC government has promulgated new laws, regulations or relevant drafts and indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers. For more detailed information, see “Item 4. Information on the Company—B. Business Overview—Regulations—M&A Rules and Overseas Listings” and “Item 4. Information on the Company—B.
Recently, PRC governmental authorities have taken a series of strict examinations and inspections against illegal activities of collecting or using data and personal information, and it was reported that numerous mobile applications or website operators were ordered to rectify their illegal activities, or imposed with warnings, fines or other administrative penalties, or even became subjects of criminal investigations.
PRC governmental authorities have taken a series of strict examinations and inspections against illegal activities of collecting or using data and personal information, and it was reported that numerous mobile applications or website operators were ordered to rectify their illegal activities, or imposed with warnings, fines or other administrative penalties, or even became subjects of criminal investigations.
Moreover, the implementation of the HFCA Act and other efforts to increase the U.S. regulatory access to audit information could cause investor uncertainty as to China-based issuers’ ability to maintain their listings on the U.S. national securities exchanges and the market price of the securities of China-based issuers, including us, could be adversely affected. 77 Table of Contents If additional remedial measures are imposed on the “big four” PRC-based accounting firms, including our independent registered public accounting firm, in administrative proceedings brought by the SEC alleging such firms’ failure to meet specific criteria set by the SEC with respect to requests for the production of documents, we could be unable to timely file future financial statements in compliance with the requirements of the Exchange Act.
Moreover, the implementation of the HFCA Act and other efforts to increase the U.S. regulatory access to audit information could cause investor uncertainty as to China-based issuers’ ability to maintain their listings on the U.S. national securities exchanges and the market price of the securities of China-based issuers, including us, could be adversely affected. 54 Table of Contents If additional remedial measures are imposed on the “big four” PRC-based accounting firms, including our independent registered public accounting firm, in administrative proceedings brought by the SEC alleging such firms’ failure to meet specific criteria set by the SEC with respect to requests for the production of documents, we could be unable to timely file future financial statements in compliance with the requirements of the Exchange Act.
If a lawsuit is brought against us and/or the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have had, including results that could be less favorable to the plaintiff(s) in any such action, depending on, among other things, the nature of the claims, the judge or justice hearing such claims and the venue of the hearing. 85 Table of Contents Certain judgments obtained against us by our shareholders may not be enforceable.
If a lawsuit is brought against us and/or the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have had, including results that could be less favorable to the plaintiff(s) in any such action, depending on, among other things, the nature of the claims, the judge or justice hearing such claims and the venue of the hearing. 60 Table of Contents Certain judgments obtained against us by our shareholders may not be enforceable.
If the Group is unable to satisfy such requirement, it may no longer be able to collaborate with the relevant financial institutions, or become subject to penalties, and the Group’s business, financial condition, results of operations and prospects could be materially and adversely affected. 29 Table of Contents Furthermore, even if the Group successfully changes the arrangements with the financial institutions and only Cango Financing will provide such credit enhancement services in the future, the outstanding guarantee liabilities of a financing guarantee company may not exceed ten times of its net assets as required by the Financing Guarantee Rules.
If the Group is unable to satisfy such requirement, it may no longer be able to collaborate with the relevant financial institutions, or become subject to penalties, and the Group’s business, financial condition, results of operations and prospects could be materially and adversely affected. 22 Table of Contents Furthermore, even if the Group successfully changes the arrangements with the financial institutions and only Cango Financing will provide such credit enhancement services in the future, the outstanding guarantee liabilities of a financing guarantee company may not exceed ten times of its net assets as required by the Financing Guarantee Rules.
As a result, the Group faces inventory risk in connection with the cars purchased by it, including the risk of inventory obsolescence, a decline in values, and significant inventory write-downs or write-offs. The Group may also face increasing costs associated with the storage of these cars.
As a result, the Group faces inventory risks in connection with the cars purchased by it, including the risk of inventory obsolescence, a decline in values, and significant inventory write-downs or write-offs. The Group may also face increasing costs associated with the storage of these cars.
If dividends paid to our non-PRC investors, or gains from the transfer of our ADSs or Class A ordinary shares by such investors, are deemed as income derived from sources within the PRC and thus are subject to PRC tax, the value of your investment in our ADSs or Class A ordinary shares may decline significantly. 70 Table of Contents We and our shareholders face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises or other assets attributed to a Chinese establishment of a non-Chinese company, or immovable properties located in China owned by non-Chinese companies.
If dividends paid to our non-PRC investors, or gains from the transfer of our ADSs or Class A ordinary shares by such investors, are deemed as income derived from sources within the PRC and thus are subject to PRC tax, the value of your investment in our ADSs or Class A ordinary shares may decline significantly. 49 Table of Contents We and our shareholders face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises or other assets attributed to a Chinese establishment of a non-Chinese company, or immovable properties located in China owned by non-Chinese companies.
Department of Justice (“DOJ”) and other authorities often have substantial difficulties in bringing and enforcing actions against non-U.S. companies such as the Group, and non-U.S. persons, such as our directors and executive officers in China.
The SEC, U.S. Department of Justice (“DOJ”) and other authorities often have substantial difficulties in bringing and enforcing actions against non-U.S. companies such as the Group, and non-U.S. persons, such as our directors and executive officers in China.
Risk Factors—Risks Relating to Our Corporate Structure—The shareholders of our consolidated VIEs may have potential conflicts of interest with us, which may materially and adversely affect the Group’s business and financial condition.” 5 Table of Contents There are also substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with the consolidated VIEs and their nominee shareholders.
Risk Factors—Risks Relating to Our Corporate Structure—The shareholders of our consolidated VIEs may have potential conflicts of interest with us, which may materially and adversely affect the Group’s business and financial condition.” 4 Table of Contents There are also substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with the consolidated VIEs and their nominee shareholders.
Taxation—Certain United States Federal Income Tax Considerations—Passive Foreign Investment Company.” There can be no assurance that we will not be a PFIC for the current or any future taxable year. 89 Table of Contents As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the NYSE corporate governance listing standards.
Taxation—Certain United States Federal Income Tax Considerations—Passive Foreign Investment Company.” There can be no assurance that we will not be a PFIC for the current or any future taxable year. 62 Table of Contents As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the NYSE corporate governance listing standards.
Further, if our corporate structure and contractual arrangements are found to be in violation of any existing or future PRC laws or regulations, the relevant regulatory authorities would have discretion in dealing with such violations, including: • revoking the Group’s business and operating licenses; • levying fines on the Group; • confiscating any of the Group’s income that they deem to be obtained through illegal operations; • shutting down the Group’s services; • discontinuing or restricting the Group’s operations in China; • imposing conditions or requirements with which the Group may not be able to comply; • requiring us to change our corporate structure and contractual arrangements; • restricting or prohibiting our use of the proceeds from overseas offering to finance our consolidated VIEs’ business and operations; and • taking other regulatory or enforcement actions that could be harmful to our business.
Further, if our corporate structure and contractual arrangements are found to be in violation of any existing or future PRC laws or regulations, the relevant regulatory authorities would have discretion in dealing with such violations, including: ● revoking the Group’s business and operating licenses; ● levying fines on the Group; ● confiscating any of the Group’s income that they deem to be obtained through illegal operations; 41 Table of Contents ● shutting down the Group’s services; ● discontinuing or restricting the Group’s operations in China; ● imposing conditions or requirements with which the Group may not be able to comply; ● requiring us to change our corporate structure and contractual arrangements; ● restricting or prohibiting our use of the proceeds from overseas offering to finance our consolidated VIEs’ business and operations; and ● taking other regulatory or enforcement actions that could be harmful to our business.
The Group may have to take corporate or legal action, which could involve significant time and resources to resolve while distracting management from the Group’s operations, and the Group’s business and operations may be materially and adversely affected. 62 Table of Contents Risks Relating to Doing Business in China Changes and developments in the political and economic policies of the PRC government may materially and adversely affect the Group’s business, financial condition and results of operations and may result in our inability to sustain the Group’s growth and expansion strategies.
The Group may have to take corporate or legal action, which could involve significant time and resources to resolve while distracting management from the Group’s operations, and the Group’s business and operations may be materially and adversely affected. 43 Table of Contents Risks Relating to Doing Business in China Changes and developments in the political and economic policies of the PRC government may materially and adversely affect the Group’s business, financial condition and results of operations and may result in our inability to sustain the Group’s growth and expansion strategies.
These uncertainties may impede the Group’s ability to enforce the contracts it has entered into and/or its intellectual property rights and could materially and adversely affect the Group’s business, financial condition and results of operations. 65 Table of Contents The M&A Rules and certain other PRC regulations establish required procedures for acquisitions conducted by foreign investors that could make it more difficult for the Group to grow through acquisitions.
These uncertainties may impede the Group’s ability to enforce the contracts it has entered into and/or its intellectual property rights and could materially and adversely affect the Group’s business, financial condition and results of operations. 45 Table of Contents The M&A Rules and certain other PRC regulations establish required procedures for acquisitions conducted by foreign investors that could make it more difficult for the Group to grow through acquisitions.
If we fail to complete such registrations or obtain such approvals, our ability to use foreign currency, including the proceeds we received from our initial public offering, and to capitalize or otherwise fund operations in China may be negatively affected, which could materially and adversely affect the Group’s liquidity and our ability to fund and expand the Group’s business. 73 Table of Contents Fluctuations in exchange rates could result in foreign currency exchange losses and could materially reduce the value of your investment.
If we fail to complete such registrations or obtain such approvals, our ability to use foreign currency, including the proceeds we received from our initial public offering, and to capitalize or otherwise fund operations in China may be negatively affected, which could materially and adversely affect the Group’s liquidity and our ability to fund and expand the Group’s business. 51 Table of Contents Fluctuations in exchange rates could result in foreign currency exchange losses and could materially reduce the value of your investment.
Furthermore, if China adopts more stringent standards with respect to environmental protection or corporate social responsibilities, the Group may incur increased compliance cost or become subject to additional restrictions in its operations. 64 Table of Contents Furthermore, the PRC government has significant oversight and discretion over the conduct of the Group’s business and may intervene with or influence the Group’s operations as the government deems appropriate to further regulatory, political and societal goals.
Furthermore, if China adopts more stringent standards with respect to environmental protection or corporate social responsibilities, the Group may incur increased compliance cost or become subject to additional restrictions in its operations. 44 Table of Contents Furthermore, the PRC government has significant oversight and discretion over the conduct of the Group’s business and may intervene with or influence the Group’s operations as the government deems appropriate to further regulatory, political and societal goals.
Risks Factors—Risks Relating to Doing Business in China—If the PCAOB determines that it is unable to inspect or investigate completely our auditor at any point in the future, our ADSs may be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, as amended, or the HFCA Act, and any such trading prohibition on our ADSs or threat thereof may materially and adversely affect the price of our ADSs and value of your investment.” PRC Licenses, Permissions and Approvals We conduct business operations mainly through the consolidated VIEs and their respective subsidiaries in China.
Risks Factors—Risks Relating to Doing Business in China—If the PCAOB determines that it is unable to inspect or investigate completely our auditor at any point in the future, our ADSs may be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, as amended, or the HFCA Act, and any such trading prohibition on our ADSs or threat thereof may materially and adversely affect the price of our ADSs and value of your investment.” 5 Table of Contents PRC Licenses, Permissions and Approvals We conduct business operations mainly through the consolidated VIEs and their respective subsidiaries in China.
We have established controls and procedures for cash flows within the Group. Each transfer of cash between our Cayman Islands holding company, a subsidiary, the consolidated VIEs or the consolidated affiliates is subject to internal approval. For the years ended December 31, 2020, 2021 and 2022, our company did not provide any capital contribution to our subsidiaries.
We have established controls and procedures for cash flows within the Group. Each transfer of cash between our Cayman Islands holding company, a subsidiary, the consolidated VIEs or the consolidated affiliates is subject to internal approval. For the years ended December 31, 2021, 2022 and 2023, our company did not provide any capital contribution to our subsidiaries.
When the consolidated VIEs declare and distribute profits to us, such payments will be subject to withholding tax, which will increase our tax liability and reduce the amount of cash available to our company. 8 Table of Contents Restrictions on Transfer of Funds The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiaries.
When the consolidated VIEs declare and distribute profits to us, such payments will be subject to withholding tax, which will increase our tax liability and reduce the amount of cash available to our company. 6 Table of Contents Restrictions on Transfer of Funds The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiaries.
See “—Risks Relating to Doing Business in China—Uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and its implementing rules, and how they may impact our business, financial condition and results of operations.” 59 Table of Contents If our corporate structure and contractual arrangements are deemed by the relevant regulators having competent authority to be illegal, either in whole or in part, we may lose control of our consolidated VIEs and have to modify such structure to comply with regulatory requirements.
See “—Risks Relating to Doing Business in China—Uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and its implementing rules, and how they may impact our business, financial condition and results of operations.” If our corporate structure and contractual arrangements are deemed by the relevant regulators having competent authority to be illegal, either in whole or in part, we may lose control of our consolidated VIEs and have to modify such structure to comply with regulatory requirements.
Risks Relating to Our Industry and Business We have a limited operating history in an emerging market. Our historical financial and operating performance may not be indicative of our future prospects and results of operations. The automotive and mobility markets, including the automotive finance market, in the PRC are relatively new and at an early stage of development.
Risks Relating to Our Industry and Business We have a limited operating history in an emerging market. Our historical financial and operating performance may not be indicative of our future prospects and results of operations. The automotive and mobility markets in the PRC are relatively new and at an early stage of development.
However, such change in the credit assessment process could lead to an increase in overdue ratios, which would materially and adversely impact the Group’s business and results of operations. 23 Table of Contents If the Group is unable to maintain low overdue ratios for financing transactions facilitated, the Group’s business and results of operations may be materially and adversely affected.
However, such change in the credit assessment process could lead to an increase in overdue ratios, which would materially and adversely impact the Group’s business and results of operations. 18 Table of Contents If the Group is unable to maintain low overdue ratios for financing transactions facilitated, the Group’s business and results of operations may be materially and adversely affected.
Furthermore, on February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Overseas Listing Trial Measures, and relevant five guidelines on the application of regulatory rules, which took effect from March 31, 2023, requiring Chinese domestic companies’ overseas offerings and listings of equity securities be filed with the CSRC.
Furthermore, on February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Overseas Listing Trial Measures, and five supporting guidelines on the application of regulatory rules, which took effect from March 31, 2023, requiring Chinese domestic companies’ overseas offerings and listings of equity securities be filed with the CSRC.
The laws and regulations governing the automotive finance industry in the PRC are still at a nascent stage and subject to further changes and interpretation. As the market, the regulatory environment or other conditions evolve, the Group’s existing solutions and services may not continue to deliver the expected business results.
The laws and regulations governing the automotive and mobility industry in the PRC are still at a nascent stage and subject to further changes and interpretation. As the market, the regulatory environment or other conditions evolve, the Group’s existing solutions and services may not continue to deliver the expected business results.
Information on the Company—B. Business Overview—Regulations— M&A Rules and Overseas Listings.” 66 Table of Contents Uncertainties exist with respect to the interpretation and implementation of the Foreign Investment Law and its implementing rules and how they may impact our business, financial condition and results of operations.
Information on the Company—B. Business Overview—Regulations— M&A Rules and Overseas Listings.” 46 Table of Contents Uncertainties exist with respect to the interpretation and implementation of the Foreign Investment Law and its implementing rules and how they may impact our business, financial condition and results of operations.
However, based on the past and projected composition and classification of our income and assets, we believe that there is a significant risk that we were a PFIC for United States federal income tax purposes for 2022, and that we may be classified as a PFIC in the current and future taxable years.
However, based on the past and projected composition and classification of our income and assets, we believe that there is a significant risk that we were a PFIC for United States federal income tax purposes for 2023, and that we may be classified as a PFIC in the current and future taxable years.
SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or Circular 16, effective on June 9, 2016, which reiterates some of the rules set forth in Circular 19, but changes the prohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against using such capital to issue loans to non-associated enterprises.
SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or Circular 16, effective on June 9, 2016 and amended in December 2023, which reiterates some of the rules set forth in Circular 19, but changes the prohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against using such capital to issue loans to non-associated enterprises.
These competitors may be better at developing new products and solutions and services, offering more attractive fees, responding more quickly to new technologies and undertaking more extensive and effective marketing campaigns. More players may enter the automotive transaction or automotive finance industry and intensify the market competition.
These competitors may be better at developing new products and solutions and services, offering more attractive fees, responding more quickly to new technologies and undertaking more extensive and effective marketing campaigns. More players may enter the automotive transaction industry and intensify the market competition.
See “—Risks Relating to Doing Business in China—Changes and developments in the PRC legal system and the interpretation and enforcement of PRC laws, rules and regulations may subject us to uncertainties.” Any failure by our consolidated VIEs or their shareholders to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business.
See “—Risks Relating to Doing Business in China—Changes and developments in the PRC legal system and the interpretation and enforcement of PRC laws, rules and regulations may subject us to uncertainties.” 39 Table of Contents Any failure by our consolidated VIEs or their shareholders to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business.
See “—Risks Relating to Doing Business in China—Changes and developments in the PRC legal system and the interpretation and enforcement of PRC laws, rules and regulations may subject us to uncertainties.” 57 Table of Contents The arbitration provisions under these contractual arrangements have no effect on the rights of our shareholders to pursue claims against us under United States federal securities laws.
See “—Risks Relating to Doing Business in China—Changes and developments in the PRC legal system and the interpretation and enforcement of PRC laws, rules and regulations may subject us to uncertainties.” The arbitration provisions under these contractual arrangements have no effect on the rights of our shareholders to pursue claims against us under United States federal securities laws.
If any of the foregoing takes place, the Group’s business and results of operations could be materially and adversely affected. 35 Table of Contents The Group collaborates with various automotive transaction industry participants in providing solutions and services through Cango platform. Such participants include dealers, financial institutions, sales agents, insurance brokers and companies and other business partners.
If any of the foregoing takes place, the Group’s business and results of operations could be materially and adversely affected. The Group collaborates with various automotive transaction industry participants in providing solutions and services through Cango platform. Such participants include dealers, financial institutions, sales agents, insurance brokers and companies and other business partners.
Organizational Structure—Contractual Arrangements among Can Gu Long, the Consolidated VIEs and Their Shareholders.” 60 Table of Contents Contractual arrangements in relation to our consolidated VIEs may be subject to scrutiny by the PRC tax authorities and they may determine that our consolidated VIEs owe additional taxes, which could negatively affect the Group’s financial condition and the value of your investment.
Organizational Structure—Contractual Arrangements among Can Gu Long, the Consolidated VIEs and Their Shareholders.” Contractual arrangements in relation to our consolidated VIEs may be subject to scrutiny by the PRC tax authorities and they may determine that our consolidated VIEs owe additional taxes, which could negatively affect the Group’s financial condition and the value of your investment.
Any increase in overdue ratios could materially and adversely affect the Group’s business, results of operations and financial condition. 24 Table of Contents Collection and recovery efforts by the in-house team may become less effective and may also subject us to regulatory risks and reputational risks. The Group utilizes an in-house team to collect repayment and recover car collaterals.
Any increase in overdue ratios could materially and adversely affect the Group’s business, results of operations and financial condition. Collection and recovery efforts by the in-house team may become less effective and may also subject us to regulatory risks and reputational risks. The Group utilizes an in-house team to collect repayment and recover car collaterals.
We cannot assure you that the PCAOB will always have complete access to inspect and investigate our auditor, or that we will not be identified as an SEC-identified issuer again in the future.
We cannot assure you that the PCAOB will always have complete access to inspect and investigate our auditor, or that we will not be identified as a SEC-identified issuer again in the future.
In particular, the Group’s revenue decreased from RMB3,921.7 million for 2021 to RMB1,980.5 million (US$287.1 million) for 2022. Furthermore, the COVID-19 outbreaks interrupted the Group’s collection efforts and affected car buyers’ ability to make repayments. As a result, the Group experienced an uptick in delinquency rates.
In particular, the Group’s revenue decreased from RMB3,921.7 million for 2021 to RMB1,980.5 million for 2022. Furthermore, the COVID-19 outbreaks interrupted the Group’s collection efforts and affected car buyers’ ability to make repayments. As a result, the Group experienced an uptick in delinquency rates.
If automotive retail transactions indeed decline, the Group’s revenues may decrease, and its results of operations may be materially and adversely affected. 39 Table of Contents Some local governmental authorities also issued regulations and relevant implementation rules in order to control urban traffic and the number of cars within particular urban areas.
If automotive retail transactions indeed decline, the Group’s revenues may decrease, and its results of operations may be materially and adversely affected. Some local governmental authorities also issued regulations and relevant implementation rules in order to control urban traffic and the number of cars within particular urban areas.
Some of the companies with which the Group competes for experienced employees have greater resources than the Group and may be able to offer more attractive terms of employment. 51 Table of Contents In addition, the Group invests significant time and expenses in training its employees, which increases their value to competitors who may seek to recruit them.
Some of the companies with which the Group competes for experienced employees have greater resources than the Group and may be able to offer more attractive terms of employment. In addition, the Group invests significant time and expenses in training its employees, which increases their value to competitors who may seek to recruit them.
For the years ended December 31, 2020, 2021 and 2022, there were no other material assets transferred, and there were no dividends or distributions between the Company, the Company’s subsidiaries and the consolidated VIEs for the periods presented.
For the years ended December 31, 2021, 2022 and 2023, there were no other material assets transferred, and there were no dividends or distributions between the Company, the Company’s subsidiaries and the consolidated VIEs for the periods presented.
As a result, the assessment of a car buyer’s credit profile may not reflect that particular car buyer’s actual creditworthiness because assessment may be based on outdated, incomplete or inaccurate information.
As a result, the assessment of a car buyer’s credit profile may not reflect that particular car buyer’s actual creditworthiness because assessment may be based on outdated, incomplete, inaccurate or even fraudulent information.
Furthermore, any negative development in the automotive finance industry, such as bankruptcies or failures of platforms providing automotive financing solutions, and especially a large number of such bankruptcies or failures, or negative perception of the industry as a whole, such as any unethical or illegal activity by other industry players or any failure of platforms providing automotive financing solutions to detect or prevent unethical or illegal activities, even if factually incorrect or based on isolated incidents, could compromise the Group’s image, undermine the trust and credibility the Group has established and impose a negative impact on the ability to attract new dealers, financial institutions, car buyers and other platform participants.
Furthermore, any negative development in the automotive and mobility markets, such as bankruptcies or failures of platforms providing automotive trading solutions, and especially a large number of such bankruptcies or failures, or negative perception of the industry as a whole, such as any unethical or illegal activity by other industry players or any failure of platforms providing automotive solutions to detect or prevent unethical or illegal activities, even if factually incorrect or based on isolated incidents, could compromise the Group’s image, undermine the trust and credibility the Group has established and impose a negative impact on the ability to attract new dealers, financial institutions, car buyers and other platform participants.
Technical hurdles in implementing technological advances may result in the services becoming less attractive to platform participants, which, in turn, may materially and adversely affect the Group’s business, results of operations and prospects. 47 Table of Contents As the Group’s business develops, it may be required to obtain additional license or permits.
Technical hurdles in implementing technological advances may result in the services becoming less attractive to platform participants, which, in turn, may materially and adversely affect the Group’s business, results of operations and prospects. As the Group’s business develops, it may be required to obtain additional license or permits.
As a consequence, we cannot be certain that the equity interest will be disposed pursuant to the contractual arrangement or ownership by the record holder of the equity interest. 56 Table of Contents All of these contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC.
As a consequence, we cannot be certain that the equity interest will be disposed pursuant to the contractual arrangement or ownership by the record holder of the equity interest. All of these contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC.
Jiayuan Lin and several other beneficial owners of our ordinary shares have completed the SAFE registration pursuant to SAFE Circular 37 in 2018. We have notified substantial beneficial owners of ordinary shares who we know are PRC residents of their filing obligation and other compliance obligations relating to offshore investment.
Xiaojun Zhang, Mr. Jiayuan Lin and several other beneficial owners of our ordinary shares have completed the SAFE registration pursuant to SAFE Circular 37 in 2018. We have notified substantial beneficial owners of ordinary shares who we know are PRC residents of their filing obligation and other compliance obligations relating to offshore investment.
