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

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Paragraph-level year-over-year comparison of HUYA Inc.'s 2022 and 2023 20-F annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+1086 added−1093 removedSource: 20-F (2024-04-26) vs 20-F (2023-04-26)

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

1086 paragraphs added · 1093 removed · 835 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

410 edited+132 added−133 removed419 unchanged
Biggest changeOther subsidiaries Primary beneficiary of VIE VIE and VIE’s subsidiaries Eliminating adjustments Consolidated Totals (in thousands of RMB) Third-party revenues — 453,967 — 10,897,479 — 11,351,446 Inter-company revenues (1) — 109,826 8,639,714 — (8,749,540 ) — Total cost and expenses (2) (5,554 ) (796,935 ) (8,813,794 ) (10,789,307 ) 8,749,269 (11,656,321 ) Share of income of subsidiaries, VIE and VIE’s subsidiaries (3) 524,190 324,777 252,963 — (1,101,930 ) — Others, net 68,919 60,317 239,685 195,202 271 564,394 Income before income tax 587,555 151,952 318,568 303,374 (1,101,930 ) 259,519 Income tax (expenses) benefits (4,056 ) (7,006 ) 6,209 (50,374 ) — (55,227 ) Share of income (loss) from equity method investments — 379,244 — (37 ) — 379,207 Net income 583,499 524,190 324,777 252,963 (1,101,930 ) 583,499 For the year ended December 31, 2020 HUYA Inc.
Biggest changeA. [Reserved] Financial Information Related to the VIE (and VIE’s Subsidiaries) The following tables related to the VIE and the VIE’s subsidiaries and other entities present the condensed consolidating schedules of financial information of HUYA Inc., its subsidiary that is the primary beneficiary of the VIE, its other subsidiaries and the VIE and its subsidiaries for the years and as of the dates indicated. 8 Table of Contents Selected Condensed Consolidating Statements of Operation Data ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, 2023 ​ ​ ​ ​ Other ​ Primary ​ VIE and ​ Eliminating ​ Consolidated ​ HUYA Inc. subsidiaries beneficiary of VIE VIE’s subsidiaries adjustments Totals ​ ​ (RMB in thousands) Third-party revenues ​ ⸺ ​ 306,969 ​ 1,326 ​ 6,686,033 ​ ⸺ ​ 6,994,328 Inter-company revenues (1) ⸺ 16,650 5,534,256 ⸺ (5,550,906) ⸺ Total cost and expenses (2) (16,707) (403,456) (5,903,519) (6,746,390) 5,550,894 (7,519,178) Share of loss of subsidiaries, VIE and VIE’s subsidiaries (3) (289,783) (382,321) (154,982) ⸺ 827,086 ⸺ Others, net 109,030 178,888 140,598 (94,625) (345) 333,546 Loss before income tax (197,460) (283,270) (382,321) (154,982) 826,729 (191,304) Income tax expenses (6,702) (6,513) ⸺ ⸺ ⸺ (13,215) Net loss (204,162) (289,783) (382,321) (154,982) 826,729 (204,519) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, 2022 *(4) ​ ​ ​ ​ Other ​ Primary ​ VIE and ​ Eliminating ​ Consolidated ​ HUYA Inc. subsidiaries beneficiary of VIE VIE’s subsidiaries adjustments Totals ​ ​ (RMB in thousands) Third-party revenues ⸺ 321,934 5,296 8,937,121 ⸺ 9,264,351 Inter-company revenues (1) ⸺ 67,919 6,854,854 ⸺ (6,922,773) ⸺ Total cost and expenses (2) (16,134) (535,011) (7,376,333) (9,161,422) 6,922,003 (10,166,897) Share of loss of subsidiaries, VIE and VIE’s subsidiaries (3) (574,309) (500,350) (176,071) — 1,250,730 — Others, net 46,137 72,213 205,086 55,551 770 379,757 Loss before income tax (544,306) (573,295) (487,168) (168,750) 1,250,730 (522,789) Income tax expenses (3,367) (1,014) (13,182) (6,801) ⸺ (24,364) Share of loss from equity method investments ⸺ ⸺ ⸺ (520) ⸺ (520) Net loss (547,673) (574,309) (500,350) (176,071) 1,250,730 (547,673) * The selected condensed consolidating statement of operation data for the year ended December 31, 2022 has been retrospectively adjusted due to the business combination under common control as discussed in Note 2(d) to our audited consolidated financial statements included elsewhere in this annual report. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, 2021 ​ ​ ​ ​ Other ​ Primary ​ VIE and ​ Eliminating ​ Consolidated ​ HUYA Inc. subsidiaries beneficiary of VIE VIE’s subsidiaries adjustments Totals ​ ​ (RMB in thousands) Third-party revenues — 453,967 — 10,897,479 — 11,351,446 Inter-company revenues (1) — 109,826 8,639,714 — (8,749,540) — Total cost and expenses (2) (5,554) (796,935) (8,813,794) (10,789,307) 8,749,269 (11,656,321) Share of income of subsidiaries, VIE and VIE’s subsidiaries (3) 524,190 324,777 252,963 — (1,101,930) — Others, net 68,919 60,317 239,685 195,202 271 564,394 Income before income tax 587,555 151,952 318,568 303,374 (1,101,930) 259,519 Income tax (expenses) benefits (4,056) (7,006) 6,209 (50,374) — (55,227) Share of income (loss) from equity method investments — 379,244 — (37) — 379,207 Net income 583,499 524,190 324,777 252,963 (1,101,930) 583,499 Notes: ​ (1) It represents the elimination of the inter-company service fees for technology support, business support and consulting fees (collectively defined as “VIE service fees”) that are charged pursuant to the exclusive business cooperation agreement. 9 Table of Contents (2) For the years ended December 31, 2021, 2022 and 2023, VIE service fees were charged by the primary beneficiary of the VIE and other subsidiaries to the VIE and VIE’s subsidiaries amounting to RMB8,664.1 million, RMB6,863.4 million and RMB5,530.3 million, respectively.
Risk Factors—Risks Related to Doing Business in Mainland China—The significant oversight and discretion of government of mainland China over our business operation could result in a material adverse change in our operations and the value of our ADSs.” Risks and uncertainties arising from the legal system in mainland China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in mainland China, could result in a material adverse change in our operations and the value of our ADSs.
Risk Factors—Risks Related to Doing Business in Mainland China—The significant oversight and discretion of the government of mainland China over our business operation could result in a material adverse change in our operations and the value of our ADSs.” Risks and uncertainties arising from the legal system in mainland China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in mainland China, could result in a material adverse change in our operations and the value of our ADSs.
As of the date of this annual report, our subsidiaries in mainland China, the VIE and its subsidiaries have obtained the requisite licenses and permits from the government authorities of mainland China that are material for our business operations in mainland China, including, among others, the Value-added Telecommunications Business Operation License for information services via internet, or ICP License, the Permit for Internet Audio-Video Program Service, a radio and television program production and operating permit, a commercial performance license and an internet culture operation license for music products.
As of the date of this annual report, our subsidiaries in mainland China, the VIE and its subsidiaries have obtained the requisite licenses and permits from the government authorities of mainland China that are material for our business operations in mainland China, including, among others, a value-added telecommunications business operation license for information services via internet, or ICP License, a permit for internet audio-video program service, a radio and television program production and operating permit, a commercial performance license and an internet culture operation license for music products.
Under relevant laws and regulations of mainland China, online service providers which provide storage space for users to upload works or links to other services or content could be held liable for copyright infringement under various circumstances, including situations where an online service provider knows or should reasonably have known that the relevant content uploaded or linked to on its platform infringes the copyrights of others and the provider realizes economic benefits from such infringement activities.