The Notification Letter did not affect our business operations and did not conflict with or cause an event of default under any of our material debt or other agreements. The NYSE has accepted our business plan and deemed us to have regained compliance with the NYSE’s continued listing standards.
The Notification Letter did not affect our business operations and did not conflict with or cause an event of default under any of our material debt or other agreements. 56 Table of Contents The NYSE has accepted our business plan and deemed us to have regained compliance with the NYSE’s continued listing standards.
As of December 31, 2022, the Group had not been subject to any material fines or other penalties under any PRC laws or regulations as to its business operations.
As of December 31, 2023, the Group had not been subject to any material fines or other penalties under any PRC laws or regulations as to its business operations.
Under the Enterprise Income Tax Law and its implementation regulations issued by the State Council, a 10% PRC withholding tax is applicable to dividends paid to investors that are non-resident enterprises, which do not have an establishment or place of business in the PRC or which have such establishment or place of business but the dividends are not effectively connected with such establishment or place of business, to the extent such dividends are derived from sources within the PRC.
Under the Enterprise Income Tax Law and its implementing rules issued by the State Council, a 10% PRC withholding tax is applicable to dividends paid to investors that are non-resident enterprises, which do not have an establishment or place of business in the PRC or which have such establishment or place of business but the dividends are not effectively connected with such establishment or place of business, to the extent such dividends are derived from sources within the PRC.
In addition, as part of the automobile trading solutions, the Group purchases cars from OEMs to facilitate the sale of such cars to its registered dealers. We believe such collaboration with OEMs makes Cango platform even more attractive to car buyers and dealers, thereby enhancing the network effect.
As part of the automobile trading solutions, the Group purchases cars from OEMs to facilitate the sale of such cars to its registered dealers. We believe such collaboration with OEMs makes Cango platform more attractive to car buyers and dealers, thereby enhancing the network effect.
For example, on July 7, 2022, the CAC promulgated the Measures for the Security Assessment of Cross-border Data Transmission, which came into effect on September 1, 2022.
For example, on July 7, 2022, the CAC promulgated the Measures for the Security Assessment of Cross-border Data Transfer, which came into effect on September 1, 2022.
In addition, failure to adhere to NYSE requirements could result in trading suspension or delisting. 80 Table of Contents The trading price of our ADSs may be volatile, which could result in substantial losses to you. The trading prices of our ADSs have fluctuated since we first listed our ADSs.
In addition, failure to adhere to NYSE requirements could result in trading suspension or delisting. The trading price of our ADSs may be volatile, which could result in substantial losses to you. The trading prices of our ADSs have fluctuated since we first listed our ADSs.
You may not realize a return on your investment in our ADSs and you may even lose your entire investment in our ADSs. 82 Table of Contents Substantial future sales or perceived potential sales of our ADSs in the public market could cause the price of our ADSs to decline.
You may not realize a return on your investment in our ADSs and you may even lose your entire investment in our ADSs. Substantial future sales or perceived potential sales of our ADSs in the public market could cause the price of our ADSs to decline.
Moreover, the CBIRC and its local branches may conduct various examinations and inspections on the Group’s insurance brokerage business operations from time to time, which could cover a broad range of aspects, including financial reporting, tax reporting, internal control and compliance with applicable laws, rules and regulations.
Moreover, the National Financial Regulatory Administration and its local branches may conduct various examinations and inspections on the Group’s insurance brokerage business operations from time to time, which could cover a broad range of aspects, including financial reporting, tax reporting, internal control and compliance with applicable laws, rules and regulations.
The CAC has solicited comments on this draft until December 13, 2021, but there is no definite timetable as to when the draft regulations will be enacted. 43 Table of Contents In the meantime, the PRC regulatory authorities have also enhanced the supervision and regulation on cross-border data transmission.
The CAC has solicited comments on this draft until December 13, 2021, but there is no definite timetable as to when the draft regulations will be enacted. In the meantime, the PRC regulatory authorities have also enhanced the supervision and regulation on cross-border data transmission.
Inability to make such capital contribution on a timely basis could have an adverse impact on the Group’s business. The Group faces intense competition and it may not be able to compete effectively. The automotive transaction industry in China is large yet competitive.
Inability to make such capital contribution on a timely basis could have an adverse impact on the Group’s business. 23 Table of Contents The Group faces intense competition and it may not be able to compete effectively. The automotive transaction industry in China is large yet competitive.
Factors that may cause fluctuations in the Group’s quarterly financial results include: • ability to attract new car buyers; • ability to maintain existing relationships with business partners and establish new relationships with additional business partners, such as dealers, financial institutions and OEMs; • the amount of financing transactions, automobile trading transactions and insurance transactions on Cango platform; • overdue ratios of financing transactions facilitated; • the mix of solutions and services offered; • the amount and timing of the Group’s operating cost and expenses and the maintenance and expansion of existing business, operations and infrastructure; 37 Table of Contents • financial institutions’ willingness and ability to fund financing transactions through Cango platform on reasonable terms; • emphasis on experience of car buyers, instead of near-term growth; • the timing of expenses related to the development or acquisition of technologies or businesses; • proper and sufficient accounting policies with respect to risk assurance liabilities and implementation; • network outages or security breaches; • general economic, industry and market conditions; and • changes in applicable laws and regulations.
Factors that may cause fluctuations in the Group’s quarterly financial results include: ● ability to maintain existing relationships with business partners and establish new relationships with additional business partners, such as dealers, car buyers and OEMs; ● the amount of automobile trading transactions and insurance transactions on Cango platform; ● overdue ratios of financing transactions facilitated; ● the mix of solutions and services offered; ● the amount and timing of the Group’s operating cost and expenses and the maintenance and expansion of existing business, operations and infrastructure; 27 Table of Contents ● emphasis on experience of car buyers, instead of near-term growth; ● the timing of expenses related to the development or acquisition of technologies or businesses; ● proper and sufficient accounting policies with respect to risk assurance liabilities and implementation; ● network outages or security breaches; ● general economic, industry and market conditions; and ● changes in applicable laws and regulations.
Mergers, acquisitions or contractual arrangements that allow one market player to take control of or to exert decisive impact on another market player must also be notified in advance to the anti-monopoly enforcement authority when the threshold under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, or the Prior Notification Rules, issued by the State Council in August 2008 and amended in September 2018 is triggered.
Mergers, acquisitions or contractual arrangements that allow one market player to take control of or to exert decisive impact on another market player must also be notified in advance to the anti-monopoly enforcement authority when the threshold under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, or the Prior Notification Rules, issued by the State Council in August 2008 and most recently amended in January 2024 is triggered.
Factors that are vital to this objective include but are not limited to the ability to: • maintain the quality and reliability of Cango platform; • maintain and develop relationships with dealers, financial institutions, insurance brokers and insurance companies; • maintain and develop relationships with OEMs; • provide prospective car buyers and existing car buyers with superior experiences; • enhance and improve credit assessment of car buyers; • effectively manage and resolve any complaints of dealers, financial institutions or car buyers; and • effectively protect personal information and privacy of car buyers and any data received from financial institutions.
Factors that are vital to this objective include but are not limited to the ability to: ● maintain the quality and reliability of Cango platform; ● maintain and develop relationships with dealers, financial institutions, insurance brokers and insurance companies; ● maintain and develop relationships with OEMs; ● provide prospective car buyers and existing car buyers with superior experiences; ● effectively manage and resolve any complaints of dealers, financial institutions or car buyers; and ● effectively protect personal information and privacy of car buyers and any data received from any third parties.
Although the Group may seek damages from the counterparties to the lease agreements, there can be no assurance that it would be able to collect such damages. Failure to fully comply with PRC labor-related laws may expose the Group to potential penalties.
Although the Group may seek damages from the counterparties to the lease agreements, there can be no assurance that it would be able to collect such damages. 33 Table of Contents Failure to fully comply with PRC labor-related laws may expose the Group to potential penalties.
The current risk management system may not be able to exhaustively assess or mitigate all risks to which the Group is exposed. Credit applications by car buyers are evaluated based on credit assessment conducted by the Group’s credit assessment model, and the credit assessment team conducts a manual evaluation when necessary.
However, such risk management policy may not be effective. The Group’s risk management system may not be able to exhaustively assess or mitigate all risks to which the Group is exposed. Credit applications by car buyers are evaluated based on credit assessment conducted by the Group’s credit assessment model, and the credit assessment team conducts a manual evaluation when necessary.
Under the contractual arrangements, our consolidated VIEs may not and its shareholders may not cause it to, in any manner, sell, transfer, mortgage or dispose of its assets or its legal or beneficial interests in the business without our prior consent.
Our consolidated VIEs hold substantially all of the Group’s assets. Under the contractual arrangements, our consolidated VIEs may not and its shareholders may not cause it to, in any manner, sell, transfer, mortgage or dispose of its assets or its legal or beneficial interests in the business without our prior consent.
According to the Notice on Further Simplifying and Improving Policies for the Foreign Exchange Administration of Direct Investment released on February 13, 2015 by SAFE, local banks will examine and handle foreign exchange registration for overseas direct investment, including the initial foreign exchange registration and amendment registration, under SAFE Circular 37 from June 1, 2015. Mr. Xiaojun Zhang, Mr.
According to the Notice on Further Simplifying and Improving Policies for the Foreign Exchange Administration of Direct Investment released on February 13, 2015 by SAFE, local banks will examine and handle foreign exchange registration for overseas direct investment, including the initial foreign exchange registration and amendment registration, under SAFE Circular 37 from June 1, 2015. 47 Table of Contents Mr.
Inability to obtain such approvals or licenses on a timely basis could have an adverse impact on the Group’s business. Shanghai Cango may be deemed to operate financing guarantee business by the PRC regulatory authorities.
Inability to obtain such approvals or licenses on a timely basis could have an adverse impact on the Group’s business. 21 Table of Contents Shanghai Cango may be deemed to operate financing guarantee business by the PRC regulatory authorities.
Strategic investments or acquisitions will involve risks commonly encountered in business relationships, including: • difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, products and services of the acquired business; • inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits, including the failure to successfully further develop the acquired technology; • difficulties in retaining, training, motivating and integrating key personnel; • diversion of management’s time and resources from normal daily operations and potential disruptions to the ongoing businesses; • strain on current liquidity and capital resources; • difficulties in executing intended business plans and achieving synergies from such strategic investments or acquisitions; • difficulties in maintaining uniform standards, controls, procedures and policies within the overall organization; • difficulties in retaining relationships with existing customers, employees and business partners of the acquired business; • risks of entering markets in which we have limited or no prior experience; 50 Table of Contents • regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing approvals, as well as being subject to new regulators with oversight over an acquired business; • assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase our risk for liability; • liability for activities of the acquired business before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; and • unexpected costs and unknown risks and liabilities associated with strategic investments or acquisitions.
If we are able to identify an appropriate business opportunity, we may not be able to successfully consummate the transaction and, even if we do consummate such a transaction, we may be unable to obtain the benefits or avoid the difficulties and risks of such transaction, which may result in investment losses. 34 Table of Contents Strategic investments or acquisitions will involve risks commonly encountered in business relationships, including: ● difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, products and services of the acquired business; ● inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits, including the failure to successfully further develop the acquired technology; ● difficulties in retaining, training, motivating and integrating key personnel; ● diversion of management’s time and resources from normal daily operations and potential disruptions to the ongoing businesses; ● strain on current liquidity and capital resources; ● difficulties in executing intended business plans and achieving synergies from such strategic investments or acquisitions; ● difficulties in maintaining uniform standards, controls, procedures and policies within the overall organization; ● difficulties in retaining relationships with existing customers, employees and business partners of the acquired business; ● risks of entering markets in which we have limited or no prior experience; ● regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing approvals, as well as being subject to new regulators with oversight over an acquired business; ● assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase our risk for liability; ● liability for activities of the acquired business before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; and ● unexpected costs and unknown risks and liabilities associated with strategic investments or acquisitions.
The PCAOB inspections have preliminarily identified numerous deficiencies in the audit firms in China, which are consistent with the types and number of findings the PCAOB has encountered in other first-time inspections around the world, and the final inspection reports is expected to be completed and made public in 2023.
The PCAOB inspections have preliminarily identified numerous deficiencies in the audit firms in China, which are consistent with the types and number of findings the PCAOB has encountered in other first-time inspections around the world, and the final inspection reports was completed and made public in 2023.
These risks and challenges include the Group’s ability to, among other things: • offer automotive financing solutions to a growing number of car buyers; • maintain and enhance the relationships and business collaboration with dealers, financial institutions, insurance brokers and companies and other platform participants; • charge competitive service fees to platform participants while driving the growth and profitability of business; • maintain low overdue ratios of financing transactions facilitated through Cango platform; • comply with complex and evolving laws and regulations; • improve operational efficiency; 17 Table of Contents • attract, retain and motivate talented employees, particularly sales and marketing, risk management as well as research and development personnel to support its business operations; • enhance technology infrastructure to support business operations and maintain system security and the confidentiality of the information provided and collected across the system; • navigate economic conditions and fluctuations; • successfully implement business strategies and offer new services, such as automobile trading solutions; and • defend the Group against legal and regulatory actions, such as actions involving intellectual property or data privacy claims.
These risks and challenges include the Group’s ability to, among other things: ● offer automobile trading solutions to a growing number of dealers; ● maintain and enhance the relationships and business collaboration with dealers, insurance brokers and companies and other platform participants; ● charge competitive service fees to platform participants while driving the growth and profitability of business; ● maintain low overdue ratios of financing transactions facilitated through Cango platform; ● comply with complex and evolving laws and regulations; ● improve operational efficiency; ● attract, retain and motivate talented employees, particularly sales and marketing, risk management as well as research and development personnel to support its business operations; ● enhance technology infrastructure to support business operations and maintain system security and the confidentiality of the information provided and collected across the system; ● navigate economic conditions and fluctuations; ● successfully implement business strategies and offer new services, such as automobile trading solutions; and ● defend the Group against legal and regulatory actions, such as actions involving intellectual property or data privacy claims. 14 Table of Contents The Group may not be able to successfully expand or maintain or effectively manage relationships with existing network of dealers.
For the years ended December 31, 2020, 2021 and 2022, our company provided loans of nil, US$21 million and nil, net, respectively, to our subsidiaries, and received repayments of US$117 million, nil and US$63 million, net, respectively.
For the years ended December 31, 2021, 2022 and 2023, our company provided loans of US$21 million, nil and US$6 million, net, respectively, to our subsidiaries, and received repayments of nil, US$63 million and nil, net, respectively.
New solutions and services may also subject the Group to additional regulatory or licensing requirements. Failure by the Group to comply with any such new regulatory or licensing requirements could materially and adversely affect our business and results of operations. We are subject to certain risks relating to our strategic partnership with Didi Chuxing.
New solutions and services may also subject the Group to additional regulatory or licensing requirements. Failure by the Group to comply with any such new regulatory or licensing requirements could materially and adversely affect our business and results of operations. 24 Table of Contents We are subject to certain risks relating to our agreement with Didi Chuxing.
Also, we may amend or terminate the deposit agreement without your consent. If you continue to hold your ADSs after an amendment to the deposit agreement, you agree to be bound by the deposit agreement as amended. See “Item 12. Description of Securities other than Equity Securities—D.
Also, we may amend or terminate the deposit agreement without your consent. If you continue to hold your ADSs after an amendment to the deposit agreement, you agree to be bound by the deposit agreement as amended. See “Item 12. Description of Securities other than Equity Securities—D. American Depositary Shares” for more information.
For the years ended December 31, 2020, 2021 and 2022, the consolidated VIEs and the consolidated affiliates provided capital contributions of nil, RMB200 million and RMB74 million (US$11 million), respectively, to other subsidiaries of the consolidated VIEs.
For the years ended December 31, 2021, 2022 and 2023, the consolidated VIEs and the consolidated affiliates provided capital contributions of RMB200 million, RMB74 million and nil, respectively, to other subsidiaries of the consolidated VIEs.
Business Overview—PRC Licenses, Permits and Approvals” for more details. 7 Table of Contents In connection with our previous issuance of securities to foreign investors, under current PRC laws, regulations and regulatory rules, as of the date of this annual report, we, our subsidiaries, the consolidated VIEs and consolidated affiliates, (i) have not received any requirement from competent PRC governmental authorities to obtain permissions from the China Securities Regulatory Commission, or the CSRC, (ii) have not received any requirement from competent PRC governmental authorities to go through cybersecurity review by the Cyberspace Administration of China, or the CAC, and (iii) have not received or were denied such requisite permissions by any PRC authority.
In connection with our previous issuance of securities to foreign investors, under current PRC laws, regulations and regulatory rules, as of the date of this annual report, we, our subsidiaries, the consolidated VIEs and consolidated affiliates, (i) have not received any requirement from competent PRC governmental authorities to obtain permissions from the China Securities Regulatory Commission, or the CSRC, (ii) have not received any requirement from competent PRC governmental authorities to go through cybersecurity review by the Cyberspace Administration of China, or the CAC, and (iii) have not received or were denied such requisite permissions by any PRC authority.
These factors include: • the growth in car ownership and the rate of any such growth; • changes in car buyer demographics, tastes and preferences; • changing financing behavior of car buyers; • the selection, price and popularity of cars offered by dealers and OEMs; and • whether alternative channels or business models that better address the needs of car buyers emerge in China.
These factors include: ● the growth in car ownership and the rate of any such growth; ● changes in car buyers’ demographics, purchasing habits, tastes and preferences; ● the selection, price and popularity of cars offered by dealers and OEMs; and ● whether alternative channels or business models that better address the needs of car buyers emerge in China.
As required by Section 404 of the Sarbanes-Oxley Act, we must perform system and process evaluation and testing of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting in our Form 20-F filing for that year.
Commencing with our fiscal year ended December 31, 2023, we must perform system and process evaluation and testing of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting in our Form 20-F filing for that year, as required by Section 404 of the Sarbanes-Oxley Act.
The China Banking and Insurance Regulatory Commission, or the CBIRC, which will be combined into the State Administration for Finance Regulation according to the Reform Plan for the Party and State Institutions promulgated by the Central Committee of the Communist Party of China and the State Council on March 16, 2023, has extensive authority to supervise and regulate the insurance industry in China and has been enhancing its supervision over this industry in recent years, and new laws, regulations and regulatory requirements have been promulgated and implemented from time to time.
The China Banking and Insurance Regulatory Commission, or the CBIRC, which was merged into the National Financial Regulatory Administration in May 2023 according to the Reform Plan for the Party and State Institutions promulgated by the Central Committee of the Communist Party of China and the State Council on March 16, 2023, has extensive authority to supervise and regulate the insurance industry in China and has been enhancing its supervision over this industry in recent years, and new laws, regulations and regulatory requirements have been promulgated and implemented from time to time.
As a result of the foregoing, the value of your investment could be materially reduced. We are a “controlled company” under the rules of NYSE and, as a result, will rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies. We are a “controlled company” as defined under the NYSE Listed Company Manual.
As a result of the foregoing, the value of your investment could be materially reduced. 36 Table of Contents We are a “controlled company” under the rules of NYSE and, as a result, will rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.
In addition to the above factors, the price and trading volume of our ADSs may be highly volatile due to multiple factors, including the following: • regulatory developments affecting us or our industry; • announcements of studies and reports relating to the quality of credit offerings on Cango platform or those of our competitors; • changes in the economic performance or market valuations of other transaction service platforms; • actual or anticipated fluctuations in the Group’s quarterly results of operations and changes or revisions of its expected results; • changes in financial estimates by securities research analysts; • conditions in the markets for car buyers and for financing facilitation services; • announcements by the Group or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures, capital raisings or capital commitments; • additions to or departures of our senior management; 81 Table of Contents • fluctuations of exchange rates between the Renminbi and the U.S. dollar; • release or expiry of lock-up or other transfer restrictions on our outstanding shares or ADSs; and • sales or perceived potential sales of additional Class A ordinary shares or ADSs.
In addition to the above factors, the price and trading volume of our ADSs may be highly volatile due to multiple factors, including the following: ● regulatory developments affecting us or our industry; ● announcements of studies and reports relating to the quality of service offerings on Cango platform or those of our competitors; ● changes in the economic performance or market valuations of other transaction service platforms; ● actual or anticipated fluctuations in the Group’s quarterly results of operations and changes or revisions of its expected results; ● changes in financial estimates by securities research analysts; ● announcements by the Group or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures, capital raisings or capital commitments; ● additions to or departures of our senior management; ● fluctuations of exchange rates between the Renminbi and the U.S. dollar; ● release or expiry of lock-up or other transfer restrictions on our outstanding shares or ADSs; and ● sales or perceived potential sales of additional Class A ordinary shares or ADSs. 57 Table of Contents If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the market price for our ADSs and trading volume could decline.
As the automotive finance market in China is under rapid development and the regulatory framework for this market is also evolving, negative publicity about this industry may arise from time to time.
As the automotive and mobility markets in China are under rapid development and the regulatory framework for the markets is also evolving, negative publicity about this industry may arise from time to time.
Negative publicity about China’s automotive finance industry in general may also have a negative impact on the Group’s reputation, regardless of whether the Group has engaged in any inappropriate activities.
Negative publicity about China’s automotive and mobility markets in general may also have a negative impact on the Group’s reputation, regardless of whether the Group has engaged in any inappropriate activities.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

162 edited+65 added−101 removed227 unchanged
Can Gu Long shall have exclusive and proprietary ownership, rights and interests in any and all intellectual properties arising out of or created during the performance of the exclusive business cooperation agreement.
Can Gu Long shall have exclusive and proprietary ownership, rights and interests in any and all intellectual properties arising out of or created during the performance of the exclusive business cooperation agreement.
The minimum price regulated by PRC law shall be the purchase price.
The minimum price regulated by PRC law shall be the purchase price.
Article 10 of the Cybersecurity Review Measures also set out certain general factors which would be the focus in assessing the national security risk during a cybersecurity review, including (i) risks of critical information infrastructure being illegally controlled or subject to interference or destruction; (ii) the harm caused by the disruption of the supply of the product or service to the business continuity of critical information infrastructure; (iii) the security, openness, transparency and diversity of sources of the product or service, the reliability of supply channels, and risks of supply disruption due to political, diplomatic, trade and other factors; (iv) compliance with PRC laws, administrative regulations and departmental rules by the provider of the product or service; (v) the risk of core data, important data or a large amount of personal information being stolen, leaked, damaged, illegally used, or illegally transmitted overseas; (vi) the risk that critical information infrastructure, core data, important data or a large amount of personal information being affected, controlled, and maliciously used by foreign governments for a listing, as well as network information security risks; and (viii) other factors that may endanger the security of critical information infrastructure, cybersecurity and data security. 118 Table of Contents On August 20, 2021, the SCNPC promulgated the Personal Information Protection Law, which took effect on November 1, 2021.
Article 10 of the Cybersecurity Review Measures also set out certain general factors which would be the focus in assessing the national security risk during a cybersecurity review, including (i) risks of critical information infrastructure being illegally controlled or subject to interference or destruction; (ii) the harm caused by the disruption of the supply of the product or service to the business continuity of critical information infrastructure; (iii) the security, openness, transparency and diversity of sources of the product or service, the reliability of supply channels, and risks of supply disruption due to political, diplomatic, trade and other factors; (iv) compliance with PRC laws, administrative regulations and departmental rules by the provider of the product or service; (v) the risk of core data, important data or a large amount of personal information being stolen, leaked, damaged, illegally used, or illegally transmitted overseas; (vi) the risk that critical information infrastructure, core data, important data or a large amount of personal information being affected, controlled, and maliciously used by foreign governments for a listing, as well as network information security risks; and (viii) other factors that may endanger the security of critical information infrastructure, cybersecurity and data security. 78 Table of Contents On August 20, 2021, the SCNPC promulgated the Personal Information Protection Law, which took effect on November 1, 2021.
However, the PRC government has recently promulgated new laws, regulations or relevant drafts and indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers. For more detailed information, see “—Regulations—M&A Rules and Overseas Listings” and “—Regulations—Regulation Related to Cybersecurity, Internet Information Security and Privacy Protection” below.
However, the PRC government has promulgated new laws, regulations or relevant drafts and indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers. For more detailed information, see “—Regulations—M&A Rules and Overseas Listings” and “—Regulations—Regulation Related to Cybersecurity, Internet Information Security and Privacy Protection” below.
As a leading automotive transaction service platform in China, we believe that the Group’s self-reinforcing platform, end-to-end service model, large and powerful dealer network and visionary and experienced management team make Cango platform more attractive and efficient to each type of participants the Group collaborates with, offering a competitive advantage over existing and potential competitors.
As a leading automotive transaction service platform in China, we believe that the Group’s self-reinforcing platform, end-to-end service model, powerful dealer network and visionary and experienced management team make Cango platform more attractive and efficient to each type of participants the Group collaborates with, offering a competitive advantage over existing and potential competitors.
However, the State Council has not promulgated the list of the non-financial institutions with anti-money laundering obligations. 126 Table of Contents The Internet Finance Guidelines jointly released by ten PRC regulatory agencies in July 2015, purport, among other things, to require Internet finance service providers to comply with certain anti-money laundering requirements, including the establishment of a customer identification program, the monitoring and reporting of suspicious transactions, the preservation of customer information and transaction records, and the provision of assistance to the public security department and judicial authority in investigations and proceedings in relation to anti-money laundering matters.
However, the State Council has not promulgated the list of the non-financial institutions with anti-money laundering obligations. 84 Table of Contents The Internet Finance Guidelines jointly released by ten PRC regulatory agencies in July 2015, purport, among other things, to require Internet finance service providers to comply with certain anti-money laundering requirements, including the establishment of a customer identification program, the monitoring and reporting of suspicious transactions, the preservation of customer information and transaction records, and the provision of assistance to the public security department and judicial authority in investigations and proceedings in relation to anti-money laundering matters.
Organizational Structure The following diagram illustrates the Group’s corporate structure. The following diagram omits certain entities that are immaterial to the Group’s results of operations, business and financial condition. Except as otherwise specified, equity interests depicted in this diagram are held as to 100%.
C. Organizational Structure The following diagram illustrates the Group’s corporate structure. The following diagram omits certain entities that are immaterial to the Group’s results of operations, business and financial condition. Except as otherwise specified, equity interests depicted in this diagram are held as to 100%.
An insurance brokerage company shall obtain an insurance intermediary licenses before it engages in insurance brokerage business. 124 Table of Contents In accordance with the Regulatory Provisions on Insurance Brokerages, which was promulgated by the CBIRC on February 1, 2018 and took effect on May 1, 2018, or the Insurance Brokerages Provisions, an insurance brokerage company, in order to operate the insurance brokerage business, shall satisfy the relevant statutory requirements with respect to its shareholders, registered capital, business scope, articles of associations, company name, senior management personnel, governance structure, internal control system, feasible business mode, business premise, etc.
An insurance brokerage company shall obtain an insurance intermediary licenses before it engages in insurance brokerage business. 82 Table of Contents In accordance with the Regulatory Provisions on Insurance Brokerages, which was promulgated by the CBIRC on February 1, 2018 and took effect on May 1, 2018, or the Insurance Brokerages Provisions, an insurance brokerage company, in order to operate the insurance brokerage business, shall satisfy the relevant statutory requirements with respect to its shareholders, registered capital, business scope, articles of associations, company name, senior management personnel, governance structure, internal control system, feasible business mode, business premise, etc.
Shanghai Chejia, the Group’s proprietary financing lease subsidiary, utilizing own capital to fund financing leases to car buyers, has obtained the approval to operate financing lease business as issued by the MOFCOM. 114 Table of Contents Regulation Related to Intermediation An intermediation contract under the PRC Civil Code is a contract whereby an intermediary presents to its client an opportunity for entering into a contract or provides the client with other intermediary services in connection with the conclusion of a contract, and the client pays the intermediary service fees.
Shanghai Chejia, the Group’s proprietary financing lease subsidiary, utilizing own capital to fund financing leases to car buyers, has obtained the approval to operate financing lease business as issued by the MOFCOM. 75 Table of Contents Regulation Related to Intermediation An intermediation contract under the PRC Civil Code is a contract whereby an intermediary presents to its client an opportunity for entering into a contract or provides the client with other intermediary services in connection with the conclusion of a contract, and the client pays the intermediary service fees.
In connection with our previous issuance of securities to foreign investors, under current PRC laws, regulations and regulatory rules, as of the date of this annual report, we, our subsidiaries, the consolidated VIEs and consolidated affiliates, (i) have not received any requirement from competent PRC governmental authorities to obtain permissions from the China Securities Regulatory Commission, or the CSRC, (ii) have not received any requirement from competent PRC governmental authorities to go through cybersecurity review by the Cyberspace Administration of China, or the CAC, and (iii) have not received or were denied such requisite permissions by any PRC authority.
In connection with our previous issuance of securities to foreign investors, under current PRC laws, regulations and regulatory rules, as of the date of this annual report, we, our subsidiaries, the consolidated VIEs and consolidated affiliates, (i) have not received any requirement from competent PRC governmental authorities to obtain permissions from the China Securities Regulatory Commission, or the CSRC, (ii) have not received any requirement from competent PRC governmental authorities to go through cybersecurity review by the CAC, and (iii) have not received or were denied such requisite permissions by any PRC authority.
Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year. 132 Table of Contents Regulation Related to Taxation Enterprise Income Tax In March 2007, the National People’s Congress enacted the Enterprise Income Tax Law, which was most recently amended in December 2018, and in December 2007, the State Council promulgated the Implementing Rules of the Enterprise Income Tax Law, which were most recently amended in April 2019.
Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year. 88 Table of Contents Regulation Related to Taxation Enterprise Income Tax In March 2007, the National People’s Congress enacted the Enterprise Income Tax Law, which was most recently amended in December 2018, and in December 2007, the State Council promulgated the Implementing Rules of the Enterprise Income Tax Law, which were most recently amended in April 2019.
The Group’s automotive financing facilitation, after-market service facilitation and other service offerings also can be attached to the automobile trading process, providing a one-stop platform for all key participants, simple and enjoyable car purchasing experience for car buyers, as well as multiple revenue streams for the Group. The Group has been focusing on building a self-reinforcing ecosystem.
The Group’s after-market service facilitation and other service offerings also can be attached to the automobile trading process, providing a one-stop platform for all key participants, simple and enjoyable car purchasing experience for car buyers, as well as multiple revenue streams for the Group. The Group has been focusing on building a self-reinforcing ecosystem.
However, given the uncertainties regarding interpretation, implementationand enforcement of relevant rules and regulations, as well as other factors beyond our control, we cannot assure you that the Group has obtained or will be able to obtain and maintain all requisite licenses, permits, filings and registrations. See “Item 3. Key Information—D.
However, given the uncertainties regarding interpretation, implementation and enforcement of relevant rules and regulations, as well as other factors beyond our control, we cannot assure you that the Group has obtained or will be able to obtain and maintain all requisite licenses, permits, filings and registrations. See “Item 3. Key Information—D.
The qualified banks, under the supervision of SAFE, may directly review the applications and conduct the registration. 129 Table of Contents On March 30, 2015, SAFE promulgated the Circular of SAFE on Reforming the Management Approach regarding the Settlement of Foreign Capital of Foreign-invested Enterprise, or Circular 19, which expands a pilot reform of the administration of the settlement of the foreign exchange capitals of foreign-invested enterprises nationwide.
The qualified banks, under the supervision of SAFE, may directly review the applications and conduct the registration. 86 Table of Contents On March 30, 2015, SAFE promulgated the Circular of SAFE on Reforming the Management Approach regarding the Settlement of Foreign Capital of Foreign-invested Enterprise, or Circular 19, which expands a pilot reform of the administration of the settlement of the foreign exchange capitals of foreign-invested enterprises nationwide.
Power of Attorney Pursuant to the power of attorney, each shareholder of Shanghai Cango has irrevocably authorized Can Gu Long to exercise the following rights relating to all equity interests held by such shareholder in Shanghai Cango during the term of the power of attorney: to act on behalf of such shareholder as its exclusive agent and attorney with respect to all matters concerning its shareholding in Shanghai Cango, including without limitation to: (1) attending shareholders’ meetings of Shanghai Cango; (2) exercising all the shareholder’s rights and shareholder’s voting rights such shareholder is entitled to under the laws of China and Shanghai Cango’s articles of association, including but not limited to the sale or transfer or pledge or disposition of its shareholding in part or in whole; and (3) designate and appoint on behalf of such shareholder the legal representative, the directors, supervisors, the chief executive officer and other senior management members of Shanghai Cango.
Power of Attorney Pursuant to the power of attorney, each shareholder of Shanghai Yungu has irrevocably authorized Can Gu Long to exercise the following rights relating to all equity interests held by such shareholder in Shanghai Yungu during the term of the power of attorney: to act on behalf of such shareholder as its exclusive agent and attorney with respect to all matters concerning its shareholding in Shanghai Yungu, including without limitation to: (1) attending shareholders’ meetings of Shanghai Yungu; (2) exercising all the shareholder’s rights and shareholder’s voting rights such shareholder is entitled to under the laws of China and Shanghai Yungu’s articles of association, including but not limited to the sale or transfer or pledge or disposition of its shareholding in part or in whole; and (3) designate and appoint on behalf of such shareholder the legal representative, the directors, supervisors, the chief executive officer and other senior management members of Shanghai Yungu.
SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or Circular 16, effective in June 2016, which reiterates some of the rules set forth in Circular 19, but Compared to Circular 19, Circular 16 provides that discretionary foreign exchange settlement applies to foreign exchange capital, foreign debt offering proceeds and remitted foreign listing proceeds, and the corresponding RMB capital converted from foreign exchange are not restricted from extending loans to related parties or repaying the inter-company loans (including advances by third parties).
SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or Circular 16, effective in June 2016 and amended in December 2023, which reiterates some of the rules set forth in Circular 19, but Compared to Circular 19, Circular 16 provides that discretionary foreign exchange settlement applies to foreign exchange capital, foreign debt offering proceeds and remitted foreign listing proceeds, and the corresponding RMB capital converted from foreign exchange are not restricted from extending loans to related parties or repaying the inter-company loans (including advances by third parties).
Industries not listed in these two catalogues are generally deemed “permitted” for foreign investment unless specifically restricted by other PRC laws. 121 Table of Contents According to the Implementing Rules, the registration of foreign-invested enterprises shall be handled by the SAMR or its authorized local counterparts.
Industries not listed in these two catalogues are generally deemed “permitted” for foreign investment unless specifically restricted by other PRC laws. 80 Table of Contents According to the Implementing Rules, the registration of foreign-invested enterprises shall be handled by the SAMR or its authorized local counterparts.
These subsidiaries are located in various cities across China and are primarily involved in providing automotive financing facilitation services to financial institutions and car buyers. (5) Primarily involved in the operation of the Group’s automobile trading, including purchasing cars from OEMs to facilitate the sales of such cars to registered dealers.
These subsidiaries are located in various cities across China and are primarily involved in providing automotive financing facilitation services and after-market services facilitation to financial institutions and car buyers. (5) Primarily involved in the operation of the Group’s automobile trading, including purchasing cars from OEMs to facilitate the sales of such cars to registered dealers.
The Group has registered 12 trademarks in the PRC, including “CANGO Management 灿谷管理.” The Group is the registered holder of 29 domain names in the PRC, such as cangoonline.com. The Group has 83 registered software copyrights relating to its mobile applications. Seasonality The Group experiences seasonality in its business, reflecting car buyers’ purchase patterns.
The Group has registered 12 trademarks in the PRC, including “CANGO Management 灿谷管理 .” The Group is the registered holder of 29 domain names in the PRC, such as cangoonline.com. The Group has 92 registered software copyrights relating to its mobile applications. Seasonality The Group experiences seasonality in its business, reflecting car buyers’ purchase patterns.
Our ADSs, each representing two of our Class A ordinary shares, have been listed on the New York Stock Exchange since July 26, 2018 under the symbol “CANG.” B. Business Overview Overview Who We Are The Group is a leading technology-enabled automotive transaction service platform in China, connecting dealers, OEMs, car buyers and other industry participants.
Our ADSs, each representing two of our Class A ordinary shares, have been listed on the New York Stock Exchange since July 26, 2018 under the symbol “CANG.” 63 Table of Contents B. Business Overview Overview Who We Are The Group is a leading technology-enabled automotive transaction service platform in China, connecting dealers, OEMs, car buyers and other industry participants.
Shanghai Cango is consolidated with the Group’s results of operations for accounting purposes, but it is not an entity in which we own equity interest. (4) Includes 21 subsidiaries that are majority owned by Shanghai Cango.
Shanghai Cango is consolidated with the Group’s results of operations for accounting purposes, but it is not an entity in which we own equity interest. (4) Includes 15 subsidiaries that are majority owned by Shanghai Cango.
(of which Shouyan Xu is the general partner) respectively holding 15.6%, 15.8%, 21.1%, 12.5%, 8.4%, 6.3% and 5.2% of equity interests in Shanghai Cango. The remaining equity interests in Shanghai Cango are held by nine other shareholders.
(of which Shouyan Xu is the general partner) respectively holding 15.6%, 15.8%, 12.5%, 8.4%, 6.3% and 5.2% of equity interests in Shanghai Cango. The remaining equity interests in Shanghai Cango are held by nine other shareholders.
Any violation of these laws and regulations may subject the entity collecting personal information to warnings, fines, confiscation of illegal gains, revocation of licenses, cancellation of filings, closedown of websites or even criminal liabilities. 115 Table of Contents On November 7, 2016, the SCNPC issued the Cybersecurity Law, which came into effect on June 1, 2017.
Any violation of these laws and regulations may subject the entity collecting personal information to warnings, fines, confiscation of illegal gains, revocation of licenses, cancellation of filings, closedown of websites or even criminal liabilities. On November 7, 2016, the SCNPC issued the Cybersecurity Law, which came into effect on June 1, 2017.
According to the Revised Confidentiality and Archives Administration Provisions, where overseas securities regulators or relevant competent authorities request to inspect, investigate or collect evidence from Chinese domestic companies concerning their overseas offering and listing or their securities firms and securities service providers that undertake securities business for such Chinese domestic companies, such inspection, investigation and evidence collection must be conducted under the cross-border regulatory cooperation mechanism, and the CSRC or competent authorities of the Chinese government will provide necessary assistance pursuant to bilateral and multilateral cooperation mechanism. 135 Table of Contents C.
According to the Revised Confidentiality and Archives Administration Provisions, where overseas securities regulators or relevant competent authorities request to inspect, investigate or collect evidence from Chinese domestic companies concerning their overseas offering and listing or their securities firms and securities service providers that undertake securities business for such Chinese domestic companies, such inspection, investigation and evidence collection must be conducted under the cross-border regulatory cooperation mechanism, and the CSRC or competent authorities of the Chinese government will provide necessary assistance pursuant to bilateral and multilateral cooperation mechanism.
The purpose was to obtain the insurance brokerage license to enhance after-market services facilitation business. 90 Table of Contents The Group completed three rounds of equity financing prior to the completion of our initial public offering. The first round of equity financing was completed in July 2017, and investors included Warburg Pincus Financial Global Ltd. and Primavera.
The purpose was to obtain the insurance brokerage license to enhance after-market services facilitation business. The Group completed three rounds of equity financing prior to the completion of our initial public offering. The first round of equity financing was completed in July 2017, and investors included Warburg Pincus Financial Global Ltd. and Primavera.
As of the date of this annual report, this draft has not been formally adopted, and substantial uncertainties exist with respect to the enactment timetable, final content, interpretation and implementation. 119 Table of Contents In the meantime, the PRC regulatory authorities have also enhanced the supervision and regulation on cross-border data transmission.
As of the date of this annual report, this draft has not been formally adopted, and substantial uncertainties exist with respect to the enactment timetable, final content, interpretation and implementation. In the meantime, the PRC regulatory authorities have also enhanced the supervision and regulation on cross-border data transmission.
This agreement will remain effective until all equity interests of Shanghai Cango held by its shareholders have been transferred or assigned to Can Gu Long or its designated person(s).
This agreement will remain effective until all equity interests of Shanghai Yungu held by its shareholders have been transferred or assigned to Can Gu Long or its designated person(s).
Exclusive Option Agreement Pursuant to the exclusive option agreement, each of Shanghai Yungu’s shareholders have irrevocably granted Can Gu Long an irrevocable and exclusive right to purchase, or designate one or more persons agreed by the board of directors of Can Gu Long to purchase the equity interests in Shanghai Yungu then held by its shareholders once or at multiple times at any time in part or in whole at Can Gu Long’s sole and absolute discretion to the extent permitted by PRC law.
Exclusive Option Agreement Pursuant to the exclusive option agreement, each of Shanghai Cango’s shareholders have irrevocably granted Can Gu Long an irrevocable and exclusive right to purchase, or designate one or more persons agreed by the board of directors of Can Gu Long to purchase the equity interests in Shanghai Cango then held by its shareholders once or at multiple times at any time in part or in whole at Can Gu Long’s sole and absolute discretion to the extent permitted by PRC law.
The State Intellectual Property Office, formerly known as the Trademark Office of the State Administration for Industry and Commerce, handles trademark registrations and grants a protection term of ten years to registered trademarks. The MIIT promulgated its Administrative Measures on Internet Domain Names in 2017.
The State Intellectual Property Office, formerly known as the Trademark Office of the State Administration for Industry and Commerce, handles trademark registrations and grants a protection term of ten years to registered trademarks. 85 Table of Contents The MIIT promulgated its Administrative Measures on Internet Domain Names in 2017.
In addition, dealers can easily access comprehensive transaction supporting services on the Cango Haoche app, including customer leads generation services, logistics services, financial services and insurance services. Through such services, the Group aims to provide dealers with convenient and efficient transaction experience and improve user engagement on Cango platform.
In addition, dealers can easily access comprehensive transaction supporting services on the Cango U-car app, including customer leads generation services, logistics services, financial services and insurance services. Through such services, the Group aims to provide dealers with convenient and efficient transaction experience and improve user engagement on Cango platform.
If the delinquency continues for more than 15 days, the Group may conduct in-person visits when it determines such measures are warranted. We view the visits as opportunities to collect repayments as well as to investigate the status of the collateral. 108 Table of Contents (4) Recovery .
If the delinquency continues for more than 15 days, the Group may conduct in-person visits when it determines such measures are warranted. We view the visits as opportunities to collect repayments as well as to investigate the status of the collateral. (4) Recovery .
On October 23, 2019, SAFE promulgated the Circular of the State Administration of Foreign Exchange on Further Promoting the Facilitation of Cross-border Trade and Investment, or Circular 28, which permits non-investment foreign-invested enterprises to use their capital funds to make equity investments in China, with genuine investment projects and in compliance with effective foreign investment restrictions and other applicable laws.
On October 23, 2019, SAFE promulgated the Circular of the State Administration of Foreign Exchange on Further Promoting the Facilitation of Cross-border Trade and Investment, or Circular 28, which was amended in December 2023, which permits non-investment foreign-invested enterprises to use their capital funds to make equity investments in China, with genuine investment projects and in compliance with effective foreign investment restrictions and other applicable laws.
We expect to provide the financial support if and when required with a portion of the proceeds from our initial public offering and proceeds from the issuance of equity or debt securities in the future. D. Facilities The Group’s corporate headquarters are located in Shanghai, China, where it leases approximately 8,388 square meters of office space.
We expect to provide the financial support if and when required with a portion of the proceeds from our initial public offering and proceeds from the issuance of equity or debt securities in the future. D. Facilities The Group’s corporate headquarters are located in Shanghai, China, where it leases approximately 5,592 square meters of office space.
Unless terminated in accordance with the provisions of the exclusive business cooperation agreement or terminated in writing by Can Gu Long, the exclusive cooperation agreement shall remain effective. 139 Table of Contents Exclusive Option Agreement Pursuant to the exclusive option agreement, each of Shanghai Cango’s shareholders have irrevocably granted Can Gu Long an irrevocable and exclusive right to purchase, or designate one or more persons agreed by the board of directors of Can Gu Long to purchase the equity interests in Shanghai Cango then held by its shareholders once or at multiple times at any time in part or in whole at Can Gu Long’s sole and absolute discretion to the extent permitted by PRC law.
Unless terminated in accordance with the provisions of the exclusive business cooperation agreement or terminated in writing by Can Gu Long, the exclusive cooperation agreement shall remain effective. 95 Table of Contents Exclusive Option Agreement Pursuant to the exclusive option agreement, each of Shanghai Yungu’s shareholders have irrevocably granted Can Gu Long an irrevocable and exclusive right to purchase, or designate one or more persons agreed by the board of directors of Can Gu Long to purchase the equity interests in Shanghai Yungu then held by its shareholders once or at multiple times at any time in part or in whole at Can Gu Long’s sole and absolute discretion to the extent permitted by PRC law.
These specialists focus on different areas including mobile application development, IT product development, new business incubation and others. 110 Table of Contents Competition The automotive transaction industry in China is large yet competitive. The Group competes against automotive transaction platforms that connect various players across the automotive transaction value chain in automotive and automotive-related transaction facilitation.
These specialists focus on different areas including mobile application development, IT product development, new business incubation and others. Competition The automotive transaction industry in China is large yet competitive. The Group competes against automotive transaction platforms that connect various players across the automotive transaction value chain in automotive and automotive-related transaction facilitation.
Circular 19 came into force and replaced both the Circular of the State Administration of Foreign Exchange on Issues Relating to the Improvement of Business Operations with Respect to the Administration of Foreign Exchange Capital Payment and Settlement of Foreign-invested Enterprises, or Circular 142 and the Circular of the State Administration of Foreign Exchange on Issues concerning the Pilot Reform of the Administrative Approach Regarding the Settlement of the Foreign Exchange Capitals of Foreign-invested Enterprises in Certain Areas, or Circular 36 on June 1, 2015.
Circular 19 came into force on June 1, 2015, recently amended on March 23, 2023 and replaced both the Circular of the State Administration of Foreign Exchange on Issues Relating to the Improvement of Business Operations with Respect to the Administration of Foreign Exchange Capital Payment and Settlement of Foreign-invested Enterprises, or Circular 142 and the Circular of the State Administration of Foreign Exchange on Issues concerning the Pilot Reform of the Administrative Approach Regarding the Settlement of the Foreign Exchange Capitals of Foreign-invested Enterprises in Certain Areas, or Circular 36 on June 1, 2015.
We have registered pledges of equity interest of shareholders in Shanghai Yungu with the relevant offices of the administration for market regulation in accordance with the PRC Civil Code. 140 Table of Contents Power of Attorney Pursuant to the power of attorney, each shareholder of Shanghai Yungu has irrevocably authorized Can Gu Long to exercise the following rights relating to all equity interests held by such shareholder in Shanghai Yungu during the term of the power of attorney: to act on behalf of such shareholder as its exclusive agent and attorney with respect to all matters concerning its shareholding in Shanghai Yungu, including without limitation to: (1) attending shareholders’ meetings of Shanghai Yungu; (2) exercising all the shareholder’s rights and shareholder’s voting rights such shareholder is entitled to under the laws of China and Shanghai Yungu’s articles of association, including but not limited to the sale or transfer or pledge or disposition of its shareholding in part or in whole; and (3) designate and appoint on behalf of such shareholder the legal representative, the directors, supervisors, the chief executive officer and other senior management members of Shanghai Yungu.
We have registered pledges of equity interest of shareholders other than the Taikang Life Insurance Co., Ltd. in Shanghai Cango with the relevant offices of the administration for market regulation in accordance with the PRC Civil Code. 93 Table of Contents Power of Attorney Pursuant to the power of attorney, each shareholder of Shanghai Cango has irrevocably authorized Can Gu Long to exercise the following rights relating to all equity interests held by such shareholder in Shanghai Cango during the term of the power of attorney: to act on behalf of such shareholder as its exclusive agent and attorney with respect to all matters concerning its shareholding in Shanghai Cango, including without limitation to: (1) attending shareholders’ meetings of Shanghai Cango; (2) exercising all the shareholder’s rights and shareholder’s voting rights such shareholder is entitled to under the laws of China and Shanghai Cango’s articles of association, including but not limited to the sale or transfer or pledge or disposition of its shareholding in part or in whole; and (3) designate and appoint on behalf of such shareholder the legal representative, the directors, supervisors, the chief executive officer and other senior management members of Shanghai Cango.