Under laws and regulations of mainland China, online service providers which provide storage space for users to upload works or links to other services or content could be held liable for copyright infringement under various circumstances, including situations where an online service provider knows or should reasonably have known that the relevant content uploaded or linked to on its platform infringes the copyrights of others and the provider realizes economic benefits from such infringement activities.
On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.
On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.
In May 2022, the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of our annual report on Form 20-F for the fiscal year ended December 31, 2021.
In May 2022, the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of our annual report on Form 20-F for the fiscal year ended December 31, 2021.
There are also risks that we may be found to violate the existing or future laws and regulations given the uncertainty and complexity of regulation of internet business of mainland China. On August 31, 2018, the Standing Committee of the National People’s Congress of China issued the E-commerce Law, which came into effect on January 1, 2019.
There are also risks that we may be found to violate the existing or future laws and regulations given the uncertainty and complexity of regulation of internet business of mainland China. On August 31, 2018, the Standing Committee of the National People’s Congress issued the E-commerce Law, which came into effect on January 1, 2019.
We are an offshore holding company conducting our operations in mainland China through our subsidiary in mainland China, the variable interest entity and its subsidiaries. We may make loans to our mainland China subsidiary, the variable interest entity and its subsidiaries, or we may make additional capital contributions to our subsidiary in mainland China.
We are an offshore holding company conducting our operations in mainland China through our subsidiaries in mainland China, the variable interest entity and its subsidiaries. We may make loans to our mainland China subsidiary, the variable interest entity and its subsidiaries, or we may make additional capital contributions to our subsidiaries in mainland China.
Furthermore, according to Article 177 of the PRC Securities Law, or Article 177, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of mainland China, and without the consent by the Chinese securities regulatory authorities and the other competent governmental agencies, no entity or individual may provide documents or materials related to securities business to any foreign party.
Furthermore, 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 mainland China, and without the consent by the Chinese securities regulatory authorities and the other competent governmental agencies, no entity or individual may provide documents or materials related to securities business to any foreign party.
Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: • the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; • the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; • the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; • the selective disclosure rules by issuers of material nonpublic information under Regulation FD; and • certain audit committee independence requirements in Rule 10A-3 of the Exchange Act.
Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: ● the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; ● the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations with respect to a security registered under the Exchange Act; ● the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; ● the selective disclosure rules by issuers of material nonpublic information under Regulation FD; and ● certain audit committee independence requirements in Rule 10A-3 of the Exchange Act.
If we are not able to maintain our relationship with talent agencies, in particular the platinum talent agencies which possess the capacity to produce a large volume of high-quality content and manage a considerable pool of talent, our operations may be materially and adversely affected; • Significant revenue sharing fees and content costs on our platform have had and may continue to have an adverse effect on our business, financial condition and results of operations. • We are subject to risks associated with operating in a rapidly changing industry and a relatively new market; and • Our revenue model for live streaming may not remain effective and we cannot guarantee that our future monetization strategies will be successfully implemented or generate sustainable revenues and profit.
If we are not able to maintain our relationship with talent agencies, in particular the platinum and diamond talent agencies which possess the capacity to produce a large volume of high-quality content and manage a considerable pool of talent, our operations may be materially and adversely affected; ● Significant revenue sharing fees and content costs on our platform have had and may continue to have an adverse effect on our business, financial condition and results of operations. ● We are subject to risks associated with operating in a rapidly changing industry and a relatively new market; and ● Our revenue model for live streaming may not remain effective and we cannot guarantee that our future monetization strategies will be successfully implemented or generate sustainable revenues and profit.
Risk Factors—Risks Related to Our Corporate Structure—The shareholders of the VIE have potential conflicts of interest with us, and if any such conflicts of interest are not resolved in our favor, our business may be materially and adversely affected.” 3 Table of Contents There are also substantial uncertainties regarding the interpretation and application of current and future laws, regulations and rules of mainland China regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with the VIE and its shareholders.