Jiayuan Lin, Warburg Pincus Financial Global Ltd., Tencent Mobility Limited, Shanghai Xiehuai Investment Management L.P., the Taikang Onshore Entities (including Taikang Life Insurance Co., Ltd. and Shandong State-controlled Taikang Phase I Industrial Development Fund Partnership Enterprise (Limited Partnership)) and Shanghai Huaiyuan Investment Management L.P.
Jiayuan Lin, Tencent Mobility Limited, Shanghai Xiehuai Investment Management L.P., the Taikang Onshore Entities (including Taikang Life Insurance Co., Ltd. and Shandong State-controlled Taikang Phase I Industrial Development Fund Partnership Enterprise (Limited Partnership)) and Shanghai Huaiyuan Investment Management L.P.
We consider such insurance coverage to be sufficient for the Group’s business operations in China. 111 Table of Contents PRC Licenses, Permissions and Approvals The Group has obtained all requisite permissions and approvals that are material to the Group’s operations in China as of the date hereof, including (i) the VATS license held by Shanghai Yungu to conduct the internet content provider (ICP) services and online data and transaction processing services, (ii) the VATS license held by Shanghai Yungu to conduct the service provider (SP) services, (iii) the filing with Shanghai Administration for Market Regulation by Shanghai Yungu to conduct used-car transaction services, (iv) the filing with Shanghai Municipal Commission of Commerce by Shanghai Yungu to conduct auction business, (v) the governmental approval for and the license held by Cango Financing to conduct financing guarantee service, and (vi) the license held by Fushun Insurance Brokerage Co., Ltd. to conduct insurance brokerage service.
PRC Licenses, Permissions and Approvals The Group has obtained all requisite permissions and approvals that are material to the Group’s operations in China as of the date hereof, including (i) the VATS license held by Shanghai Yungu to conduct the internet content provider (ICP) services and online data and transaction processing services, (ii) the VATS license held by Shanghai Yungu to conduct the service provider (SP) services, (iii) the filing with Shanghai Administration for Market Regulation by Shanghai Yungu to conduct used car transaction services, (iv) the filing with Shanghai Municipal Commission of Commerce by Shanghai Yungu to conduct auction business, (v) the governmental approval for and the license held by Cango Financing to conduct financing guarantee service, and (vi) the license held by Fushun Insurance Brokerage Co., Ltd. to conduct insurance brokerage service.
As of December 31, 2022, the Group collaborated with 14 insurance brokers and companies to facilitate the sale of their products, such as auto insurance, accident insurance and other automotive related insurance services, to car buyers.
As of December 31, 2023, the Group collaborated with eight insurance brokers and companies to facilitate the sale of their products, such as auto insurance, accident insurance and other automotive related insurance services, to car buyers.
NEV manufacturers typically do not have a large offline network. This creates a unique opportunity for the Group to provide offline services to NEV manufacturers and their customers by realizing the “last mile” of transaction, leveraging the Group’s nationwide network, operational expertise and industry knowhow.
This creates a unique opportunity for the Group to provide offline services to NEV manufacturers and their customers by realizing the “last mile” of transaction, leveraging the Group’s nationwide network, operational expertise and industry knowhow.
Annual interest on most of the financing transactions facilitated in 2021 ranged from 8.11% to 9.99%. Annual interest on most of the financing transactions facilitated in 2022 ranged from 7.81% to 9.99%. Besides interest, financial institutions do not charge car buyers additional fees. • Installments .
Annual interest on most of the financing transactions facilitated in 2022 ranged from 7.81% to 9.99%. Annual interest on most of the financing transactions facilitated in 2023 ranged from 8.35% to 9.84%. Besides interest, financial institutions do not charge car buyers additional fees. ● Installments .
When purchasing the Group’s self-owned used cars on Cango U-Car app, the dealers are required to pay a deposit first and pay the purchase prices in full before specific deadlines for the cars to be picked up or delivered. The Group also offers transaction facilitation services on Cango U-Car app.
When purchasing the Group’s self-owned used cars on Cango U-car app, the dealers are required to pay a deposit first and pay the purchase prices in full before specific deadlines for the cars to be picked up or delivered.
In the opinion of Fangda Partners, our PRC legal counsel: • the ownership structures of Can Gu Long and our consolidated VIEs in China do not violate any applicable PRC law, regulation, or rule currently in effect; and • the contractual arrangements among Can Gu Long, the consolidated VIEs and their shareholders governed by PRC laws are valid, binding and enforceable in accordance with their terms and applicable PRC laws, rules, and regulations currently in effect, and do not violate any applicable PRC law, regulation, or rule currently in effect, except that the pledges in respect of the consolidated VIEs’ equity interests would not be deemed validly created until they are registered with the local administration for market regulation. 137 Table of Contents However, these contractual arrangements may not be as effective as direct ownership in providing us with control over our consolidated VIEs.
In the opinion of Fangda Partners, our PRC legal counsel: ● the ownership structures of Can Gu Long and our consolidated VIEs in China do not violate any applicable PRC law, regulation, or rule currently in effect; and 92 Table of Contents ● the contractual arrangements among Can Gu Long, the consolidated VIEs and their shareholders governed by PRC laws are valid, binding and enforceable in accordance with their terms and applicable PRC laws, rules, and regulations currently in effect, and do not violate any applicable PRC law, regulation, or rule currently in effect, except that the pledges in respect of the consolidated VIEs’ equity interests would not be deemed validly created until they are registered with the local administration for market regulation.
Pursuant to the agreements with WeBank, WeBank pays the Group service fees for credit origination, credit assessment and credit servicing based on a percentage of the outstanding balance of relevant financing transactions.
WeBank pays the Group service fees for credit origination, credit assessment and credit servicing based on a percentage of the outstanding balance of relevant financing transactions.
On November 28, 2019, the Secretary Bureau of the Cyberspace Administration of China, the General Office of the MIIT, the General Office of the Ministry of Public Security and the General Office of the SAMR jointly issued the Notice on the Measures for Determining the Illegal Collection and Use of Personal Information through Mobile Applications, which aims to provide reference for supervision and administration departments and provide guidance for mobile applications operators’ self-examination and self-correction and social supervision by netizens, and further elaborates the forms of behavior constituting illegal collection and use of the personal information through mobile applications including: (i) failing to publish the rules on the collection and use of personal information; (ii) failing to explicitly explain the purposes, methods and scope of the collection and use of personal information; (iii) collecting and using personal information without the users’ consent; (iv) collecting personal information unrelated to the services it provides and beyond the necessary principle; (v) providing personal information to others without the users’ consent; (vi) failing to provide the function of deleting or correcting the personal information according to the laws or failing to publish information such as ways of filing complaints and reports.
On November 28, 2019, the Secretary Bureau of the CAC, the General Office of the MIIT, the General Office of the Ministry of Public Security and the General Office of the SAMR jointly issued the Notice on the Measures for Determining the Illegal Collection and Use of Personal Information through Mobile Applications, which aims to provide reference for supervision and administration departments and provide guidance for mobile applications operators’ self-examination and self-correction and social supervision by netizens, and further elaborates the forms of behavior constituting illegal collection and use of the personal information through mobile applications including: (i) failing to publish the rules on the collection and use of personal information; (ii) failing to explicitly explain the purposes, methods and scope of the collection and use of personal information; (iii) collecting and using personal information without the users’ consent; (iv) collecting personal information unrelated to the services it provides and beyond the necessary principle; (v) providing personal information to others without the users’ consent; (vi) failing to provide the function of deleting or correcting the personal information according to the laws or failing to publish information such as ways of filing complaints and reports. 77 Table of Contents On June 10, 2021, the SCNPC promulgated the Data Security Law, which took effect in September 2021.
The Group has extensive, technology-enabled service offerings that cover each key component of the automotive transaction value chain, including pre-sale automobile trading solutions, during-sale automotive financing facilitation services, and post-sale after-market services facilitation. Our Vision and Roadmap to Our Vision Our vision is to make automotive transactions simpler, easier and more pleasant.
The Group has extensive, technology-enabled service offerings that cover key components of the automotive transaction value chain, including pre-sale automobile trading solutions and post-sale after-market services facilitation. To a lesser extent, the Group also provides during-sale automotive financing facilitation. Our Vision and Roadmap to Our Vision Our vision is to make automotive transactions simpler, easier and more pleasant.
As these measures took effect recently, uncertainties still exist with respect to the interpretation and implementation of these measures in practice and how they will affect the Group’s business operation and the value of our securities.
However, uncertainties still exist with respect to the interpretation and implementation of these measures in practice and how they will affect the Group’s business operation and the value of our securities.
Shanghai Cango, one of our consolidated VIEs, currently owns 61.25% equity interest (directly and through Shanghai Wangtian Investment Co., Ltd., its wholly-owned subsidiary) in Shanghai Chejia and Express Group Development Limited, our wholly-owned consolidated subsidiary, owns 38.75% equity interest in Shanghai Chejia.
Shanghai Cango, one of our consolidated VIEs, currently owns 61.25% equity interest (directly and through Shanghai Wangtian Investment Co., Ltd., its wholly-owned subsidiary) in Shanghai Chejia and Express Group Development Limited, our wholly-owned consolidated subsidiary, owns 38.75% equity interest in Shanghai Chejia. As a result, Shanghai Chejia is the Group’s consolidated affiliate.
This percentage varies among different funding arrangements and typically ranged from 20% to 30% of the purchase price in 2020, 2021 and 2022. 107 Table of Contents • Principal .
This percentage varies among different funding arrangements and typically ranged from 20% to 30% of the purchase price in 2021, 2022 and 2023. ● Principal .
Pursuant to the Notice of the Supreme People’s Court, the Supreme People’s Procuratorate and the Ministry of Public Security on Legally Punishing Criminal Activities Infringing upon the Personal Information of Citizens, issued in 2013, and the Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues regarding Legal Application in Criminal Cases Infringing upon the Personal Information of Citizens, which was issued on May 8, 2017 and took effect on June 1, 2017, the following activities may constitute the crime of infringing upon a citizen’s personal information: (i) providing a citizen’s personal information to specified persons or releasing a citizen’s personal information online or through other methods in violation of relevant national provisions; (ii) providing legitimately collected information relating to a citizen to others without such citizen’s consent (unless the information is processed, not traceable to a specific person and not recoverable); (iii) collecting a citizen’s personal information in violation of applicable rules and regulations when performing a duty or providing services; or (iv) collecting a citizen’s personal information by purchasing, accepting or exchanging such information in violation of applicable rules and regulations.
Since the Amendment was released only for soliciting public comments at this stage, uncertainties exist with respect to the enactment timetable, final content, interpretation and implementation. 76 Table of Contents Pursuant to the Notice of the Supreme People’s Court, the Supreme People’s Procuratorate and the Ministry of Public Security on Legally Punishing Criminal Activities Infringing upon the Personal Information of Citizens, issued in 2013, and the Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues regarding Legal Application in Criminal Cases Infringing upon the Personal Information of Citizens, which was issued on May 8, 2017 and took effect on June 1, 2017, the following activities may constitute the crime of infringing upon a citizen’s personal information: (i) providing a citizen’s personal information to specified persons or releasing a citizen’s personal information online or through other methods in violation of relevant national provisions; (ii) providing legitimately collected information relating to a citizen to others without such citizen’s consent (unless the information is processed, not traceable to a specific person and not recoverable); (iii) collecting a citizen’s personal information in violation of applicable rules and regulations when performing a duty or providing services; or (iv) collecting a citizen’s personal information by purchasing, accepting or exchanging such information in violation of applicable rules and regulations.
A financing guarantee company that falls under any of the following circumstances shall be ordered by the competent government authority to make correction within the prescribed time limit; and, where it fails to correct by the prescribed deadline, the financing guarantee company may be subject to penalties including, fines of RMB100,000 to RMB500,000, confiscation of illegal gains if any, being ordered to suspend business for rectification, or being revoked of its permit for financing guarantee business under grave circumstances: (i) where the ratio of the outstanding guarantee liabilities of the financing guarantee company to its net assets is not in compliance with relevant requirements; (ii) where the financing guarantee company provides financing guarantee for its controlling shareholder or actual controller, or where the conditions by which the financing guarantee company provides financing guarantee for other affiliated parties are more favorable than those for providing similar guarantee for non-affiliated parties; (iii) where the financing guarantee company fails to accrue corresponding reserves in accordance with relevant provisions; or (iv) where the financing guarantee company fails to use its proprietary funds pursuant to the applicable governmental provisions on the safety and liquidity of the assets of financing guarantee companies. 123 Table of Contents With respect to the cooperation on guarantee business between financing guarantee companies and banking financial institutions, as required by the Financing Guarantee Rules, the two parties of such cooperation shall follow the principles of free will, equality, fairness and honesty, being compliant with laws, and prudent operation.
A financing guarantee company that falls under any of the following circumstances shall be ordered by the competent government authority to make correction within the prescribed time limit; and, where it fails to correct by the prescribed deadline, the financing guarantee company may be subject to penalties including, fines of RMB100,000 to RMB500,000, confiscation of illegal gains if any, being ordered to suspend business for rectification, or being revoked of its permit for financing guarantee business under grave circumstances: (i) where the ratio of the outstanding guarantee liabilities of the financing guarantee company to its net assets is not in compliance with relevant requirements; (ii) where the financing guarantee company provides financing guarantee for its controlling shareholder or actual controller, or where the conditions by which the financing guarantee company provides financing guarantee for other affiliated parties are more favorable than those for providing similar guarantee for non-affiliated parties; (iii) where the financing guarantee company fails to accrue corresponding reserves in accordance with relevant provisions; or (iv) where the financing guarantee company fails to use its proprietary funds pursuant to the applicable governmental provisions on the safety and liquidity of the assets of financing guarantee companies.
As the conditions of used car vary, the Group has established professional technician teams and car service teams for used-car transactions, providing dealers with car viewing, car inspection and car loan services to further improve the matching conversion rate.
As the conditions of used car vary, the Group has engaged third-party professional technician teams and car service teams for used car transactions, providing dealers with car viewing, car inspection and car loan services to further improve the matching conversion efficiency. ● New car transactions.
In April 2018, the MOFCOM transferred the duties to make rules on the operation and supervision of financing lease companies to the China Banking and Insurance Regulatory Commission, or the CBIRC.
In April 2018, the MOFCOM transferred the duties to make rules on the operation and supervision of financing lease companies to the China Banking and Insurance Regulatory Commission, or the CBIRC , which was merged into the National Financial Regulatory Administration.
If the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may only enforce the arbitration awards in the PRC courts through arbitration award recognition proceedings, which would require additional expenses and delay.
Under PRC laws, rulings by arbitrators are final, and parties cannot appeal the arbitration results in courts. If the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may only enforce the arbitration awards in the PRC courts through arbitration award recognition proceedings, which would require additional expenses and delay.
The system handles the massive volume of data required to evaluate a large number of credit applications quickly and monitors repayment activities by borrowers. In the meantime, it is flexible enough to capitalize on changing user preferences, market trends and technological advances. Such technology infrastructure is based on cloud computing distributed platform, which is scalable with strong data processing power.
The system handles the massive volume of data quickly. In the meantime, it is flexible enough to capitalize on changing user preferences, market trends and technological advances. Such technology infrastructure is based on cloud computing distributed platform, which is scalable with strong data processing power.
Regulation on Foreign Exchange Registration of Overseas Investment by PRC Residents SAFE issued SAFE Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, that became effective in July 2014, replacing the Circular of the State Administration of Foreign Exchange on Issues Concerning the Regulation of Foreign Exchange in Equity Finance and Return Investments by Domestic Residents through Offshore Special Purpose Vehicles, or SAFE Circular 75.
Funds in the settlement account of capital accounts may be settled and used at the discretion of the account holder. 87 Table of Contents Regulation on Foreign Exchange Registration of Overseas Investment by PRC Residents SAFE issued SAFE Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, that became effective in July 2014, replacing the Circular of the State Administration of Foreign Exchange on Issues Concerning the Regulation of Foreign Exchange in Equity Finance and Return Investments by Domestic Residents through Offshore Special Purpose Vehicles, or SAFE Circular 75.
For car buyers, the Group facilitates financing transactions that make their car purchases more affordable, and the Group also assists them in handling administrative procedures in relation to car purchasing and financing. The Group leverages its large nationwide dealer network in providing the services to financial institutions and car buyers.
For car buyers, the Group facilitates financing transactions that make their car purchases more affordable, and the Group also assists them in handling administrative procedures in relation to car purchasing and financing. The Group charges financial institutions service fees for its credit services.
We anticipate that more established companies, including technology companies that possess large, existing user bases, substantial financial resources, sophisticated technological capabilities and established distribution channels may also enter the market in the future.
The Group may also in the future face competition from new entrants that will increase the level of competition. We anticipate that more established companies, including technology companies that possess large, existing user bases, substantial financial resources, sophisticated technological capabilities and established distribution channels may also enter the market in the future.
Furthermore, a financing guarantee company shall not provide financing guarantee for its controlling shareholder and actual controller. When a financing guarantee company provides financing guarantee for other affiliated parties, the conditions shall not be more favorable than those for providing similar guarantee for non-affiliated parties.
When a financing guarantee company provides financing guarantee for other affiliated parties, the conditions shall not be more favorable than those for providing similar guarantee for non-affiliated parties.
The sales team also utilizes a sales management system to engage new dealers and monitor existing dealers. The system maintains a comprehensive list of dealers across China, and the Group continually updates this list based on information obtained from third parties such as OEMs and government sources.
The system maintains a comprehensive list of dealers across China, and the Group continually updates this list based on information obtained from third parties such as OEMs and government sources.
As such, its solutions and service offerings include pre-sale automobile trading solutions, during-sale automotive financing facilitation and post-sale after-market services facilitation. The Group primarily enables other platform participants to optimize their operations or secure better terms in transactions.
Solutions and Service Offerings The Group provides integrated solutions and services through its technology-enabled platform along the entire automotive transaction value chain. As such, its solutions and service offerings mainly include pre-sale automobile trading solutions and post-sale after-market services facilitation. The Group primarily enables other platform participants to optimize their operations or secure better terms in transactions.
Regulation Related to VATS License Among all of the applicable laws and regulations, the Telecommunications Regulations of the People’s Republic of China, or the Telecom Regulations, promulgated by the PRC State Council in September 25, 2000 and amended on July 29, 2014 and February 6, 2016 respectively, is the primary governing law, and sets out the general framework for the provision of telecommunications services by domestic PRC companies.
The Group has been in compliance with the regulations and policies that have been issued by the CAC to the date of this annual report in all material respects. 79 Table of Contents Regulation Related to VATS License Among all of the applicable laws and regulations, the Telecommunications Regulations of the People’s Republic of China, or the Telecom Regulations, promulgated by the PRC State Council in September 25, 2000 and amended on July 29, 2014 and February 6, 2016 respectively, is the primary governing law, and sets out the general framework for the provision of telecommunications services by domestic PRC companies.
Furthermore, according to the Announcement on Relevant Policies for Deepening Value-added Tax Reform jointly promulgated by the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs, which became effective on April 1, 2019, the taxable goods previously subject to VAT rates of 16% and 10% respectively become subject to lower VAT rates of 13% and 9% respectively starting from April 1, 2019.
Furthermore, according to the Announcement on Relevant Policies for Deepening Value-added Tax Reform jointly promulgated by the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs, which became effective on April 1, 2019, the taxable goods previously subject to VAT rates of 16% and 10% respectively become subject to lower VAT rates of 13% and 9% respectively starting from April 1, 2019. 89 Table of Contents Furthermore, on September 1, 2023, the Standing Committee of the National People’s Congress of China released the second draft version of the Value Added Tax Law of the People’s Republic of China, or the Draft VAT Law.
Shanghai Chejia has the right to recover the collateral in the event of default. 106 Table of Contents (6) Upon the expiration of the lease term, Shanghai Chejia transfers the title back to the car buyer, and its security interest in the collateral is also released. Credit Assessment Model Credit assessment forms the foundation of the Group’s risk management efforts.
Upon the expiration of the lease term, the lessor transfers the title back to the car buyer, and its security interest in the collateral is also released. Credit Assessment Model Credit assessment forms the foundation of the Group’s risk management efforts.
According to the Interpretations of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues concerning the Application of the Law in Handling Criminal Cases Involving Crimes of Illegally Using the Information Network or Providing Aid for Criminal Activities regarding Information Network issued on October 21, 2019 and taking effect on November 1, 2019, a violator refusing to perform the obligation of safety management for the information network, causing the disclosure of user information, and falling under one of the following circumstances shall be deemed “causing serious consequences” as prescribed under the PRC Criminal Law: (i) causing the disclosure of not less than 500 pieces of location information, communication content, credit information, and property information; (ii) causing the disclosure of not less than 5,000 pieces of accommodation information, communication records, health and physiological information, transaction information and other user information that may affect personal or property safety; (iii) causing the disclosure of not less than 50,000 pieces of user information other than the information set forth in items (i) and (ii); (iv) causing the disclosure of user information which quantity does not meet the standards set forth in items (i), (ii) and (iii), but meets the relevant quantity standards after conversion at the corresponding proportion in aggregate; (v) causing deaths, serious injuries, mental disorders or kidnapping of others, or other serious consequences; (vi) causing material economic losses; (vii) seriously disturbing the social order; or (viii) causing other serious consequences. 116 Table of Contents Pursuant to the Ninth Amendment to the Criminal Law issued by the SCNPC in August 2015, which became effective in November 2015, any person or entity that fails to fulfill the obligations related to Internet information security administration as required by applicable laws and refuses to rectify upon orders is subject to criminal penalty for the result of (i) any dissemination of illegal information in large scale; (ii) any severe effect due to the leakage of the client’s information; (iii) any serious loss of criminal evidence; or (iv) other severe situation, and any individual or entity that (i) sells or provides personal information to others in a way violating the applicable law, or (ii) steals or illegally obtain any personal information is subject to criminal penalty in severe situation.
According to the Interpretations of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues concerning the Application of the Law in Handling Criminal Cases Involving Crimes of Illegally Using the Information Network or Providing Aid for Criminal Activities regarding Information Network issued on October 21, 2019 and taking effect on November 1, 2019, a violator refusing to perform the obligation of safety management for the information network, causing the disclosure of user information, and falling under one of the following circumstances shall be deemed “causing serious consequences” as prescribed under the PRC Criminal Law: (i) causing the disclosure of not less than 500 pieces of location information, communication content, credit information, and property information; (ii) causing the disclosure of not less than 5,000 pieces of accommodation information, communication records, health and physiological information, transaction information and other user information that may affect personal or property safety; (iii) causing the disclosure of not less than 50,000 pieces of user information other than the information set forth in items (i) and (ii); (iv) causing the disclosure of user information which quantity does not meet the standards set forth in items (i), (ii) and (iii), but meets the relevant quantity standards after conversion at the corresponding proportion in aggregate; (v) causing deaths, serious injuries, mental disorders or kidnapping of others, or other serious consequences; (vi) causing material economic losses; (vii) seriously disturbing the social order; or (viii) causing other serious consequences.
Circular 19 or Circular 16 may delay or limit us from using the proceeds of offshore offerings to make additional capital contributions or loans to our PRC subsidiary and any violations of these circulars could result in severe monetary or other penalties. 130 Table of Contents In January 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, or Circular 3, which stipulates several capital control measures with respect to the outbound remittance of profit from domestic entities to offshore entities, including (i) under the principle of genuine transaction, banks shall check board resolutions regarding profit distribution, the original version of tax filing records and audited financial statements; and (ii) domestic entities shall hold income to account for previous years’ losses before remitting the profits.
In January 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, or Circular 3, which stipulates several capital control measures with respect to the outbound remittance of profit from domestic entities to offshore entities, including (i) under the principle of genuine transaction, banks shall check board resolutions regarding profit distribution, the original version of tax filing records and audited financial statements; and (ii) domestic entities shall hold income to account for previous years’ losses before remitting the profits.