Risk Factors—Risks Related to Our Corporate Structure—The shareholders of the VIE have potential conflicts of interest with us, and if any such conflicts of interest are not resolved in our favor, our business may be materially and adversely affected.” 3 Table of Contents There are also uncertainties regarding the interpretation and application of current and future laws, regulations and rules of mainland China regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with the VIE and its shareholders.
Although the law in this regard is unclear, we intend to treat the variable interest entity (including its subsidiaries) as being owned by us for United States federal income tax purposes, not only because we exercise effective control over the operation of such entities but also because we are entitled to substantially all of their economic benefits, and, as a result, we consolidate their results of operations in our consolidated financial statements.
Although the law in this regard is unclear, we intend to treat the variable interest entity (including its subsidiaries) as being owned by us for United States federal income tax purposes, not only because we exercise effective control over the operations of such entities, but also because we are entitled to substantially all of their economic benefits, and, as a result, we consolidate their results of operations in our consolidated financial statements.
Additionally, operators of e-commerce platforms shall record and save information released on their platform about commodities and services, and report to competent authorities, if such information show that e-commerce operators have failed to obtain the administrative license when they are subject to the relevant administrative approval, or commodities sold or services offered by e-commerce operators are found to be in violation of certain requirements to safeguard personal safety, property security and the requirements on environmental protection, or to be prohibited by laws and administrative regulations.
Additionally, operators of e-commerce platforms shall record and save information released on their platform about commodities and services, and report to competent authorities, if such information show that e-commerce operators have failed to obtain the administrative license when they are subject to the administrative approval, or commodities sold or services offered by e-commerce operators are found to be in violation of certain requirements to safeguard personal safety, property security and the requirements on environmental protection, or to be prohibited by laws and administrative regulations.
Our live streaming revenues experienced a decline in 2022, and we may continue to experience a decline and not be able to achieve a growth in the future, as the user demand for this service may change, decrease substantially or dissipate, we may fail to anticipate and serve user demands effectively, or we may have to make adjustments on our live streaming revenue model under intensified regulations, rules, or guidelines on the live streaming industry and we may not be able to mitigate revenue impacts of those adjustments.
Our live streaming revenues experienced a decline in 2022 and 2023, and we may continue to experience a decline and not be able to achieve a growth in the future, as the user demand for this service may change, decrease substantially or dissipate, we may fail to anticipate and serve user demands effectively, or we may have to make adjustments on our live streaming revenue model under intensified regulations, rules, or guidelines on the live streaming industry and we may not be able to mitigate revenue impacts of those adjustments.
If we are not able to comply with the cybersecurity and data privacy requirements in a timely manner, or at all, we may be subject to government enforcement actions and investigations, fines, penalties, suspension of our non-compliant operations, or removal of our apps from the relevant application stores, among other sanctions, which could materially and adversely affect our business and results of operations.
If we are not able to comply with the cybersecurity and data privacy requirements in a timely manner, or at all, we may be subject to government enforcement actions and investigations, fines, penalties, suspension of our non-compliant operations, or removal of our apps from application stores, among other sanctions, which could materially and adversely affect our business and results of operations.
According to a notice issued by the Administration of Press, Publication, Radio, Film and Television of the Guangdong Province on September 26, 2016, or Guangdong Province Letter, only live streaming services covering (i) major political, military, economics, social, cultural, sports activities or reality event streaming or (ii) activities such as general social cultural activities or sports events are required to apply for an Audio-Visual License.
According to a notice issued by the Administration of Press, Publication, Radio, Film and Television of the Guangdong Province on September 26, 2016, only live streaming services covering (i) major political, military, economics, social, cultural, sports activities or reality event streaming or (ii) activities such as general social cultural activities or sports events are required to apply for an Audio-Visual License.
On April 3, 2020, Linen Investment Limited, a wholly-owned subsidiary of Tencent, exercised its option to acquire 16,523,819 Class B ordinary shares for an aggregate purchase price of US$262.6 million in cash from JOYY. On October 12, 2020, Linen Investment Limited entered into a share transfer agreement with certain affiliates of Mr.
On April 3, 2020, Linen Investment Limited, a wholly-owned subsidiary of Tencent, exercised its option to acquire 16,523,819 Class B ordinary shares for an aggregate purchase price of US$262.6 million in cash from JOYY Inc. On October 12, 2020, Linen Investment Limited entered into a share transfer agreement with certain affiliates of Mr.
E-commerce platform operators shall not delete consumers’ ratings of commodities sold or services provided on the platform. We have carried out compliance work in accordance with these regulatory requirements. However, there are substantial uncertainties with respect to the interpretation and implementation of the E-commerce Law and how it may impact our business operations.
E-commerce platform operators shall not delete consumers’ ratings of commodities sold or services provided on the platform. We have carried out compliance work in accordance with these regulatory requirements. However, there are uncertainties with respect to the interpretation and implementation of the E-commerce Law and how it may impact our business operations.
If we fail to obtain required approval or complete other review or filing procedures, under the Overseas Listing Filing Rules or otherwise, for any future overseas securities offerings or listings, including but not limited to follow-on offerings, issuance of convertible bonds, secondary listings, offshore relisting after going-private transactions, and other equivalent offering activities, we may face sanctions by the CSRC or other regulatory agencies of mainland China, which may include fines and penalties on our operations in mainland China, limitations on our operating privileges in mainland China, restrictions on or prohibition of the payments or remittance of dividends by our subsidiaries in mainland China, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs.
If we fail to obtain required approval or complete other review or filing procedures, under the Overseas Listing Filing Rules or otherwise, for any future overseas securities offerings or listings, including but not limited to follow-on offerings, issuance of convertible bonds, secondary listings, offshore relisting after going-private transactions, and other equivalent offering activities, we may face sanctions by the China Securities Regulatory Commission or other regulatory agencies of mainland China, which may include fines and penalties on our operations in mainland China, limitations on our operating privileges in mainland China, restrictions on or prohibition of the payments or remittance of dividends by our subsidiaries in mainland China, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs.
If the governmental authorities of mainland China determine that we are not in compliance with all the requirements under applicable laws and regulations relating to Internet content, we may be subject to fines and/or other sanctions such as an order to correct the violation, confiscation of illegal earnings, suspension or shutdown of the related business and website, cessation of business operation for rectification, and revocation of business license, any of which could disrupt our operations. 49 Table of Contents In conducting anti-monopoly and competition laws and regulations related scrutiny or action, governmental agencies and regulators may, among other things, prohibit future acquisitions, divestitures, or combinations we plan to make, impose significant fines or penalties, require divestiture of certain of our assets, or impose other restrictions that limit or require us to modify our operations.
If the governmental authorities of mainland China determine that we are not in compliance with all the requirements under applicable laws and regulations relating to Internet content, we may be subject to fines and/or other sanctions such as an order to correct the violation, confiscation of illegal earnings, suspension or shutdown of the related business and website, cessation of business operation for rectification, and revocation of business license, any of which could disrupt our operations. 51 Table of Contents In conducting anti-monopoly and competition laws and regulations related scrutiny or action, governmental agencies and regulators may, among other things, prohibit future acquisitions, divestitures, or combinations we plan to make, impose significant fines or penalties, require divestiture of certain of our assets, or impose other restrictions that limit or require us to modify our operations.
In addition to possible shareholders’ approval, we may also have to obtain approvals and licenses from relevant government authorities for the acquisitions and to comply with any applicable laws and regulations of mainland China, which could result in increased delay and costs, and may derail our business strategy if we fail to do so.
In addition to possible shareholders’ approval, we may also have to obtain approvals and licenses from the government authorities for the acquisitions and to comply with any applicable laws and regulations of mainland China, which could result in increased delay and costs, and may derail our business strategy if we fail to do so.
Although we monitor such authorized personnel, there is no assurance such procedures will prevent all instances of abuse or negligence. Accordingly, if any of our authorized personnel misuse or misappropriate our corporate chops or seals, we could encounter difficulties in maintaining control over the relevant entities and experience significant disruption to our operations.