Risk Factors—Risks Relating to Doing Business in China—Changes and developments in the PRC legal system and the interpretation and enforcement of PRC laws, rules and regulations may subject us to uncertainties.” Regulation This section sets forth a summary of the most significant rules and regulations that affect our business activities in China or the rights of our shareholders to receive dividends and other distributions from us. 112 Table of Contents Regulation Related to Financing Lease The Administrative Measures of Supervision on Financing Lease Enterprises, or the Administrative Measures, was formulated by the MOFCOM and became effective on October 1, 2013.
Risk Factors—Risks Relating to Doing Business in China—Changes and developments in the PRC legal system and the interpretation and enforcement of PRC laws, rules and regulations may subject us to uncertainties.” Regulation This section sets forth a summary of the most significant rules and regulations that affect our business activities in China or the rights of our shareholders to receive dividends and other distributions from us.
The outstanding guarantee liabilities of a financing guarantee company vis-à-vis the same guaranteed party shall not exceed 10% of the net assets of the financing guarantee company, while the outstanding guarantee liabilities of a financing guarantee company vis-à-vis the same guaranteed party and its affiliated parties shall not exceed 15% of its net assets.
The outstanding guarantee liabilities of a financing guarantee company vis-à-vis the same guaranteed party shall not exceed 10% of the net assets of the financing guarantee company, while the outstanding guarantee liabilities of a financing guarantee company vis-à-vis the same guaranteed party and its affiliated parties shall not exceed 15% of its net assets. 81 Table of Contents Furthermore, a financing guarantee company shall not provide financing guarantee for its controlling shareholder and actual controller.
Specifically, it expressly excludes an agent or a “designated payee” from being considered as a “beneficial owner” and a “beneficial owner” analysis is required to be conducted on a case-by-case basis following the “substance-over-the-form” principle. 133 Table of Contents Value-Added Tax and Business Tax Pursuant to the Provisional Regulations on Value-Added Tax of the PRC and its implementation regulations, unless otherwise specified by relevant laws and regulations, any entity or individual engaged in the sales of goods, provision of processing, repairs and replacement services and importation of goods into China is generally required to pay a value-added tax, or VAT, for revenues generated from sales of products, while qualified input VAT paid on taxable purchase can be offset against such output VAT.
Value-Added Tax and Business Tax Pursuant to the Provisional Regulations on Value-Added Tax of the PRC and its implementation regulations, unless otherwise specified by relevant laws and regulations, any entity or individual engaged in the sales of goods, provision of processing, repairs and replacement services and importation of goods into China is generally required to pay a value-added tax, or VAT, for revenues generated from sales of products, while qualified input VAT paid on taxable purchase can be offset against such output VAT.
The relationships between each of Can Gu Long, the consolidated VIEs and their shareholders as illustrated in this diagram are governed by contractual arrangements and do not constitute equity ownership. (1) Investors in our ADSs hold equity interest in Cango Inc., which does not conduct operations.
The relationships between each of Can Gu Long, the consolidated VIEs and their shareholders as illustrated in this diagram are governed by contractual arrangements and do not constitute equity ownership.
Where an employment relationship was established prior to the implementation of the Labor Contract Law but no written employment contract was concluded, a contract must be concluded within one month after the Labor Contract Law’s implementation. 128 Table of Contents According to the Social Insurance Law promulgated by SCNPC, most recently amended on December 29, 2018, the Regulation of Insurance for Work-Related Injury, the Provisional Measures on Insurance for Maternity of Employees, Regulation of Unemployment Insurance, the Decision of the State Council on Setting Up Basic Medical Insurance System for Staff Members and Workers in Cities and Towns and the Interim Regulation on the Collection and Payment of Social Insurance Premiums, an employer is required to contribute the social insurance for its employees in the PRC, including the pension insurance, medical insurance, unemployment insurance, maternity insurance and work-related injury insurance.
According to the Social Insurance Law promulgated by SCNPC, most recently amended on December 29, 2018, the Regulation of Insurance for Work-Related Injury, the Provisional Measures on Insurance for Maternity of Employees, Regulation of Unemployment Insurance, the Decision of the State Council on Setting Up Basic Medical Insurance System for Staff Members and Workers in Cities and Towns and the Interim Regulation on the Collection and Payment of Social Insurance Premiums, an employer is required to contribute the social insurance for its employees in the PRC, including the pension insurance, medical insurance, unemployment insurance, maternity insurance and work-related injury insurance.
The Group initially focused on providing automotive financing solutions to car buyers by connecting them to dealers and financial institutions through Cango platform. As of December 31, 2022, the Group’s dealer network was comprised of 42,549 registered dealers.
The Group initially focused on providing automotive financing solutions to car buyers by connecting them to dealers and financial institutions through Cango platform. At its peak, the Group’s dealer network was comprised of over 50,000 registered dealers for automotive financing solutions.
According to the Administrative Measures, the MOFCOM and the provincial-level commerce authorities are in charge of the supervision and administration of financing lease enterprises. A financing lease company shall report, according to the requirements of the MOFCOM, the relevant data in a timely and truthful manner through the National Financing Lease Company Management Information System.
A financing lease company shall report, according to the requirements of the MOFCOM, the relevant data in a timely and truthful manner through the National Financing Lease Company Management Information System.
The Draft VAT Law was released only for soliciting public comments at this stage and thus substantial uncertainties exist with respect to the enactment timetable, final content, interpretation and implementation.
If passed, the Draft VAT Law will consolidate China’s current VAT regulations into one overarching piece of legislation. The Draft VAT Law was released only for soliciting public comments at this stage and thus substantial uncertainties exist with respect to the enactment timetable, final content, interpretation and implementation.
Leveraging the Group’s wide customer base, the app allows dealers to choose from a large collection of used cars in various types. In addition to car sourcing services, the Group also offers transaction facilitation services on Cango U-Car app.
Leveraging the Group’s wide customer base, the Cango U-car app allows dealers to choose from a large collection of used cars in various types and buying dealers can make bids in online auctions. In addition to car sourcing services, the Group also offers transaction facilitation services, which connect dealers looking for cars with dealers wishing to supply cars.
If dealers fail to make timely payments, their deposits are forfeited and the Group will seek to sell the relevant cars to other buyers. 95 Table of Contents In addition to car sourcing services, the Group also offers transaction facilitation services, which connect dealers looking for cars with dealers wishing to supply cars.
If dealers fail to make timely payments, their deposits are forfeited and the Group will seek to sell the relevant cars to other buyers. In addition to car sourcing services, the Group also offers transaction facilitation services, the process of which is substantially the same as transaction facilitation services of used cars.
Financing Leases Shanghai Chejia funds financing leases with its own capital as well as debt financing provided by Bank of Shanghai and several other institutions. The financing leases are recorded on Shanghai Chejia’s balance sheet as financing lease receivables.
Nevertheless, WeBank continues to fund existing loans facilitated through Cango platform and performs relevant obligations. Financing Leases Shanghai Chejia funds financing leases with its own capital as well as debt financing provided by Bank of Shanghai and several other institutions. The financing leases are recorded on Shanghai Chejia’s balance sheet as financing lease receivables.
The Group launched its car trading transaction platform as a comprehensive tool kit to address dealers’ pain points. Such car trading transaction platform allows dealers to conveniently (i) source cars from Cango platform, (ii) manage inventory on their enterprise resource planning systems and (iii) engage potential car buyers.
For example, the Group launched its car trading transaction platform as a comprehensive tool kit to address dealers’ pain points. Such car trading transaction platform allows dealers to conveniently source cars from Cango platform, serve existing car buyers and engage potential car buyers.
Contractual Arrangements with Shanghai Yungu and Its Shareholders Equity Interest Pledge Agreements Pursuant to the equity interest pledge agreements, each shareholder of Shanghai Yungu, has pledged all of such shareholder’s equity interest in Shanghai Yungu as a security interest, as applicable, to respectively guarantee Shanghai Yungu and its shareholders’ performance of their obligations under the relevant contractual arrangement, which include the exclusive business cooperation agreement, exclusive option agreement and power of attorney.
This agreement will remain effective until all equity interests of Shanghai Cango held by its shareholders have been transferred or assigned to Can Gu Long or its designated person(s). 94 Table of Contents Contractual Arrangements with Shanghai Yungu and Its Shareholders Equity Interest Pledge Agreements Pursuant to the equity interest pledge agreements, each shareholder of Shanghai Yungu, has pledged all of such shareholder’s equity interest in Shanghai Yungu as a security interest, as applicable, to respectively guarantee Shanghai Yungu and its shareholders’ performance of their obligations under the relevant contractual arrangement, which include the exclusive business cooperation agreement, exclusive option agreement and power of attorney.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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China Generally, our subsidiary, consolidated VIEs and subsidiaries of the consolidated VIEs in China are subject to enterprise income tax on their taxable income in China at a rate of 25%. The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards.
China Generally, our PRC subsidiary, consolidated VIEs and subsidiaries of the consolidated VIEs in China are subject to enterprise income tax on their taxable income in China at a rate of 25%. The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards.
At inception, the Group recognizes the non-contingent aspect of the risk assurance liability at fair value, which is primarily based on assumptions regarding probability of default, loss given default and margin rate, while considering the premium required by a third-party market participant to issue the same risk assurance in a standalone transaction.
At inception, the Group recognizes non-contingent risk assurance liability at fair value, which is primarily based on assumptions regarding probability of default, loss given default and margin rate, while considering the premium required by a third-party market participant to issue the same risk assurance in a standalone transaction.
The risk assurance liability requires the Group to either make delinquent installment repayments or purchase the loans after a specified period on an individual loan basis. The risk assurance liability is exempted from being accounted for as a derivative in accordance with ASC 815-10-15-58. accounted for in accordance with ASC 460.
The risk assurance liability requires the Group to either make delinquent installment repayments or purchase the loans after a specified period on an individual loan basis. The risk assurance liability is exempted from being accounted for as a derivative in accordance with ASC 815-10-15-58.
The Group’s restricted cash consists of cash deposited with the respective financial institution customers as (i) collaboration and guarantee deposits in relation to facilitation transaction with financial institutions and (ii) collateral for notes payable for automobile trading business.
The Group’s restricted cash – others consists of cash deposited with the respective financial institution customers as (i) collaboration and guarantee deposits in relation to facilitation transaction with financial institutions and (ii) collateral for notes payable for automobile trading business.
If our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. 153 Table of Contents Results of Operations The following tables set forth a summary of the Group’s consolidated results of operations for the periods presented, in absolute amount and as a percentage of its total revenues.
If our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. 105 Table of Contents Results of Operations The following tables set forth a summary of the Group’s consolidated results of operations for the periods presented, in absolute amount and as a percentage of its total revenues.
Research and Development Research and development expenses consist primarily of compensation related to research and development personnel, depreciation and amortization of equipment and costs of data center services. Net Loss/Gain on Risk Assurance Liabilities Risk assurance liabilities consist of a non-contingent aspect and a contingent aspect.
Research and Development Research and development expenses consist primarily of compensation related to research and development personnel, depreciation and amortization of equipment and costs of data center services. Net Loss on Risk Assurance Liabilities / Net Loss on Contingent Risk Assurance Liabilities Risk assurance liabilities consist of a non-contingent aspect and a contingent aspect.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2022 that are reasonably likely to have a material effect on the Group’s total net revenues, income, profitability, liquidity or capital reserves, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2023 that are reasonably likely to have a material effect on the Group’s total net revenues, income, profitability, liquidity or capital reserves, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
Material Cash Requirements The Group’s material cash requirements as of December 31, 2022 and any subsequent interim period primarily include its short-term loans, long-term debt obligations, capital commitment obligations, operating lease commitment obligations, as well as capital expenditures and repurchase of shares. See “—Capital Expenditures” and “Item 16E.
Material Cash Requirements The Group’s material cash requirements as of December 31, 2023 and any subsequent interim period primarily include its short-term loans, long-term debt obligations, capital commitment obligations, operating lease commitment obligations, as well as capital expenditures and repurchase of shares. See “—Capital Expenditures” and “Item 16E.
Risk Factors—Risks Relating to Our Industry and Business —We may need additional capital to pursue business objectives and respond to business opportunities, challenges or unforeseen circumstances, and financing may not be available on terms acceptable to us, or at all.” 157 Table of Contents The Group’s ability to manage its working capital, including receivables and other assets and accrued expenses and other liabilities, may materially affect the Group’s financial condition and results of operations.
Risk Factors—Risks Relating to Our Industry and Business —We may need additional capital to pursue business objectives and respond to business opportunities, challenges or unforeseen circumstances, and financing may not be available on terms acceptable to us, or at all.” The Group’s ability to manage its working capital, including receivables and other assets and accrued expenses and other liabilities, may materially affect the Group’s financial condition and results of operations.
As of December 31, 2021 and 2022, the Group completed its annual impairment test for goodwill under a quantitative impairment test of goodwill in which the Group performs an assessment that consists of a comparison of the carrying value of a reporting unit with its fair value.
As of December 31, 2022, the Group completed its annual impairment test for goodwill under a quantitative impairment test of goodwill in which the Group performs an assessment that consists of a comparison of the carrying value of a reporting unit with its fair value.
The Group does not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to the Group or engages in leasing, hedging or product development services with the Group. Holding Company Structure Cango Inc. is a holding company with no material operations of its own.
The Group does not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to the Group or engages in leasing, hedging or product development services with the Group. 111 Table of Contents Holding Company Structure Cango Inc. is a holding company with no material operations of its own.
As of and for the years ended December 31, 2020, 2021 and 2022, the amounts of unrecognized tax benefits as well as interest and penalties associated with uncertainty in income taxes were insignificant.
As of and for the years ended December 31, 2021, 2022 and 2023, the amounts of unrecognized tax benefits as well as interest and penalties associated with uncertainty in income taxes were insignificant.
The Group’s actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information — D. Risk Factors” or in other parts of this annual report. 142 Table of Contents A.
The Group’s actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information — D. Risk Factors” or in other parts of this annual report. A.
Comparison of Year Ended December 31, 2021 and Year Ended December 31, 2020 For a discussion of the Group’s results of operations for the year ended December 31, 2021 compared with the year ended December 31, 2020, see “Item 5. Operating and Financial Review and Prospects—A.
Comparison of Year Ended December 31, 2022 and Year Ended December 31, 2021 For a discussion of the Group’s results of operations for the year ended December 31, 2022 compared with the year ended December 31, 2021, see “Item 5. Operating and Financial Review and Prospects—A.
Adjustments for changes in working capital primarily consisted of (i) a decrease in risk assurance liabilities of RMB596.6 million (US$86.5 million), primarily due to the fulfillment of the Group’s risk assurance obligations, (ii) an increase in financing receivables of RMB277.9 million (US$40.3 million), primarily due to an increase in amount of delinquent loan and debt securities the Group acquired in 2022 under contractual obligations, and (iii) an increase in other current and non-current assets of RMB370.3 million (US$53.7 million), primarily due to an increase in balances of advance payments and deposits to the suppliers of automobile trading businesses.
Adjustments for changes in working capital primarily consisted of (i) a decrease in risk assurance liabilities of RMB596.6 million, primarily due to the fulfillment of the Group’s risk assurance obligations, (ii) an increase in financing receivables of RMB277.9 million, primarily due to an increase in amount of delinquent loan and debt securities the Group acquired in 2022 under contractual obligations, and (iii) an increase in other current and non-current assets of RMB370.3 million, primarily due to an increase in balances of advance payments and deposits to the suppliers of automobile trading businesses.
We believe that these transaction volume metrics are useful to investors because they are frequently used by analysts, investors and other interested parties to evaluate companies in the automotive transaction industry.
We believe that these credit performance metrics are useful to investors because they are frequently used by analysts, investors and other interested parties to evaluate companies in the automotive transaction industry.
The Group determines revenue recognition through the following steps: • Identify the contract(s) with a customer; • Identify the performance obligations in the contract; • Determine the transaction price; • Allocate the transaction price to the performance obligations in the contract; and • Recognize revenue when (or as) the entity satisfies a performance obligation.
The Group determines revenue recognition through the following steps: ● Identify the contract(s) with a customer; ● Identify the performance obligations in the contract; ● Determine the transaction price; ● Allocate the transaction price to the performance obligations in the contract; and 112 Table of Contents ● Recognize revenue when (or as) the entity satisfies a performance obligation.
The contingent aspect is recognized as loss on risk assurance liabilities when car buyer’s default is probable, and the amount of loss is estimable. The Group considers the underlying risk profile, including delinquency status, overdue period and historical loss experience when assessing the probability of contingent loss. Car buyers are grouped based on common risk characteristics, such as product type.
The contingent aspect was recognized as loss on risk assurance liabilities when car buyer’s default was probable, and the amount of loss was estimable. The Group considered the underlying risk profile, including delinquency status, overdue period and historical loss experience when assessing the probability of contingent loss. Car buyers were grouped based on common risk characteristics, such as product type.
Liquidity and Capital Resources The Group’s primary sources of liquidity have been issuance of equity securities, borrowings from trusts and banks and cash provided by operating activities, which have historically been sufficient to meet its working capital and substantially all of its capital expenditure requirements. In 2020, net cash used in operating activities was RMB621.6 million.
Liquidity and Capital Resources The Group’s primary sources of liquidity have been issuance of equity securities, borrowings from trusts and banks and cash provided by operating activities, which have historically been sufficient to meet its working capital and substantially all of its capital expenditure requirements. In 2021, net cash used in operating activities was RMB404.4 million.
Investing Activities Net cash provided by investing activities was RMB 1,959.5 million (US$284.1million) in 2022, primarily due to (i) maturities of held-to-maturity investment of RMB4,353.8 million (US$631.2 million), (ii) repayments of finance lease receivables of RMB1,408.1 million (US$204.2 million), and (iii) proceeds from sale or redemption of other short-term investments, net of RMB212.6 million (US$30.8 million), which was partially offset by (i) purchase of held-to-maturity investment of RMB3,934.7 million (US$570.5 million), and (ii) origination of finance lease receivables of RMB75.8 million (US$11.0 million).
Net cash provided by investing activities was RMB1,959.5 million in 2022, primarily due to (i) maturities of held-to-maturity investment of RMB4,353.8 million, (ii) repayments of finance lease receivables of RMB1,408.1 million, and (iii) proceeds from sale or redemption of other short-term investments, net of RMB212.6 million, which was partially offset by (i) purchase of held-to-maturity investment of RMB3,934.7 million, and (ii) origination of finance lease receivables of RMB75.8 million.
Subsequent to the initial recognition, the non-contingent aspect of the risk assurance liability is reduced over the term of the arrangement as the Group is released from its stand ready obligation on a loan-by-loan basis based on the borrower’s repayment of the loan principal.
Subsequently, non-contingent risk assurance liability is reduced over the term of the arrangement as the Group is released from its stand ready obligation on a loan-by-loan basis based on the borrower’s repayment of the loan principal.
Financing Activities Net cash used in financing activities was RMB2,990.2 million (US$433.5 million) in 2022, primarily due to distribution to shareholders of RMB1,871.1 million (US$271.3 million), repayment of borrowings of RMB1,705.2 million (US$247.2 million), and payment to repurchase treasury shares of RMB105.8 million (US$15.3 million), which was partially offset by proceeds from borrowings of RMB684.8 million (US$99.3 million).
Net cash used in financing activities was RMB2,990.2 million in 2022, primarily due to distribution to shareholders of RMB1,871.1 million, repayment of borrowings of RMB1,705.2 million, and payment to repurchase treasury shares of RMB105.8 million, which was partially offset by proceeds from borrowings of RMB684.8 million.
Nonetheless, the Group may be affected by any future COVID-19 outbreaks in China. 145 Table of Contents Governmental policies affecting the automotive finance industry in China are developing and evolving, creating both challenges and opportunities that could affect the Group’s financial performance.
Nonetheless, the Group may be affected by any future COVID-19 resurgence in China. Governmental policies affecting the automotive industry in China are developing and evolving, creating both challenges and opportunities that could affect the Group’s financial performance.
The Group measures contingent loss based on the future payout estimated using the historical default rates of a portfolio of similar loans less the fair value of the recoverable collateral. 149 Table of Contents Non-GAAP Measures We use adjusted net income/(loss), adjusted net income/(loss) per ADS-basic and adjusted net income/(loss) per ADS-diluted, which are non-GAAP financial measures, in evaluating the Group’s operating results and for financial and operational decision-making purposes.
The Group measures contingent loss based on the expected credit loss rates of a portfolio of similar loans less the fair value of the recoverable collateral. 101 Table of Contents Non-GAAP Measures We use adjusted net income/(loss), adjusted net income/(loss) per ADS-basic and adjusted net income/(loss) per ADS-diluted, which are non-GAAP financial measures, in evaluating the Group’s operating results and for financial and operational decision-making purposes.
Comparison of Year Ended December 31, 2022 and Year Ended December 31, 2021 Revenues.
Comparison of Year Ended December 31, 2023 and Year Ended December 31, 2022 Revenues .
Allowance for Finance Lease Receivables and Allowance for Financing Receivables The allowance for finance lease receivables and allowance for financing receivables are calculated by multiplying the PD and LGD model based on pools of finance lease receivables or financing receivables with similar risk characteristics, including product types, i.e. new cars and used cars to arrive at an estimate of incurred losses in the portfolio.
Allowance for Financing Receivables and Allowance for Finance Lease Receivables Before the adoption of ASC 326 on January 1, 2023 The allowance for financing receivables and allowance for finance lease receivables were calculated by multiplying the PD and LGD model based on pools of finance lease receivables or financing receivables with similar risk characteristics, including product types, i.e. new cars and used cars to arrive at an estimate of incurred losses in the portfolio.
The Group recognized foreign exchange gain of RMB1.4 million in 2021 and of RMB5.9 million (US$0.9 million) in 2022, primarily due to the fluctuation of the foreign exchange rate of U.S. dollars against RMB in both years. Other income, net .
The Group recognized foreign exchange gain of RMB5.9 million and RMB1.1 million (US$0.2 million) in 2022 and 2023, respectively, primarily due to the fluctuation of the foreign exchange rate of U.S. dollars against RMB in both years. Other income .
As of December 31, 2022, the Group had short-term investments of RMB1,941.4 million (US$281.5 million), primarily consisting of time deposits and structured deposits investments with original maturities of three months or more but less than one year and marketable securities with readily determinable fair value.
As of December 31, 2023, the Group had short-term investments of RMB635.1 million (US$89.4 million), primarily consisting of time deposits and structured deposits investments with original maturities of three months or more but less than one year and marketable securities with readily determinable fair value.
We believe that the Group’s current cash, cash equivalents, restricted cash and short-term investments and anticipated cash flows from operating activities will be sufficient to meet its anticipated working capital requirements, capital expenditures and debt repayment in the ordinary course of business for at least the next 12 months.
The Group’s credit agreements do not contain any material debt covenants. 108 Table of Contents We believe that the Group’s current cash, cash equivalents, restricted cash and short-term investments and anticipated cash flows from operating activities will be sufficient to meet its anticipated working capital requirements, capital expenditures and debt repayment in the ordinary course of business for at least the next 12 months.
The non-contingent aspect of risk assurance liabilities is reduced over the term of the arrangement, which the Group recognizes as gain on risk assurance liabilities, as it is released from the risk assurance obligation on a loan-by-loan basis based on car buyers’ repayments.
Before January 1, 2023, the non-contingent aspect of risk assurance liabilities was reduced over the term of the arrangement, which the Group recognized as gain on risk assurance liabilities, as it was released from the risk assurance obligation on a loan-by-loan basis based on car buyers’ repayments.
The non-contingent aspect of risk assurance liabilities is reduced over the term of the arrangement, which the Group recognizes as gain on risk assurance liabilities, as it is released from the risk assurance obligation on a loan-by-loan basis based on car buyers’ repayments.
Before January 1, 2023, the non-contingent aspect of risk assurance liabilities was reduced over the term of the arrangement, which the Group recognized as gain on risk assurance liabilities, as it was released from the risk assurance obligation on a loan-by-loan basis based on car buyers’ repayments.
Sales and Marketing Sales and marketing expenses consist primarily of compensation related to sales staff but exclude incentives paid to them. General and Administrative General and administrative expenses consist primarily of compensation related to accounting and finance, legal, human resources and other administrative personnel, professional service fee as well as rent for office spaces related to various administrative activities.
General and Administrative General and administrative expenses consist primarily of compensation related to accounting and finance, legal, human resources and other administrative personnel, professional service fee as well as rent for office spaces related to various administrative activities.
The Group has extensive, technology-enabled service offerings that cover each key component of the automotive transaction value chain, including pre-sale automobile trading solutions, during-sale automotive financing facilitation services, and post-sale after-market services facilitation.
The Group has extensive, technology-enabled service offerings that cover key components of the automotive transaction value chain, including pre-sale automobile trading solutions and post-sale after-market services facilitation. To a lesser extent, the Group also provides during-sale automotive financing facilitation.
Borrowers that pass the Group’s credit assessment are recommended to the financial institutions. Once the borrower is independently approved by the financial institutions, the financial institutions will directly fund the borrower’s automobile purchase and the Group will earn a loan facilitation fee from the financial institution and borrowers.
Once the borrower is independently approved by the financial institutions, the financial institutions will directly fund the borrower’s automobile purchase and the Group will earn a loan facilitation fee from the financial institution and borrowers.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers” for further details. We intend to fund the Group’s existing and future material cash requirements with its existing cash and cash equivalents, restricted cash, short-term investments and other financing alternatives.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers” for further details. We intend to fund the Group’s existing and future material cash requirements with its existing cash and cash equivalents, restricted cash, short-term investments and other financing alternatives. The Group will continue to make cash commitments, including capital expenditures, to support its business initiatives.
Credit Performance Metrics As of December 31, 2022, the total outstanding balance of financing transactions for which the Group is not obligated to bear credit risk was RMB3.7 billion (US$0.5 billion), representing 14.6% of the total outstanding balance of financing transactions facilitated.
Credit Performance Metrics As of December 31, 2023, the total outstanding balance of financing transactions for which the Group is not obligated to bear credit risk was RMB1.9 billion (US$0.3 billion), representing 18.6% of the total outstanding balance of financing transactions facilitated.
The competitive position may be affected by, among other things, service quality and ability to price solutions and services competitively. The Group will continue to invest in technologies to improve service quality and user experience.
Ability to Compete Effectively The Group’s business and results of operations depend on its ability to compete effectively. The competitive position may be affected by, among other things, service quality and ability to price solutions and services competitively. The Group will continue to invest in technologies to improve service quality and user experience.
As of December 31, 2022, the maximum potential undiscounted future payment the Group would be required to make was RMB16,506.7 million (US$2,393.3 million). Other than the above, the Group has not entered into any other commitments to guarantee the payment obligations of any third parties.
As of December 31, 2023, the maximum potential undiscounted future payment the Group would be required to make was RMB4,855.9 million (US$683.9 million). Other than the above, the Group has not entered into any other commitments to guarantee the payment obligations of any third parties.
The Group’s general and administrative expenses as a percentage of the Group’s total revenues increased from 7.0% in 2021 to 15.1% in 2022. • Research and development . The Group’s research and development expenses decreased from RMB70.3 million in 2021 to RMB46.0 million (US$6.7 million) in 2022, primarily due to budget adjustments.
The Group’s general and administrative expenses as a percentage of the Group’s total revenues decreased from 15.1% in 2022 to 9.2% in 2023. ● Research and development . The Group’s research and development expenses decreased from RMB46.0 million in 2022 to RMB30.1 million (US$4.2 million) in 2023, primarily due to budget adjustments.
As of December 31, 2022, the Group collaborated with 14 insurance brokers and companies to facilitate the sale of their products, such as auto insurance, accident insurance and other automotive related insurance services, to car buyers.
After-market Services Facilitation The Group facilitates the sale of insurance policies and other after-market services for car buyers. As of December 31, 2023, the Group collaborated with eight insurance brokers and companies to facilitate the sale of their products, such as auto insurance, accident insurance and other automotive related insurance services, to car buyers.
The cost of revenue as a percentage of the Group’s total revenues increased from 75.4% to 92.4% during the same period, primarily due to a higher contribution from car trading transactions to total revenues. Car trading transactions normally present a higher cost-revenue ratio, thus pushing up the overall ratio. • Sales and marketing .
The cost of revenue as a percentage of the Group’s total revenues decreased from 92.4% to 88.8% during the same period, primarily due to a lower share of revenue contribution from car trading transactions, which normally present a higher cost-revenue ratio. ● Sales and marketing .
Under the arrangements with certain financial institutions, the Group is obligated to purchase the relevant financing receivables upon certain specified events of default by car buyers. As of December 31, 2022, risk assurance liabilities related to such arrangement were RMB402.3 million (US$58.3 million).
Under the arrangements with certain financial institutions, the Group is obligated to purchase the relevant financing receivables upon certain specified events of default by car buyers. As of December 31, 2023, deferred guarantee income and contingent risk assurance liabilities related to such arrangement were RMB211.4 million (US$29.8 million).
While new laws and regulations or changes to existing laws and regulations could make current business operations more difficult or expensive, or result in changes to solutions and services offerings and hence the ability to price solutions, these events could also provide new product and market opportunities.
While new laws and regulations or changes to existing laws and regulations could make current business operations more difficult or expensive, or result in changes to solutions and services offerings and hence the ability to price solutions, these events could also provide new product and market opportunities. 98 Table of Contents Ability to Retain Existing Dealers and Engage New Dealers The Group’s ability to retain existing dealers it collaborates with and engage new dealers is important for the Group’s business.
Net cash provided by investing activities was RMB2,661.2 million in 2021, primarily due to (i) proceeds from sale or redemption of other short-term investments, net of RMB2,841.9 million, (ii) repayments of finance lease receivables of RMB2,112.0 million, and (iii) maturities of held-to-maturity investment of RMB1,158.1 million, which was partially offset by (i) purchase of held-to-maturity investment of RMB 2,342.2 million, and (ii) origination of finance lease receivables of RMB1,091.4 million. 159 Table of Contents Net cash used in investing activities was RMB493.6 million in 2020, which was primarily attributable to (i) origination of finance lease receivables of RMB2,256.4 million, and (ii) purchase of short-term investments of RMB1,116.8 million in wealth management products which are primarily invested in various types of debt securities, which was partially offset by (i) repayments of finance lease receivables of RMB1,839.8 million, and (ii) proceeds from redemption of short-term investments of RMB1,020.7 million.
Net cash provided by investing activities was RMB2,661.2 million in 2021, primarily due to (i) proceeds from sale or redemption of other short-term investments, net of RMB2,841.9 million, (ii) repayments of finance lease receivables of RMB2,112.0 million, and (iii) maturities of held-to-maturity investment of RMB1,158.1 million, which was partially offset by (i) purchase of held-to-maturity investment of RMB 2,342.2 million, and (ii) origination of finance lease receivables of RMB1,091.4 million.
For 2) after-market car recovery and disposal services income, it mainly refers to delinquent asset management income for car recovery and disposal services, which is recognized at the point of time when the Group delivers the relevant service. Risk Assurance Liabilities The Group provides risk assurance to various financial institution customers.
For 2) after-market car recovery and disposal services income, it mainly refers to delinquent asset management income for car recovery and disposal services, which is recognized at the point of time when the Group delivers the relevant service. Income Taxes The Group recognizes income taxes under the liability method.
The Group’s automobile trading solutions enable transactions among dealers, as well as those between dealers and OEMs. The Group takes limited inventory risk, as the Group first aggregates demand from dealers, and then makes bulk purchase of cars from OEMs and arranges delivery of cars to the dealers.
The Group takes limited inventory risk, as the Group first aggregates demand from dealers, and then makes bulk purchase of cars from OEMs and arranges delivery of cars to the dealers.
The fair values of the reporting unit are determined using income valuation approaches through the application of discounted cash flow method. Estimating fair values of the reporting unit involves significant assumptions, including future revenue growth rates, gross margin, terminal growth rates and discount rates. No impairment losses on goodwill was recognized during the years ended December 31, 2021 and 2022.
The fair values of the reporting unit are determined using income valuation approaches through the application of discounted cash flow method. Estimating fair values of the reporting unit involves significant assumptions, including future revenue growth rates, gross margin, terminal growth rates and discount rates.
GAAP, which is net income: For the year ended December 31, 2018 2019 2020 2021 2022 (Unaudited) RMB (Unaudited) RMB (Unaudited) RMB (Unaudited) RMB (Unaudited) RMB (Unaudited) US$ (in thousands, except for share and per share data) Net income (loss) 306,924 404,859 3,373,420 (8,544 ) (1,111,208 ) (161,110 ) Add: ESOP Expenses (1) 33,411 82,266 78,755 87,635 158,523 22,984 Adjusted net income (loss) 340,335 487,125 3,452,175 79,091 (952,685 ) (138,126 ) Less: Net income attributable to the non-controlling interest shareholders 4,232 13,945 3,902 — — — Adjusted net income (loss) attributable to Cango Inc.’s ordinary shareholders 336,103 473,180 3,448,273 79,091 (952,685 ) (138,126 ) Adjusted net income (loss) per ADS-basic (2) 2.41 3.13 22.95 0.55 (6.95 ) (1.01 ) Adjusted net income (loss) per ADS-diluted (2) 2.39 3.12 22.69 0.54 (6.95 ) (1.01 ) Weighted average ADS outstanding—basic 139,578,372 151,208,676 150,242,430 144,946,453 137,042,445 137,042,445 Weighted average ADS outstanding—diluted 140,436,903 151,641,829 151,950,322 146,867,997 137,042,445 137,042,445 (1) ESOP Expenses are allocated in operating cost and expenses as follows: 150 Table of Contents For the year ended December 31, 2018 2019 2020 2021 2022 (Unaudited) RMB (Unaudited) RMB (Unaudited) RMB (Unaudited) RMB (Unaudited) RMB (Unaudited) US$ (in thousands) Cost of revenue 1,370 3,373 3,075 4,928 4,160 603 Sales and marketing 7,117 17,523 16,003 15,311 14,691 2,130 General and administrative 23,187 57,093 55,591 63,035 135,889 19,702 Research and development 1,737 4,278 4,085 4,361 3,782 548 ESOP Expenses 33,411 82,266 78,755 87,635 158,523 22,984 (2) Each ADS represents two ordinary shares.
GAAP, which is net income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ 2019 2020 2021 2022 ​ 2023 ​ (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) ​ ​ RMB ​ RMB ​ RMB ​ RMB ​ RMB ​ US$ ​ ​ (in thousands, except for share and per share data) ​ Net income (loss) 404,859 ​ 3,373,420 ​ (8,544) ​ (1,111,208) (37,873) (5,334) ​ Add: ESOP Expenses (1) 82,266 ​ 78,755 ​ 87,635 ​ 158,523 38,491 5,421 ​ Adjusted net income (loss) 487,125 ​ 3,452,175 ​ 79,091 ​ (952,685) 618 87 ​ Less: Net income attributable to the non-controlling interest shareholders 13,945 ​ 3,902 ​ — ​ — — — ​ Adjusted net income (loss) attributable to Cango Inc.’s ordinary shareholders 473,180 ​ 3,448,273 ​ 79,091 ​ (952,685) 618 87 ​ Adjusted net income (loss) per ADS-basic (2) 3.13 ​ 22.95 ​ 0.55 ​ (6.95) 0.01 — ​ Adjusted net income (loss) per ADS-diluted (2) 3.12 ​ 22.69 ​ 0.54 ​ (6.95) — ​ — ​ Weighted average ADS outstanding—basic 151,208,676 ​ 150,242,430 ​ 144,946,453 ​ 137,042,445 121,524,393 121,524,393 ​ Weighted average ADS outstanding—diluted 151,641,829 ​ 151,950,322 ​ 146,867,997 ​ 137,042,445 126,940,244 126,940,244 ​ (1) ESOP Expenses are allocated in operating cost and expenses as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ 2019 2020 2021 2022 ​ 2023 ​ ​ (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) ​ ​ RMB ​ RMB ​ RMB ​ RMB ​ RMB ​ US$ ​ ​ (in thousands) Cost of revenue 3,373 3,075 4,928 4,160 2,187 308 Sales and marketing 17,523 ​ 16,003 ​ 15,311 ​ 14,691 7,716 1,087 General and administrative 57,093 ​ 55,591 ​ 63,035 ​ 135,889 26,833 3,779 Research and development 4,278 ​ 4,085 ​ 4,361 ​ 3,782 1,755 247 ESOP Expenses 82,266 ​ 78,755 ​ 87,635 ​ 158,523 38,491 5,421 (2) Each ADS represents two ordinary shares. 102 Table of Contents Components of Results of Operations Revenues The Group’s revenues mainly consist of automobile trading income, loan facilitation income and other related income, guarantee income, leasing income, after-market services income and others.
The Group’s research and development expenses were RMB62.6 million, RMB70.3 million and RMB46.0 million (US$6.7 million) in 2020, 2021 and 2022, respectively. D.
The Group’s research and development expenses were RMB70.3 million, RMB46.0 million and RMB30.1 million (US$4.2 million) in 2021, 2022 and 2023, respectively. D.
After-market insurance facilitation service income for personal accident insurance and automobile insurance is recognized at the point of time when facilitation services are completed. For anti-theft package services, the Group first allocates the fair value of indemnification service under ASC 460 and then allocates the remaining consideration to the after-market service of anti-theft telematic devises installment.
For anti-theft package services, the Group first allocates the fair value of indemnification service under ASC 460 and then allocates the remaining consideration to the after-market service of anti-theft telematic devises installment.
Under the guidance, if a reporting unit’s carrying amount exceeds its fair value, an entity will record an impairment charge based on that difference. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. Fair value is primarily determined by computing the future discounted cash flows expected to be generated by the reporting unit.
The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. Fair value is primarily determined by computing the future discounted cash flows expected to be generated by the reporting unit.
In automotive financing, the Group charges financial institutions service fee based on a percentage of the principal amount of the relevant financing transactions. For the after-market services, the Group earns fixed service fee for facilitating the sale of different kinds of insurance products, such as accident insurances, automotive insurances and other automotive related insurance services.
For the after-market services, the Group earns fixed service fee for facilitating the sale of different kinds of insurance products, such as accident insurances, automotive insurances and other automotive related insurance services.
Capital Expenditures The Group made capital expenditures of RMB5.4 million, RMB18.9 million and RMB4.6 million (US$0.7 million) in 2020, 2021 and 2022, respectively. In these periods, such capital expenditures were mainly used for purchases of property and equipment and intangible assets. The Group will continue to make capital expenditures to meet the expected growth of its business.
In these periods, such capital expenditures were mainly used for purchases of property and equipment and intangible assets. The Group will continue to make capital expenditures to meet the expected growth of its business.
Net cash used in financing activities was RMB1,946.4 million in 2021, primarily due to repayment of borrowings of RMB2,101.6 million and distribution to shareholders of RMB955.4 million, which was partially offset by proceeds from borrowings of RMB1,546.7 million.
Net cash used in financing activities was RMB1,946.4 million in 2021, primarily due to repayment of borrowings of RMB2,101.6 million and distribution to shareholders of RMB955.4 million, which was partially offset by proceeds from borrowings of RMB1,546.7 million. 110 Table of Contents Capital Expenditures The Group made capital expenditures of RMB18.9 million, RMB4.6 million and RMB1.8 million (US$0.3 million) in 2021, 2022 and 2023, respectively.
Such changes in working capital were partially offset by (i) a decrease in contract assets of RMB651.6 million (US$94.5 million), primarily due to the loan facilitation service fees collected in 2022 for such services granted to customers in the years before. 158 Table of Contents Net cash used in operating activities was RMB404.4 million in 2021, primarily due to net loss of RMB8.5 million, adjusted for (i) deferred income tax benefit of RMB582.9 million, (ii) provision for credit losses and other assets of RMB203.4 million, (iii) loss on risk assurance liabilities of RMB197.8 million, (iv) share-based compensation expense of RMB87.6 million, and (v) changes in working capital.
Net cash used in operating activities was RMB404.4 million in 2021, primarily due to net loss of RMB8.5 million, adjusted for (i) deferred income tax benefit of RMB582.9 million, (ii) provision for credit losses of RMB203.4 million, (iii) loss on risk assurance liabilities of RMB197.8 million, (iv) share-based compensation expense of RMB87.6 million, and (v) changes in working capital.
The allowance for financing receivables is calculated using the probability of default and loss given default model based on pools of financing receivables with similar risk characteristics, including product type to arrive at an estimate of incurred losses in the portfolio. The Group recognizes any increase in allowance for financing receivables as provision for credit losses for the relevant period.
After January 1, 2023, the allowance for financing receivables is calculated using the probability of default and loss given default model (incorporating forward-looking factors) based on pools of financing receivables with similar risk characteristics, including product type to arrive at an estimate of expected losses in the portfolio.
Automobile Trading Solutions The Group enables automobile trading transactions among platform participants by providing car sourcing and transaction facilitation services, along with logistics and warehousing support for dealers. Such services are accessible primarily through two apps: Cango Haoche app, which provides new-car transaction services, and Cango U-Car app, which provides used-car transaction services.
Automobile Trading Solutions The Group enables automobile trading transactions among platform participants by providing car sourcing and transaction facilitation services, along with logistics and warehousing support for dealers.
After-market services income The Group provides after-market services to car buyers which mainly include two types of separate contracts, 1) insurance facilitation service and 2) car recovery and disposal services. For 1) after-market insurance facilitation service, it mainly includes two types of contracts, one is facilitating personal accident insurance and automobile insurance, and the other is offering anti-theft package services.
For 1) after-market insurance facilitation service, it mainly includes two types of contracts, one is facilitating personal accident insurance and automobile insurance, and the other is offering anti-theft package services. After-market insurance facilitation service income for personal accident insurance and automobile insurance is recognized at the point of time when facilitation services are completed.
The revenue generated from sale of vehicles is recognized at a point in time when the control of the vehicles is transferred from the Group to the customers when the vehicles are delivered and their titles are passed on to the customers. 163 Table of Contents Loan facilitation services and PAS The Group entered into non-risk assured and risk assured facilitation arrangements with various financial institutions.
The revenue generated from sale of vehicles is recognized at a point in time when the control of the vehicles is transferred from the Group to the customers when the vehicles are delivered and their titles are passed on to the customers.
We refer to such arrangement to purchase financing receivables from financial institutions as risk assurance obligation. The Group incurs risk assurance liabilities in connection with these risk assurance obligation. The table below sets forth the movement of risk assurance liabilities in the periods presented.
After purchasing such financing receivables, security interest in the collateral is also transferred to the Group. We refer to such arrangement to purchase financing receivables from financial institutions as risk assurance obligation. 100 Table of Contents The Group incurs risk assurance liabilities in connection with these risk assurance obligation.
Organizational Structure.” For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see “—Holding Company Structure.” The following table sets forth a summary of the Group’s cash flows for the periods presented: Year Ended December 31, 2020 2021 2022 RMB RMB RMB US$ (in thousands) Summary Consolidated Cash Flow Data: Net cash used in operating activities (621,612 ) (404,390 ) (567,385 ) (82,263 ) Net cash (used in)/provided by investing activities (493,563 ) 2,661,223 1,959,529 284,105 Net cash used in financing activities (380,822 ) (1,946,434 ) (2,990,209 ) (433,540 ) Cash, cash equivalents and restricted cash at beginning of the year 3,846,983 2,314,892 2,610,281 378,455 Cash, cash equivalents and restricted cash at end of the year 2,314,892 2,610,281 1,282,483 185,943 Operating Activities Net cash used in operating activities was RMB567.4 million (US$82.3million) in 2022, primarily due to net loss of RMB1,111.2 million (US$161.1 million), adjusted for (i) deferred income tax expense of RMB371.3 million (US$53.8 million), (ii) provision for credit losses and other assets of RMB319.4 million (US$46.3 million), (iii) loss on risk assurance liabilities of RMB299.9 million (US$43.5 million), (iv) share-based compensation expense of RMB158.5 million (US$23.0 million), and (v) changes in working capital.
Organizational Structure.” For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see “—Holding Company Structure.” The following table sets forth a summary of the Group’s cash flows for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ ​ RMB ​ RMB ​ RMB ​ US$ ​ ​ (in thousands) Summary Consolidated Cash Flow Data: Net cash (used in)/provided by operating activities (404,390) (567,385) 1,026,026 144,513 Net cash provided by investing activities 2,661,223 1,959,529 2,124,698 299,257 Net cash (used in) financing activities (1,946,434) (2,990,209) (1,193,779) (168,140) Cash, cash equivalents and restricted cash at beginning of the year 2,314,892 2,610,281 1,282,483 180,634 Cash, cash equivalents and restricted cash at end of the year 2,610,281 1,282,483 3,288,326 463,151 ​ Operating Activities Net cash provided by operating activities was RMB1,026.0 million (US$144.5 million) in 2023, primarily due to net loss of RMB37.9 million (US$5.3 million), adjusted for (i) impairment loss for goodwill of RMB148.7 million (US$20.9 million), (ii) deferred income tax expense of RMB89.5 million (US$12.6 million), (iii) share-based compensation expense of RMB38.5 million (US$5.4 million), (iv) loss on contingent risk assurance liabilities of RMB25.6 million (US$3.6 million) and (v) changes in working capital, partially offset by the adjustments for (i) guarantee income of RMB212.1 million (US$29.9 million) and (ii) net recovery of credit losses and other assets of RMB136.5 million (US$19.2 million).
With the expansion of China’s automotive industry, dealers, financial institutions, OEMs and other industry participants have been utilizing technology-enabled automotive transaction service platforms to solve their pain points and capture market opportunities. The growth of the Group’s business will depend in part of the continuation of these trends.
China’s automotive industry, especially the automotive transaction industry, may be affected by, among other factors, the general economic conditions in China and the growth of disposable income. With the expansion of China’s automotive industry, dealers, financial institutions, OEMs and other industry participants have been utilizing technology-enabled automotive transaction service platforms to solve their pain points and capture market opportunities.
The Group measured contingent loss based on the future payout of the arrangement estimated using the historical default rates of a portfolio of similar loans less the fair value of the recoverable collateral. 165 Table of Contents Leases Operating Leases – Lessee under ASC 842 The Group has operating leases for certain office rentals as a lessee.
The Group measured contingent loss based on the future payout estimated using the historical default rates of a portfolio of similar loans less the fair value of the recoverable collateral.
Key Factors Affecting Our Results of Operations Solution and Service Offerings and Pricing The Group’s revenue depends on its ability to improve existing solutions and services, continue identifying evolving business needs, refine collaboration models with business partners and provide value-added services. The Group’s revenue also depends on its abilities to effectively price solutions and services and monetize new business opportunities.
In automotive financing, the Group charges financial institutions service fee based on a percentage of the principal amount of the relevant financing transactions. 97 Table of Contents Key Factors Affecting Our Results of Operations Solution and Service Offerings and Pricing The Group’s revenue depends on its ability to improve existing solutions and services, continue identifying evolving business needs, refine collaboration models with business partners and provide value-added services.
The Group’s research and development expenses as a percentage of the Group’s total revenues remained relatively stable at 1.8% in 2021 and 2.3% in 2022. • Net loss on risk assurance liabilities . The Group’s net loss on risk assurance liabilities increased from RMB197.8 million in 2021 to RMB299.9 million (US$43.5 million) in 2022.
The Group’s research and development expenses as a percentage of the Group’s total revenues decreased from 2.3% in 2022 to 1.8% in 2023. ● Net loss on contingent risk assurance liabilities. The Group’s net loss on contingent risk assurance liabilities was nil and RMB25.6 million (US$3.6 million) in 2022 and 2023, respectively.
Revenue Recognition The Group’s revenues are derived principally from 1) automobile trading income, 2) loan facilitation services and post-origination administrative services, 3) finance lease services, 4) after-market services facilitation services, and 5) other income.
E. Critical Accounting Policies and Estimates Revenue Recognition The Group’s revenues are derived principally from 1) automobile trading income, 2) loan facilitation services and post-origination administrative services, or “PAS”, 3) finance lease services, 4) after-market services facilitation services, 5) guarantee income and 6) other income, which mainly includes vehicle management fees and storage service fees related to automobile trading transaction.
This information should be read together with the Group’s consolidated financial statements and related notes included elsewhere in this annual report. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.