Although we monitor such authorized personnel, there is no assurance such procedures will prevent all instances of abuse or negligence. Accordingly, if any of our authorized personnel misuse or misappropriate our corporate chops or seals, we could encounter difficulties in maintaining control over the entities and experience significant disruption to our operations.
We may again not be able to generate sufficient revenues to offset such costs and expenses to sustain profitability in the future. In addition, we expect to continue to invest heavily in our operations to maintain our current market position, support anticipated future growth and meet our expanded reporting and compliance obligations as a public company.
We may again not be able to generate sufficient revenues to offset such costs and expenses to sustain profitability in the future. In addition, we expect to continue to invest heavily in our operations to maintain our current market position, support anticipated future growth and meet our reporting and compliance obligations as a public company.
Furthermore, if future laws, administrative regulations or provisions prescribed by the State Council mandate further actions to be taken by companies with respect to existing contractual arrangements, we may face substantial uncertainties as to whether we can complete such actions in a timely manner, or at all.
Furthermore, if future laws, administrative regulations or provisions prescribed by the State Council mandate further actions to be taken by companies with respect to existing contractual arrangements, we may face uncertainties as to whether we can complete such actions in a timely manner, or at all.
All designated legal representatives of our subsidiary in mainland China, the variable interest entity and its subsidiaries are members of our senior management team who have signed employment agreements with us or our subsidiary in mainland China, the variable interest entity and its subsidiaries under which they agree to abide by various duties they owe to us.
All designated legal representatives of our subsidiaries in mainland China, the variable interest entity and its subsidiaries are members of our senior management team who have signed employment agreements with us or our subsidiaries in mainland China, the variable interest entity and its subsidiaries under which they agree to abide by various duties they owe to us.
Although we factor in industry standards and expected user demand in determining how to optimize our monetization effectively, if we fail to properly manage the supply and timing of our products and services and their appropriate prices, our users may be less likely to make purchases from us.
Although we factor in industry standards and user demand in determining how to optimize our monetization effectively, if we fail to properly manage the supply and timing of our products and services and their appropriate prices, our users may be less likely to make purchases from us.
On June 24, 2022, the revised version of Anti-Monopoly Law of the PRC was promulgated by the Standing Committee of the National People’s Congress. According to the revised Anti-monopoly Law, where a concentration of undertakings reaches the declaration threshold stipulated by the State Council, a declaration must be approved by the anti-monopoly authority before parties implement the concentration.
On June 24, 2022, the revised version of Anti-Monopoly Law was promulgated by the Standing Committee of the National People’s Congress. According to the revised Anti-monopoly Law, where a concentration of undertakings reaches the declaration threshold stipulated by the State Council, a declaration must be approved by the anti-monopoly authority before parties implement the concentration.
As used in this annual report, “we,” “us,” “our company,” “our” and “Huya” refer to HUYA Inc., a Cayman Islands company, and its subsidiaries, and, in the context of describing our operations and combined and consolidated financial information, also include the VIE and its subsidiaries in mainland China.
As used in this annual report, “we,” “us,” “our company,” “our” and “Huya” refer to HUYA Inc., a Cayman Islands company, and its subsidiaries, and, in the context of describing our operations and consolidated financial information, also include the VIE and its subsidiaries in mainland China.
Under the PRC Administrative Provisions for the Internet Audio-Video Program Service, or the Audio-Visual Provisions, providers of internet audio-visual program services are required to obtain a license for online transmission of audio-visual programs, or the Audio-Visual License, issued by the PRC National Radio and Television Administration, or the NRTA, or complete certain registration procedures with the NRTA.
Under the PRC Administrative Provisions for the Internet Audio-Video Program Service, providers of internet audio-visual program services are required to obtain a license for online transmission of audio-visual programs, or the Audio-Visual License, issued by the National Radio and Television Administration, or complete certain registration procedures with the National Radio and Television Administration.