This information should be read together with the Group’s consolidated financial statements and related notes included elsewhere in this annual report.
In addition, the growth of the Group’s transaction facilitation services depends on, among others, the Group’s ability to efficiently matching selling dealers with buying dealers and providing logistics and related financial services that effectively support the transaction between dealers. The Group historically derived a major portion of its revenues from automotive financing facilitation services.
In addition, the growth of the Group’s transaction facilitation services depends on, among others, the Group’s ability to efficiently matching selling dealers with buying dealers and providing logistics and warehousing services that effectively support the transaction between dealers. Covering the key components of the automotive transaction value chain, the Group also derives revenue from after-market service facilitation.
Initial direct cost received and direct origination costs are generally deferred and amortized over the term of the related finance lease receivables using the effective interest method and are removed from the consolidated balance sheets when the related finance lease receivables are sold, charged off or paid in full.
Initial direct cost received and direct origination costs are generally deferred and amortized over the term of the related finance lease receivables using the effective interest method and are removed from the consolidated balance sheets when the related finance lease receivables are sold, charged off or paid in full. 113 Table of Contents After-market services income The Group provides after-market services to car buyers which mainly include two types of separate contracts, 1) insurance facilitation service and 2) car recovery and disposal services.
The tables below set forth the transaction volume metrics in the periods presented: For the Year Ended December 31, 2020 2021 2022 Number of financing transactions facilitated 329,293 318,772 30,983 Number of automobile trading transactions 4,999 23,166 16,418 147 Table of Contents The table below sets forth a breakdown for the amount of financing transactions facilitated in the periods presented: As of / For the Year Ended December 31, 2020 2021 2022 RMB RMB RMB US$ (in thousands) Outstanding principal of financing transactions facilitated 43,504,835 46,702,054 25,581,254 3,708,933 Amount of financing transactions facilitated 27,697,739 30,128,194 2,838,827 411,591 We define “financing transactions” as loans and financing leases.
We believe that these transaction volume metrics are useful to investors because they are frequently used by analysts, investors and other interested parties to evaluate companies in the automotive transaction industry. 99 Table of Contents The tables below set forth the transaction volume metrics in the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 Number of financing transactions facilitated 318,772 30,983 27 Number of automobile trading transactions 23,166 16,418 12,695 ​ The table below sets forth a breakdown for the outstanding principal and amount of financing transactions facilitated in the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of / For the Year Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ ​ RMB ​ RMB ​ RMB ​ US$ ​ ​ (in thousands) Outstanding principal of financing transactions facilitated 46,702,054 25,581,254 9,971,559 1,404,465 Amount of financing transactions facilitated 30,128,194 2,838,827 1,686 238 ​ We define “financing transactions” as loans and financing leases.
To maintain and improve the operating leverage of Cango platform, the Group must manage to grow the business by increasing productivity and continuing automating its operations with technology. Ability to Compete Effectively The Group’s business and results of operations depend on its ability to compete effectively.
Personnel costs have been and we expect will continue to be a large component of the Group’s operating cost and expenses. To maintain and improve the operating leverage of Cango platform, the Group must manage to grow the business by increasing productivity and continuing automating its operations with technology.
In accordance with ASC 350, Intangibles – Goodwill and Other (“ASC 350”), recorded goodwill amounts are not amortized, but rather are tested for impairment annually or more frequently if there are indicators of impairment present. 167 Table of Contents The Group applied Accounting Standards Update (“ASU”) No. 2017-04, Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which simplifies the accounting for goodwill impairment by eliminating Step two from the goodwill impairment test.
In accordance with ASC 350, Intangibles – Goodwill and Other (“ASC 350”), recorded goodwill amounts are not amortized, but rather are tested for impairment annually or more frequently if there are indicators of impairment present.
In addition, the collaborations with financial institutions may be affected by factors beyond the Group’s control, such as whether automotive financing solutions are perceived as an attractive asset class, operational disruption of financial institutions, general economic conditions and the regulatory environment.
In addition, the collaborations with dealers may be affected by factors beyond the Group’s control, such as the overall automotive and mobility markets, general economic conditions and the regulatory environment.
Year Ended December 31, 2020 2021 2022 RMB % RMB % RMB US$ % (in thousands) Revenues: Automobile trading income 624,774 30.4 2,227,172 56.8 1,596,307 231,443 80.6 Loan facilitation income and other related income 891,837 43.5 1,233,556 31.5 146,429 21,230 7.4 Leasing income 286,079 13.9 251,295 6.4 155,522 22,549 7.9 After-market services income 241,193 11.8 193,787 4.9 71,457 10,360 3.6 Others 8,549 0.4 15,907 0.4 10,739 1,557 0.5 Total revenues 2,052,432 100.0 3,921,716 100.0 1,980,453 287,139 100.0 Operating cost and expenses: Cost of revenue 1,098,121 53.5 2,958,010 75.4 1,830,090 265,338 92.4 Sales and marketing 195,894 9.5 239,333 6.1 132,779 19,251 6.7 General and administrative 265,691 12.9 276,179 7.0 299,545 43,430 15.1 Research and development 62,596 3.0 70,279 1.8 45,959 6,664 2.3 Net loss on risk assurance liabilities 2,268 0.1 197,750 5.1 299,863 43,476 15.1 Provision for credit losses 109,565 5.3 203,415 5.2 319,360 46,303 16.1 Total operating cost and expenses 1,734,135 84.5 3,944,966 100.6 2,927,597 424,462 147.8 Income (loss) from operations 318,297 15.5 (23,250 ) (0.6 ) (947,143 ) (137,323 ) (47.8 ) Interest income 34,901 1.7 26,373 0.7 43,733 6,341 2.2 Net gain (loss) on equity securities 3,353,381 163.4 (12,992 ) (0.3 ) (9,811 ) (1,422 ) (0.5 ) Interest expense (2,759 ) (0.1 ) (14,481 ) (0.4 ) (16,809 ) (2,437 ) (0.8 ) Foreign exchange (loss) gain, net (8,848 ) (0.4 ) 1,351 * 5,918 858 0.3 Other income, net 49,139 2.4 41,912 1.1 52,067 7,549 2.6 Other expenses (838 ) * (6,606 ) (0.2 ) (2,466 ) (358 ) (0.1 ) Net income (loss) before income taxes 3,743,274 182.4 12,308 0.3 (874,511 ) (126,792 ) (44.2 ) Income tax expenses (369,854 ) (18.0 ) (20,853 ) (0.5 ) (236,697 ) (34,318 ) (12.0 ) Net income (loss) 3,373,420 164.4 (8,544 ) (0.2 ) (1,111,208 ) (161,110 ) (56.1 ) Less: Net income attributable to the non-controlling interest shareholders 3,902 0.2 — — — — — Net income (loss) attributable to Cango Inc.’s ordinary shareholders 3,369,518 164.2 (8,544 ) (0.2 ) (1,111,208 ) (161,110 ) (56.1 ) * less than 0.1%.
The operating results in any period are not necessarily indicative of the results that may be expected for any future period. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2022 ​ 2023 ​ ​ RMB % RMB % RMB US$ % ​ ​ (in thousands) Revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Automobile trading income 2,227,172 ​ 56.8 ​ 1,596,307 ​ 80.6 1,309,634 184,458 77.0 Loan facilitation income and other related income 1,233,556 ​ 31.5 ​ 146,429 ​ 7.4 19,962 2,812 1.2 Guarantee income — ​ — ​ — ​ — 212,121 29,877 12.5 Leasing income 251,295 ​ 6.4 ​ 155,522 ​ 7.9 57,431 8,089 3.4 After-market services income 193,787 ​ 4.9 ​ 71,457 ​ 3.6 65,388 9,210 3.8 Others 15,907 ​ 0.4 ​ 10,739 ​ 0.5 37,383 5,265 2.1 Total revenues 3,921,716 ​ 100.0 ​ 1,980,453 ​ 100.0 1,701,919 239,710 100.0 Operating cost and expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenue 2,958,010 ​ 75.4 ​ 1,830,090 ​ 92.4 1,511,863 212,941 88.8 Sales and marketing 239,333 ​ 6.1 ​ 132,779 ​ 6.7 38,922 5,482 2.3 General and administrative 276,179 ​ 7.0 ​ 299,545 ​ 15.1 156,966 22,108 9.2 Research and development 70,279 ​ 1.8 ​ 45,959 ​ 2.3 30,114 4,241 1.8 Net loss on contingent risk assurance liabilities — ​ — ​ — ​ — 25,632 3,610 1.5 Net loss on risk assurance liabilities 197,750 ​ 5.1 ​ 299,863 ​ 15.1 — — — Provision (net recovery on provision) for credit losses 203,415 ​ 5.2 ​ 319,360 ​ 16.1 (136,485) (19,224) (8.0) Impairment loss from goodwill — ​ — ​ — ​ — 148,658 20,938 8.7 Total operating cost and expenses 3,944,966 ​ 100.6 ​ 2,927,597 ​ 147.8 1,775,670 250,098 104.3 Income (loss) from operations ​ (23,250) ​ (0.6) ​ (947,143) ​ (47.8) ​ (73,751) ​ (10,388) ​ (4.3) Interest income ​ 26,373 ​ 0.7 ​ 43,733 ​ 2.2 ​ 79,165 ​ 11,150 ​ 4.6 Net (loss) gain on equity securities (12,992) ​ (0.3) ​ (9,811) ​ (0.5) 24,093 3,393 1.4 Interest expense (14,481) ​ (0.4) ​ (16,809) ​ (0.8) (4,100) (577) (0.2) Foreign exchange gain, net 1,351 ​ ​ * 5,918 ​ 0.3 1,099 155 0.1 Other income 41,912 ​ 1.1 ​ 52,067 ​ 2.6 30,702 4,324 1.8 Other expenses (6,606) ​ (0.2) ​ (2,466) ​ (0.1) (1,625) (229) (0.1) Net income (loss) before income taxes 12,308 ​ 0.3 ​ (874,511) ​ (44.2) 55,583 7,829 3.3 Income tax expenses (20,853) ​ (0.5) ​ (236,697) ​ (12.0) (93,457) (13,163) (5.5) Net (loss) (8,544) ​ (0.2) ​ (1,111,208) ​ (56.1) (37,873) (5,334) (2.2) Net (loss) attributable to Cango Inc.’s ordinary shareholders (8,544) ​ (0.2) ​ (1,111,208) ​ (56.1) (37,873) (5,334) (2.2) * less than 0.1%.
The Group relies on in-house delinquent asset management team to collect repayments and recover the car collateral at different stages of delinquent asset management process. The ability to collect repayments and recover car collaterals in a cost-effective way may affect the Group’s relationships with financial institutions and/or results of operations.
After a delinquency occurs, the Group aims to collect repayments and/or recover the car collateral from the car buyer. The Group relies on in-house delinquent asset management team to collect repayments and recover the car collateral at different stages of delinquent asset management process.
The Group also owns used cars from cars disposed by individual car buyers who have used the Group’s automotive financial services in the past. The transaction facilitation services connect dealers looking for cars with dealers wishing to supply cars.
The Group also owns used cars from cars disposed by individual car buyers who have used the Group’s automotive financial services in the past, as well as cars used as collaterals and later collected and disposed by financial institutions.
For further information on the Group’s critical accounting policies, see Note 2 to its consolidated financial statements. The Group believes the following accounting policies involve the most significant judgments and estimates used in the preparation of its financial statements.
The Group believes the following accounting policies involve the most significant judgments and estimates used in the preparation of its financial statements. Risk Assurance Liabilities The Group provides risk assurance to various financial institution customers.
The Group’s cost of revenue decreased from RMB2,958.0 million in 2021 to RMB1,830.1 million (US$265.3 million) in 2022, primarily due to a decrease in the amount of automobile trading transactions.
The Group’s cost of revenue decreased from RMB1,830.1 million in 2022 to RMB1,511.9 million (US$212.9 million) in 2023, primarily due to a decrease in cost of vehicles, which was in line with the decrease in automobile trading volume.
The Group’s ability to aggregate dealer’s demand enables the Group to obtain favorable car purchase price from OEMs, which further improve dealers’ loyalty to the Group’s automobile trading platform.
As such, its financial performance depends in part on the ability to attract and maintain dealers and collaborate with OEMs to provide dealers with sufficient car sources at attractive prices. The Group’s ability to aggregate dealer’s demand enables the Group to obtain favorable car purchase price from OEMs, which further improve dealers’ loyalty to the Group’s automobile trading platform.
The Group continues to explore opportunities to facilitate other after-market services on Cango platform, including additional types of insurance, extended warranties and car customization services. The Group receives sales revenue and fee income for its automobile trading solutions.
The Group continues to explore opportunities to facilitate other after-market services on Cango platform, including additional types of insurance, extended warranties and car customization services. Automotive Financing Facilitation Services The Group provides automotive financing facilitation services primarily by connecting financial institutions and car buyers, leveraging its vast dealer network.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Zhang has also served as a chairman and general manager of Shanghai Chejia since 2016. Prior to co-founding our company, Mr. Zhang served as a director and general manager of SAIC-GMAC Automotive Finance Co., Ltd. from 2004 to 2013. From 1999 to 2004, Mr. Zhang served as a deputy general manager of Shanghai Automobile Group Finance Company.
Mr. Zhang has also served as a chairman and general manager of Shanghai Chejia since 2016. Prior to co-founding our company, Mr. Zhang served as a director and general manager of SAIC-GMAC Automotive Finance Co., Ltd. from 2004 to 2013. From 1999 to 2004, Mr. Zhang served as a deputy general manager of Shanghai Automobile Group Finance Company.
E. Share Ownership The following table sets forth information as of the date of this annual report with respect to the beneficial ownership of our ordinary shares by: • each of our directors and executive officers; and • each person known to us to own beneficially 5.0% or more of our ordinary shares.
Share Ownership The following table sets forth information as of the date of this annual report with respect to the beneficial ownership of our ordinary shares by: ● each of our directors and executive officers; and ● each person known to us to own beneficially 5.0% or more of our ordinary shares.
(8) Represents (i) 8,108,503 Class A ordinary shares in the form of ADSs that are beneficially owned by Magic Spark Inc., a limited liability company established in the Cayman Islands, and (ii) 8,108,503 Class A ordinary shares in the form of ADSs that are beneficially owned by TK Autolink Inc., a limited liability company established in the Cayman Islands.
(7) Represents (i) 8,108,503 Class A ordinary shares in the form of ADSs that are beneficially owned by Magic Spark Inc., a limited liability company established in the Cayman Islands, and (ii) 8,108,503 Class A ordinary shares in the form of ADSs that are beneficially owned by TK Autolink Inc., a limited liability company established in the Cayman Islands.
The nominating and corporate governance committee will be responsible for, among other things: 177 Table of Contents • selecting and recommending to the board nominees for election by the shareholders or appointment by the board; • reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; • making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and • advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken.
The nominating and corporate governance committee will be responsible for, among other things: ● selecting and recommending to the board nominees for election by the shareholders or appointment by the board; ● reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; ● making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and ● advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken. 123 Table of Contents D.
The share options were not granted under (and have no impact on the share reserve under), but is governed by, the terms and conditions of the share incentive plan, except otherwise provided under the applicable share option grant agreements. C. Board Practices Our board of directors consisted of seven directors as of December 31, 2022.
The share options were not granted under (and have no impact on the share reserve under), but is governed by, the terms and conditions of the share incentive plan, except otherwise provided under the applicable share option grant agreements. C. Board Practices Our board of directors consisted of seven directors as of December 31, 2023.
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. F.
The functions and powers of our board of directors include, among others: • conducting and managing the business of our company; • representing our company in contracts and deals; 174 Table of Contents • appointing attorneys for our company; • select senior management such as managing directors and executive directors; • providing employee benefits and pension; • managing our company’s finance and bank accounts; • exercising the borrowing powers of our company and mortgaging the property of our company; and • exercising any other powers conferred by the shareholders meetings or under our third amended and restated memorandum and articles of association.
The functions and powers of our board of directors include, among others: ● conducting and managing the business of our company; ● representing our company in contracts and deals; ● appointing attorneys for our company; ● select senior management such as managing directors and executive directors; ● providing employee benefits and pension; ● managing our company’s finance and bank accounts; ● exercising the borrowing powers of our company and mortgaging the property of our company; and ● exercising any other powers conferred by the shareholders meetings or under our third amended and restated memorandum and articles of association.
Xiaojun Zhang has the right to acquire upon exercise of the options within 60 days. Eagle Central is a limited liability company established in the British Virgin Islands that is controlled by Mr. Xiaojun Zhang. Eagle Central is further described in footnote 5 below.
Xiaojun Zhang has the right to acquire upon exercise of the options within 60 days. Eagle Central is a limited liability company established in the British Virgin Islands that is controlled by Mr. Xiaojun Zhang. Eagle Central is further described in footnote 4 below.
The registered address of TK Autolink Inc. is 4th Floor, Harbour Place, 103 South Church Street, P.O. Box 10240, Grand Cayman, KY1 – 1002, Cayman Islands. In May 2018, our co-founders Mr. Xiaojun Zhang and Mr. Jiayuan Lin entered into a voting agreement, which was amended and restated in June 2019.
The registered address of TK Autolink Inc. is 4th Floor, Harbour Place, 103 South Church Street, P.O. Box 10240, Grand Cayman, KY1 – 1002, Cayman Islands. 126 Table of Contents In May 2018, our co-founders Mr. Xiaojun Zhang and Mr. Jiayuan Lin entered into a voting agreement, which was amended and restated in June 2019.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. Directors and Senior Management Directors and Executive Officers The following table sets forth information regarding our directors and executive officers as of December 31, 2022.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. Directors and Senior Management Directors and Executive Officers The following table sets forth information regarding our directors and executive officers as of December 31, 2023.
Our audit committee consists solely of independent directors. 175 Table of Contents The audit committee oversees our accounting and financial reporting processes and the audits of our financial statements.
Our audit committee consists solely of independent directors. 121 Table of Contents The audit committee oversees our accounting and financial reporting processes and the audits of our financial statements.
Our directors also have a duty to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our third amended and restated memorandum and articles of association.
Our directors must also exercise their powers only for a proper purpose. Our directors also have a duty to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our third amended and restated memorandum and articles of association.
GAAP that have been discussed with management and all other material written communications between the independent auditor and management; • establishing procedures for the receipt, retention and treatment of complaints received from our employees regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; 176 Table of Contents • annually reviewing and reassessing the adequacy of our audit committee charter; • such other matters that are specifically delegated to our audit committee by our board of directors from time to time; • meeting separately, periodically, with management, internal auditors and the independent auditor; and • reporting regularly to the full board of directors.
GAAP that have been discussed with management and all other material written communications between the independent auditor and management; ● establishing procedures for the receipt, retention and treatment of complaints received from our employees regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; ● annually reviewing and reassessing the adequacy of our audit committee charter; ● such other matters that are specifically delegated to our audit committee by our board of directors from time to time; ● meeting separately, periodically, with management, internal auditors and the independent auditor; and ● reporting regularly to the full board of directors. 122 Table of Contents Compensation Committee Our compensation committee consists of Xiaojun Zhang, Jiayuan Lin and Dongsheng Zhou.
Compensation Committee Our compensation committee consists of Xiaojun Zhang, Jiayuan Lin and Dongsheng Zhou. Xiaojun Zhang is the chairperson of our compensation committee. Dongsheng Zhou satisfies the requirements for an “independent director” within the meaning of Section 303A of the NYSE Listed Company Manual.
Xiaojun Zhang is the chairperson of our compensation committee. Dongsheng Zhou satisfies the requirements for an “independent director” within the meaning of Section 303A of the NYSE Listed Company Manual.
(2) Represents (i) 1 Class A ordinary share that is held by Medway Brilliant Holding Limited, or Medway Brilliant, (ii) 34,702,890 Class B ordinary shares that are held by Traveler Enterprise Limited, or Traveler Enterprise, (iii) 2,741,606 Class A ordinary shares represented by ADSs that are beneficially owned by Traveler Enterprise, and (iv) 11,588,096 Class A ordinary shares that Mr.
(2) Represents (i) 1 Class A ordinary share that is held by Medway Brilliant Holding Limited, or Medway Brilliant, (ii) 34,702,890 Class B ordinary shares that are held by Traveler Enterprise Limited, or Traveler Enterprise, (iii) 2,741,606 Class A ordinary shares represented by ADSs that are beneficially owned by Traveler Enterprise, and (iv) 12,086,254 Class A ordinary shares that Mr.
The amended and restated voting agreement provides that they shall reach a consensus before exercising their voting rights with respect to our shares. As of March 31, 2023, the co-founders collectively exercised 89.1% of the aggregate voting power of our issued and outstanding share capital.
The amended and restated voting agreement provides that they shall reach a consensus before exercising their voting rights with respect to our shares. As of March 31, 2024, the co-founders collectively exercised 91.8% of the aggregate voting power of our issued and outstanding share capital.
Jiayuan Lin, our co-founder, director and chief executive officer. The administrators will determine the provisions and terms and conditions of each equity award.
Xiaojun Zhang, our co-founder and chairman, and Mr. Jiayuan Lin, our co-founder, director and chief executive officer. The administrators will determine the provisions and terms and conditions of each equity award.
D. Employees As of December 31, 2020, 2021 and 2022, the Group had a total of 3,009, 2,351 and 827 employees, respectively. The decrease in the Group’s employees in 2022 was primarily due to the organizational restructuring for business transitions.
Employees As of December 31, 2021, 2022 and 2023, the Group had a total of 2,351, 827 and 632 employees, respectively. The decrease in the Group’s employees in 2023 was primarily due to the organizational restructuring for business transitions.
The maximum number of ordinary shares that may be subject to equity awards pursuant to the share incentive plan is 27,845,526 initially. Additional ordinary shares may be reserved for issuance of equity awards as determined by our board of directors. Administration The share incentive plan is jointly administered by Mr. Xiaojun Zhang, our co-founder and chairman, and Mr.
The maximum number of ordinary shares that may be subject to equity awards pursuant to the share incentive plan is 27,845,526 initially. Additional ordinary shares may be reserved for issuance of equity awards as determined by our board of directors. 118 Table of Contents Administration The share incentive plan is jointly administered by Mr.
Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. 179 Table of Contents *** Less than 1% of our total outstanding shares. (1) Represents (i) 38,275,787 Class B ordinary shares that are held by Eagle Central Holding Limited, or Eagle Central, and (ii) 11,538,346 Class A ordinary shares that Mr.
Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. *** Less than 1% of our total outstanding shares. (1) Represents (i) 38,275,787 Class B ordinary shares that are held by Eagle Central Holding Limited, or Eagle Central, and (ii) 12,012,128 Class A ordinary shares that Mr.
(3) Represents (i) 1 Class A ordinary share that is held by Medway Brilliant, (ii) 34,702,890 Class B ordinary shares that are held by Traveler Enterprise, and (iii) 2,741,606 Class A ordinary shares represented by ADSs that are beneficially owned by Traveler Enterprise.
Medway Brilliant and Traveler Enterprise are further described in footnote 3 below. 125 Table of Contents (3) Represents (i) 1 Class A ordinary share that is held by Medway Brilliant, (ii) 34,702,890 Class B ordinary shares that are held by Traveler Enterprise, and (iii) 2,741,606 Class A ordinary shares represented by ADSs that are beneficially owned by Traveler Enterprise.
Name Age Position/Title Xiaojun Zhang 51 Co-founder and chairman Jiayuan Lin 54 Co-founder, director and chief executive officer Yongyi Zhang 50 Chief financial officer and director Zhipeng Song 38 Director Chi Ming Lee 70 Independent director Dongsheng Zhou 55 Independent director Rong Liu 74 Independent director Xiaojun Zhang is our co-founder and has served as our chairman since 2014. Mr.
Name Age Position/Title Xiaojun Zhang ​ 52 ​ Co-founder and chairman Jiayuan Lin ​ 55 ​ Co-founder, director and chief executive officer Yongyi Zhang ​ 51 ​ Chief financial officer and director Zhipeng Song ​ 39 ​ Director Chi Ming Lee ​ 71 ​ Independent director Dongsheng Zhou ​ 56 ​ Independent director Rong Liu ​ 75 ​ Independent director ​ Xiaojun Zhang is our co-founder and has served as our chairman since 2014.
Compensation Compensation In 2022, we and our subsidiaries and consolidated VIEs paid aggregate cash compensation of approximately RMB25.3 million (US$3.7 million) to our directors and executive officers as a group. We did not pay any other cash compensation or benefits in kind to our directors and executive officers.
Compensation Compensation In 2023, we and our subsidiaries and consolidated VIEs paid aggregate cash compensation of approximately RMB20.4 million (US$2.9 million) to our directors and executive officers as a group. We did not pay any other cash compensation or benefits in kind to our directors and executive officers.
Name Position Ordinary Shares Underlying Option Awards Option Exercise Price (US$)** Grant Date Option Expiration Date Xiaojun Zhang Chairman 1,667,000 0.2951 May 25, 2018 May 24, 2028 1,670,732 0.2951 February 15, 2019 February 14, 2029 1,895,130 0.2951 October 15, 2020 October 14, 2030 2,506,098 0.2951 May 1, 2021 April 30, 2031 28,000 0.2951 August 1, 2022 July 31, 2032 Jiayuan Lin Chief executive officer and director 1,688,000 0.2951 May 25, 2018 May 24, 2028 1,670,732 0.2951 February 15, 2019 February 14, 2029 1,992,630 0.2951 October 15, 2020 October 14, 2030 2,506,098 0.2951 May 1, 2021 April 30, 2031 Yongyi Zhang Chief financial officer and director * 0.2951 May 25, 2018 May 24, 2028 * 0.2951 February 15, 2019 February 14, 2029 * 0.2951 October 15, 2020 October 14, 2030 * 0.2951 May 1, 2021 April 30, 2031 Zhipeng Song Director * 0.2951 May 25, 2018 May 24, 2028 * 0.2951 February 15, 2019 February 14, 2029 * 0.2951 October 15, 2020 October 14, 2030 * 0.2951 May 1, 2021 April 30, 2031 * The shares underlying the outstanding options held by each of these directors and executive officers represent less than 1% of our total outstanding shares. ** The option exercise price has been adjusted to US$0.2951 due to the payments of cash dividends to our shareholders. 173 Table of Contents Special Option Grants In June 2022, we granted (i) options to purchase 6,000,000 Class A ordinary shares to Mr.
Certain options previously granted were subsequently forfeited pursuant to the terms of the share incentive plan. ​ 119 Table of Contents The table below summarizes outstanding options held by our directors and executive officers as of March 31, 2024 under the share incentive plan. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares ​ ​ ​ ​ ​ ​ Underlying Option Exercise ​ ​ Option Name Position Option Awards Price (US$)** Grant Date Expiration Date Xiaojun Zhang ​ Chairman 1,667,000 0.2951 ​ May 25, 2018 ​ May 24, 2028 ​ ​ ​ 1,670,732 0.2951 ​ February 15, 2019 ​ February 14, 2029 ​ ​ ​ 1,895,130 0.2951 ​ October 15, 2020 ​ October 14, 2030 ​ ​ ​ 2,506,098 0.2951 ​ May 1, 2021 ​ April 30, 2031 ​ ​ ​ 28,000 0.2951 ​ August 1, 2022 ​ July 31, 2032 Jiayuan Lin ​ Chief executive officer and director 1,688,000 0.2951 ​ May 25, 2018 ​ May 24, 2028 ​ ​ ​ 1,670,732 0.2951 ​ February 15, 2019 ​ February 14, 2029 ​ ​ ​ 1,992,630 0.2951 ​ October 15, 2020 ​ October 14, 2030 ​ ​ ​ 2,506,098 0.2951 ​ May 1, 2021 ​ April 30, 2031 Yongyi Zhang ​ Chief financial officer and director * 0.2951 ​ May 25, 2018 ​ May 24, 2028 ​ ​ ​ * 0.2951 ​ February 15, 2019 ​ February 14, 2029 ​ ​ ​ * 0.2951 ​ October 15, 2020 ​ October 14, 2030 ​ ​ ​ * 0.2951 ​ May 1, 2021 ​ April 30, 2031 Zhipeng Song ​ Director * 0.2951 ​ May 25, 2018 ​ May 24, 2028 ​ ​ ​ * 0.2951 ​ February 15, 2019 ​ February 14, 2029 ​ ​ ​ * 0.2951 ​ October 15, 2020 ​ October 14, 2030 ​ ​ ​ * 0.2951 ​ May 1, 2021 ​ April 30, 2031 * The shares underlying the outstanding options held by each of these directors and executive officers represent less than 1% of our total outstanding shares. ** The option exercise price has been adjusted to US$0.2951 due to the payments of cash dividends to our shareholders.
Song has also served as a vice president of Shanghai Chejia since 2016. From 2014 to 2015, Mr. Song served as an assistant general manager of our company. From 2012 to 2014, he served a regional manager of Anji Leasing Co., Ltd. From 2010 to 2012, he served as an account manager of SAIC-GMAC Automotive Finance Co., Ltd. Mr.
Song served as an assistant general manager of our company. From 2012 to 2014, he served a regional manager of Anji Leasing Co., Ltd. From 2010 to 2012, he served as an account manager of SAIC-GMAC Automotive Finance Co., Ltd. Mr.
Jiayuan Lin is the beneficial owner of the shares held by Medway Brilliant and Traveler Enterprise in our company. Medway Brilliant and Traveler Enterprise are further described in footnote 3 below.
Jiayuan Lin is the beneficial owner of the shares held by Medway Brilliant and Traveler Enterprise in our company.
The share options vested immediately upon grant and have an exercise price of US$0.2951 per Class A ordinary share as of the date hereof.
Lin’s roles in guiding our Group’s profitable investment in Li Auto. The share options vested immediately upon grant and have an exercise price of US$0.2951 per Class A ordinary share as of the date hereof.
Liu completed a graduate program in international economy at China Eastern Normal University. 170 Table of Contents The business address for all of our executive officers and directors is 8F, New Bund Oriental Plaza II, 556 West Haiyang Road, Pudong New Area, Shanghai 200124, People’s Republic of China. B.
The business address for all of our executive officers and directors is 8F, New Bund Oriental Plaza II, 556 West Haiyang Road, Pudong New Area, Shanghai 200124, People’s Republic of China. 117 Table of Contents B.
Zhang served as a deputy manager of Shanghai Stock Exchange. From 1995 to 1997, Mr. Zhang served as an auditor of Arthur Anderson (Shanghai Office). Mr. Zhang received a bachelor’s degree in international accounting from Shanghai University of Finance and Economics in 1995. 169 Table of Contents Zhipeng Song has served as a director of our company since 2018. Mr.
Zhang served as an auditor of Arthur Anderson (Shanghai Office). Mr. Zhang received a bachelor’s degree in international accounting from Shanghai University of Finance and Economics in 1995. Zhipeng Song has served as a director of our company since 2018. Mr. Song has also served as a vice president of Shanghai Chejia since 2016. From 2014 to 2015, Mr.
Xiaojun Zhang, our co-founder and chairman, and (ii) options to purchase 6,000,000 Class A ordinary shares to Mr. Jiayuan Lin, our co-founder, director and chief executive officer. These share options were granted in consideration of Mr. Zhang and Mr. Lin’s roles in guiding our Group’s profitable investment in Li Auto.
Special Option Grants In June 2022, we granted (i) options to purchase 6,000,000 Class A ordinary shares to Mr. Xiaojun Zhang, our co-founder and chairman, and (ii) options to purchase 6,000,000 Class A ordinary shares to Mr. Jiayuan Lin, our co-founder, director and chief executive officer. These share options were granted in consideration of Mr. Zhang and Mr.
Ordinary Shares Beneficially Owned Class A ordinary shares Class B ordinary shares Percentage of total outstanding ordinary shares Percentage of aggregate voting power** Directors and Executive Officers:* Xiaojun Zhang (1) 11,538,346 38,275,787 17.7 46.6 Jiayuan Lin (2) 14,329,703 34,702,890 17.4 42.5 Yongyi Zhang *** — *** *** Zhipeng Song *** — *** *** Chi Ming Lee — — — — Dongsheng Zhou — — — — Rong Liu — — — — Directors and Executive Officers as a Group 26,876,156 72,978,677 34.0 88.5 Principal Shareholders: Lin Entities (3) 2,741,607 34,702,890 13.9 42.1 WP Fintech (4) 48,601,124 — 18.0 2.9 Eagle Central Holding Limited (5) — 38,275,787 14.2 46.2 Tencent Mobility Limited (6) 25,223,898 — 9.4 1.5 Didi Chuxing (7) 28,376,116 — 10.5 1.7 Taikang Offshore Entities (8) 16,217,006 — 6.0 1.0 * The business address for our directors and executive officers is 8F, New Bund Oriental Plaza II, 556 West Haiyang Road, Pudong New Area, Shanghai 200124, People’s Republic of China. ** For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class.
In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option or other right or the conversion of any other security. 124 Table of Contents As of March 31, 2024, the total number of ordinary shares outstanding is 208,729,976, comprising 135,751,299 Class A ordinary shares and 72,978,677 Class B ordinary shares. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares Beneficially Owned ​ ​ ​ ​ ​ ​ Percentage ​ ​ ​ ​ ​ ​ ​ ​ of total ​ Percentage ​ ​ Class A ​ Class B ​ outstanding ​ of aggregate ​ ordinary shares ordinary shares ordinary shares voting power** Directors and Executive Officers:* Xiaojun Zhang (1) 12,012,128 38,275,787 22.8 48.4 Jiayuan Lin (2) 14,827,861 34,702,890 22.4 44.1 Yongyi Zhang *** — *** *** Zhipeng Song *** — *** *** Chi Ming Lee — — — — Dongsheng Zhou — — — — Rong Liu — — — — Directors and Executive Officers as a Group 28,015,505 72,978,677 43.2 91.8 Principal Shareholders: ​ ​ ​ ​ Lin Entities (3) 2,741,607 34,702,890 17.9 43.7 Eagle Central Holding Limited (4) — 38,275,787 18.3 48.0 Tencent Mobility Limited (5) 25,223,898 — 12.1 1.6 Didi Chuxing (6) 28,376,116 — 13.6 1.8 Taikang Offshore Entities (7) 16,217,006 — 7.8 1.0 * The business address for our directors and executive officers is 8F, New Bund Oriental Plaza II, 556 West Haiyang Road, Pudong New Area, Shanghai 200124, People’s Republic of China. ** For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class.
Lin worked in the Pudong branch of Bank of China as a staff member in the finance department, deputy manager of the audit division and deputy manager of the credit division. Mr. Lin received a bachelor’s degree in economics, with specialization in investment management, from Shanghai University of Finance and Economics in 1991.
Lin worked in the Pudong branch of Bank of China as a staff member in the finance department, deputy manager of the audit division and deputy manager of the credit division. Mr.
The executive officers have also agreed to disclose in confidence to us all inventions, designs and trade secrets which they conceive, develop or reduce to practice during the executive officer’s employment with us and to assign all right, title and interest in them to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and trade secrets. 171 Table of Contents In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment and typically for one year following the last date of employment.
The executive officers have also agreed to disclose in confidence to us all inventions, designs and trade secrets which they conceive, develop or reduce to practice during the executive officer’s employment with us and to assign all right, title and interest in them to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and trade secrets.
Term Unless terminated earlier, the share incentive plan will continue in effect for a term of ten years from the date of its adoption. 172 Table of Contents Award Agreements Generally, equity awards granted under the share incentive plan are evidenced by an award agreement providing for the number of ordinary shares subject to the award, and the terms and conditions of the award, which must be consistent with the share incentive plan.
Award Agreements Generally, equity awards granted under the share incentive plan are evidenced by an award agreement providing for the number of ordinary shares subject to the award, and the terms and conditions of the award, which must be consistent with the share incentive plan.
The following table sets forth the breakdown of the Group’s employees as of December 31, 2022 by function: Function Number of Employees % of Total Sales and marketing 217 26.3 Operations 188 22.7 Risk management 226 27.3 General administration 94 11.4 Research and development 102 12.3 Total 827 100.0 As of December 31, 2022, 346 of the Group’s employees were based in Shanghai.
The following table sets forth the breakdown of the Group’s employees as of December 31, 2023 by function: ​ ​ ​ ​ ​ ​ Number of ​ Function ​ Employees ​ % of Total Sales and marketing 73 11.6 Operations 172 27.2 Risk management 219 34.7 General administration 90 14.2 Research and development 78 12.3 Total 632 100.0 ​ As of December 31, 2023, 290 of the Group’s employees were based in Shanghai.
He also serves as a supervisor at Yangzhou Dongsheng Auto Parts Co., Ltd. In 1999, Mr.
He also serves as a supervisor at Yangzhou Dongsheng Auto Parts Co., Ltd. In 1999, Mr. Liu completed a graduate program in international economy at China Eastern Normal University.
Information regarding beneficial ownership is based on the information contained in the Schedule 13G reported as of December 31, 2021 and filed by Tencent Mobility Limited with SEC on February 10, 2022. Tencent Mobility Limited is a limited liability company established in Hong Kong.
(5) Represents 25,223,898 Class A ordinary shares in the form of ADSs that are beneficially owned by Tencent Mobility Limited. Information regarding beneficial ownership is based on the information contained in the Schedule 13G reported as of December 31, 2021 and filed by Tencent Mobility Limited with SEC on February 10, 2022.
The non-compete restricted period typically expires two years after the termination of employment, and the Group agrees to compensate the employee with a certain percentage of his or her pre-departure salary during the restricted period. 178 Table of Contents We believe that the Group maintains a good working relationship with its employees, and the Group has not experienced any major labor disputes.
The Group enters into standard labor, confidentiality and non-compete agreements with its employees. The non-compete restricted period typically expires two years after the termination of employment, and the Group agrees to compensate the employee with a certain percentage of his or her pre-departure salary during the restricted period.
Information regarding beneficial ownership is reported as of December 31, 2019, based on the information contained in the Schedule 13G filed by Didi Chuxing with SEC on February 13, 2020. Links Advance Holdings Limited is controlled by Didi Chuxing. DiDi Sunshine Investments L.P. is an exempted limited partnership organized in the Cayman Islands.
(6) Represents (i) 4,740,480 Class A ordinary shares held by Links Advance Holdings Limited and (ii) 23,635,636 Class A ordinary shares held by DiDi Sunshine Investments L.P. Information regarding beneficial ownership is reported as of December 31, 2019, based on the information contained in the Schedule 13G filed by Didi Chuxing with SEC on February 13, 2020.
Yongyi Zhang has served as our chief financial officer since 2018 and director since 2018. Prior to joining our company, Mr. Zhang served as an executive director of Zhongde Securities Co., Ltd. from 2010 to 2018. From 2001 to 2010, Mr. Zhang served as a senior manager of China Galaxy Securities Co., Ltd. From 1997 to 2001, Mr.
Zhang served as an executive director of Zhongde Securities Co., Ltd. from 2010 to 2018. From 2001 to 2010, Mr. Zhang served as a senior manager of China Galaxy Securities Co., Ltd. From 1997 to 2001, Mr. Zhang served as a deputy manager of Shanghai Stock Exchange. From 1995 to 1997, Mr.
The address of the Warburg Pincus entities is 450 Lexington Avenue, New York, New York 10017, U.S.A. (5) Eagle Central is a limited liability company established in the British Virgin Islands that is controlled by Mr. Xiaojun Zhang. The registered address of Eagle Central is the offices of Sertus Incorporations (BVI) Limited, Sertus Chambers, P.O.
(4) Eagle Central is a limited liability company established in the British Virgin Islands that is controlled by Mr. Xiaojun Zhang. The registered address of Eagle Central is the offices of Sertus Incorporations (BVI) Limited, Sertus Chambers, P.O. Box 905, Quastisky Building, Road Town, Tortola VG1110, British Virgin Islands.
Granted Options As of March 31, 2023, options to purchase 20,468,670 Class A ordinary shares were outstanding under the share incentive plan. Certain options previously granted were subsequently forfeited pursuant to the terms of the share incentive plan.
Granted Options As of March 31, 2024, options to purchase 23,999,068 Class A ordinary shares were outstanding under the share incentive plan.
Its general partner is a wholly-owned subsidiary of Didi Chuxing. The general partner exercises the voting rights with respect to the shares held by the limited partnership. The general partner disclaims beneficial ownership of our shares except to the extent of its pecuniary interest in the limited partnership.
The general partner disclaims beneficial ownership of our shares except to the extent of its pecuniary interest in the limited partnership.
Duties of Directors Under Cayman Islands law, our directors have a fiduciary duty to our company, including a duty of loyalty, a duty to act honestly, and a duty to act in good faith in what they consider to be in our best interests. Our directors must also exercise their powers only for a proper purpose.
None of our non-executive directors has a service contract with us that provides for benefits upon termination of service. 120 Table of Contents Duties of Directors Under Cayman Islands law, our directors have a fiduciary duty to our company, including a duty of loyalty, a duty to act honestly, and a duty to act in good faith in what they consider to be in our best interests.
Tencent Mobility Limited is wholly owned by Tencent Holdings Limited, a public company listed on the Hong Kong Stock Exchange.
Tencent Mobility Limited is a limited liability company established in Hong Kong. Tencent Mobility Limited is wholly owned by Tencent Holdings Limited, a public company listed on the Hong Kong Stock Exchange. The registered address of Tencent Mobility Limited is 29/F, Three Pacific Place, No.1 Queen’s Road East, Wanchai, Hong Kong.
Removed
The table below summarizes outstanding options held by our directors and executive officers as of March 31, 2023 under the share inentive plan.
Added
Lin received a bachelor’s degree in economics, with specialization in investment management, from Shanghai University of Finance and Economics in 1991. 116 Table of Contents Yongyi Zhang has served as our chief financial officer since 2018 and director since 2018. Prior to joining our company, Mr.
Removed
None of our non-executive directors has a service contract with us that provides for benefits upon termination of service.
Added
In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment and typically for one year following the last date of employment.
Removed
The Group enters into standard labor, confidentiality and non-compete agreements with its employees.
Added
Term Unless terminated earlier, the share incentive plan will continue in effect for a term of ten years from the date of its adoption.
Removed
In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option or other right or the conversion of any other security.
Added
We believe that the Group maintains a good working relationship with its employees, and the Group has not experienced any major labor disputes. E.
Removed
As of March 31, 2023, the total number of ordinary shares outstanding is 269,503,966, comprising 196,525,289 Class A ordinary shares and 72,978,677 Class B ordinary shares.
Added
Links Advance Holdings Limited is controlled by Didi Chuxing. DiDi Sunshine Investments L.P. is an exempted limited partnership organized in the Cayman Islands. Its general partner is a wholly-owned subsidiary of Didi Chuxing. The general partner exercises the voting rights with respect to the shares held by the limited partnership.
Removed
(4) Represents 48,601,124 Class A ordinary shares in the form of 24,300,562 ADSs that are beneficially owned by Warburg Pincus Cango Fintech Investment Company Limited, a British Virgin Islands business company (“WP Fintech”).
Added
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation On October 10, 2023, our board of directors adopted an Incentive Compensation Clawback Policy, or the Clawback Policy, providing for the recoupment of certain incentive-based compensation from current and former executive officers of our company in the event we are required to restate any of our financial statements filed with the SEC under the Exchange Act in order to correct an error that is material to the previously-issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
Removed
Information regarding beneficial ownership is reported as of December 31, 2022, based on the information contained in the Amendment No. 2 to the Schedule 13G filed by WP Fintech with SEC on April 4, 2023.
Added
Adoption of the Clawback Policy was mandated by new NYSE continued listing standards introduced pursuant to Exchange Act Rule 10D-1.
Removed
The direct parents of WP Fintech are (i) Warburg Pincus Private Equity XII, L.P., a Delaware limited partnership (“WP XII”), (ii) Warburg Pincus Private Equity XII-B, L.P., a Delaware limited partnership (“WP XII-B”), (iii) Warburg Pincus Private Equity XII-D, L.P., a Delaware limited partnership (“WP XII-D”), (iv) Warburg Pincus Private Equity XII-E, L.P., a Delaware limited partnership (“WP XII-E”), (v) WP XII Partners, L.P., a Delaware limited partnership (“WP XII Partners”), (vi) Warburg Pincus XII Partners, L.P., a Delaware limited partnership (“Warburg Pincus XII Partners” and, together with WP XII, WP XII-B, WP XII-D, WP XII-E and WP XII Partners, the “WP XII Funds”), (vii) Warburg Pincus China (Cayman), L.P., a Cayman Islands limited partnership (“WPC Cayman”), and (viii) Warburg Pincus China Partners (Cayman), L.P., a Cayman Islands limited partnership (“Warburg Pincus China Cayman Partners” and, together with WPC Cayman, the “WPC Cayman Funds”).
Added
In addition, Section 304 of the Sarbanes-Oxley Act of 2002 permits the SEC to order the disgorgement of bonuses and incentive-based compensation earned by a registrant issuer’s chief executive officer and chief financial officer in the year following the filing of any financial statement that the issuer is required to restate because of misconduct, and the reimbursement of those funds to the issuer.
Removed
Warburg Pincus XII, L.P., a Delaware limited partnership (“WP XII GP”), is the general partner of the WP XII Funds. WP Global LLC, a Delaware limited liability company (“WP Global”), is the general partner of WP XII GP. Warburg Pincus Partners II, L.P., a Delaware limited partnership (“WPP II”), is the managing member of WP Global.
Added
A copy of the Clawback Policy has been filed herewith as Exhibit 97.1. In the year ended December 31, 2023, we were not required to prepare an accounting restatement that required recovery of erroneously awarded compensation pursuant to the Clawback Policy, nor were there any outstanding balance as of December 31, 2023 of erroneously awarded compensation to be recovered.
Removed
Warburg Pincus Partners GP LLC, a Delaware limited liability company (“WPP GP”), is the general partner of WPP II. Warburg Pincus & Co., a New York general partnership (“WP”), is the managing member of WPP GP. Warburg Pincus (Cayman) China GP, L.P., a Cayman Islands limited partnership (“WPC Cayman GP”), is the general partner of the WPC Cayman Funds.
Removed
Warburg Pincus (Cayman) China GP LLC, a Delaware limited liability company (“WPC Cayman GP LLC”), is the general partner of WPC Cayman GP. Warburg Pincus Partners II (Cayman), L.P., a Cayman Islands exempted limited partnership (“WPP II Cayman”), is the managing member of WPC Cayman GP LLC.
Removed
Warburg Pincus (Bermuda) Private Equity GP Ltd., a Bermuda exempted company (“WP Bermuda”), is the general partner of WPP II Cayman.
Removed
Investment and voting decisions with respect the Class A ordinary shares held by the Warburg Pincus entities are made by a committee comprised of three or more individuals and all members of such committee disclaim beneficial ownership of the shares held by the Warburg Pincus entities.
Removed
Box 905, Quastisky Building, Road Town, Tortola VG1110, British Virgin Islands. (6) Represents 25,223,898 Class A ordinary shares in the form of ADSs that are beneficially owned by Tencent Mobility Limited.
Removed
The registered address of Tencent Mobility Limited is 29/F, Three Pacific Place, No.1 Queen’s Road East, Wanchai, Hong Kong. 180 Table of Contents (7) Represents (i) 4,740,480 Class A ordinary shares held by Links Advance Holdings Limited and (ii) 23,635,636 Class A ordinary shares held by DiDi Sunshine Investments L.P.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

1 edited+0 added−0 removed1 unchanged
For a description of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements among Can Gu Long, the Consolidated VIEs and Their Shareholders.” Share Incentive Plan See “Item 6. Directors, Senior Management and Employees—B. Compensation—Share Incentive Plan.” 181 Table of Contents Special Option Grants See “Item 6. Directors, Senior Management and Employees—B. Compensation—Special Option Grants.” C.
For a description of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements among Can Gu Long, the Consolidated VIEs and Their Shareholders.” Share Incentive Plan See “Item 6. Directors, Senior Management and Employees—B. Compensation—Share Incentive Plan.” Special Option Grants See “Item 6. Directors, Senior Management and Employees—B. Compensation—Special Option Grants.” C.

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