In respect of an indirect offshore transfer of assets of a mainland China establishment or place of business of a foreign enterprise, the resulting gain is to be included with the annual enterprise filing of the mainland China establishment or place of business being transferred, and would consequently be subject to mainland China enterprise income tax at a rate of 25%.
With respect to an indirect offshore transfer of assets of a mainland China establishment or place of business of a foreign enterprise, the resulting gain is to be included with the annual enterprise filing of the mainland China establishment or place of business being transferred and would consequently be subject to mainland China enterprise income tax at a rate of 25%.
Furthermore, if our subsidiary in mainland China, the variable interest entity and its subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us, which may restrict our ability to satisfy our liquidity requirements.
Furthermore, if our subsidiaries in mainland China, the variable interest entity and its subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us, which may restrict our ability to satisfy our liquidity requirements.
There are, however, substantial uncertainties regarding the interpretation and application of current or future laws and regulations in mainland China. Thus, we cannot assure you that the government of mainland China will not take a view contrary to the opinion of our mainland China legal counsel.
There are, however, uncertainties regarding the interpretation and application of current or future laws and regulations in mainland China. Thus, we cannot assure you that the government of mainland China will not take a view contrary to the opinion of our mainland China legal counsel.
In the opinion of our mainland China legal counsel, Commerce & Finance Law Offices, based on its understanding of the relevant laws and regulations in mainland China, each of the contracts among our subsidiary in mainland China, the variable interest entity and its shareholders is valid, binding and enforceable in accordance with its terms.
In the opinion of our mainland China legal counsel, Commerce & Finance Law Offices, based on its understanding of the laws and regulations in mainland China, each of the contracts among our subsidiary in mainland China, the variable interest entity and its shareholders is valid, binding and enforceable in accordance with its terms.
Pursuant to the equity interest pledge agreements between Guangzhou Huya, the variable interest entity, and Huya Technology, our wholly-owned subsidiary in mainland China, and the shareholders of Guangzhou Huya, each shareholder of Guangzhou Huya agrees to pledge its equity interests in Guangzhou Huya to our subsidiary to secure Guangzhou Huya’s performance of its obligations under the relevant contractual arrangements.
Pursuant to the equity interest pledge agreements between Guangzhou Huya, the variable interest entity, and Huya Technology, our wholly-owned subsidiary in mainland China, and the shareholders of Guangzhou Huya, each shareholder of Guangzhou Huya agrees to pledge its equity interests in Guangzhou Huya to our subsidiary to secure Guangzhou Huya’s performance of its obligations under the contractual arrangements.
For example, our mobile MAUs may not accurately reflect the actual number of people who accessed our platform, as it is possible that some people may use more than one device, some people may share one device, and some people may access our platform through multiple channels.
For example, our mobile MAUs may not accurately reflect the actual number of people who accessed our platform through our mobile apps, as it is possible that some people may use more than one device, some people may share one device, and some people may access our platform through multiple channels.
Our IT systems and content delivery network, or CDN, are vulnerable to damage or interruption as a result of fires, floods, earthquakes, power losses, telecommunications failures, undetected errors in software, computer viruses, hacking and other attempts to harm our IT systems.
Our IT systems and content delivery network are vulnerable to damage or interruption as a result of fires, floods, earthquakes, power losses, telecommunications failures, undetected errors in software, computer viruses, hacking and other attempts to harm our IT systems.
For instance, on February 7, 2021, the Anti-monopoly Committee of the State Council published the Guideline on Anti-monopoly of Platform Economy Sector, or the Guideline, which became effective on the same day, aiming at enhancing anti-monopoly administration on businesses that operate under the platform model and the overall platform economy.
For instance, on February 7, 2021, the Anti-monopoly Committee of the State Council published the Guideline on Anti-monopoly of Platform Economy Sector, which became effective on the same day, aiming at enhancing anti-monopoly administration on businesses that operate under the platform model and the overall platform economy.
Although we usually utilize chops to enter into contracts, the designated legal representatives of each of our subsidiary in mainland China, the variable interest entity and its subsidiaries have the apparent authority to enter into contracts on behalf of such entities without chops and bind such entities.
Although we usually utilize chops to enter into contracts, the designated legal representatives of each of our subsidiaries in mainland China, the variable interest entity and its subsidiaries have the apparent authority to enter into contracts on behalf of such entities without chops and bind such entities.
Any such exclusion from indices could result in a less active trading market for our ADSs. Any actions or publications by shareholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of our ADSs.
The exclusion from indices could result in a less active trading market for our ADSs. Any actions or publications by shareholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of our ADSs.
The absolute amounts and revenue percentages that we pay broadcasters and talent agencies may increase. If our competitor platforms offer higher revenue sharing ratios or additional fees with an intent to attract our popular broadcasters, costs to retain our broadcasters may further increase.
The absolute amounts and revenue percentages that we pay broadcasters and talent agencies may increase. If our competitor platforms offer higher revenue sharing ratios or additional fees with an intent to attract our popular broadcasters, costs to retain our broadcasters may increase.
If such third parties increase their prices, fail to provide their services effectively, terminate their service or agreements or discontinue their relationships with us, we could suffer service interruptions, reduced revenues or increased costs, any of which may have a material adverse effect on our business, financial condition and results of operations. 29 Table of Contents Our operations depend on the performance of the internet infrastructure and fixed telecommunications networks in mainland China, which is in large part maintained by state-owned operators.
If such third parties increase their prices, fail to provide their services effectively, terminate their service or agreements or discontinue their relationships with us, we could suffer service interruptions, reduced revenues or increased costs, any of which may have a material adverse effect on our business, financial condition and results of operations. 31 Table of Contents Our operations depend on the performance of the internet infrastructure and fixed telecommunications networks in mainland China, which is in large part maintained by state-owned operators.
Under law of mainland China, legal documents for corporate transactions are executed using the chops or seal of the signing entity or with the signature of a legal representative whose designation is registered and filed with the relevant branch of the Administration of Industry and Commerce.
Under law of mainland China, legal documents for corporate transactions are executed using the chops or seal of the signing entity or with the signature of a legal representative whose designation is registered and filed with the branch of the Administration of Industry and Commerce.
These risks could result in a material adverse change in our operations and the value of our ADSs, significantly limit or completely hinder our ability to continue to offer securities to investors, or cause the value of such securities to significantly decline or become worthless.
These risks and uncertainties could result in a material adverse change in our operations and the value of our ADSs, significantly limit or completely hinder our ability to continue to offer securities to investors, or cause the value of such securities to significantly decline or become worthless.
The interpretation and application of existing mainland China laws, regulations and policies and possible new laws, regulations or policies relating to the internet industry have created substantial uncertainties regarding the legality of existing and future foreign investments in, and the businesses and activities of, internet businesses in mainland China, including our business.
The interpretation and application of existing mainland China laws, regulations and policies and possible new laws, regulations or policies relating to the internet industry have created uncertainties regarding the legality of existing and future foreign investments in, and the businesses and activities of, internet businesses in mainland China, including our business.
We may not at all times be fully aware or informed of the identities of all our shareholders or beneficial owners that are required to make such registrations, and we cannot compel our beneficial owners to comply with SAFE registration requirements.
We may not at all times be fully aware or informed of the identities of all our shareholders or beneficial owners that are required to make such registrations, and we cannot compel our beneficial owners to comply with the registration requirements.
If a designated legal representative obtains control of the chops in an effort to obtain control over any of our subsidiary in mainland China, the variable interest entity or its subsidiaries, we or our subsidiary in mainland China, the variable interest entity and its subsidiaries would need to pass a new shareholder or board resolution to designate a new legal representative and we would need to take legal action to seek the return of the chops, apply for new chops with the relevant authorities, or otherwise seek legal redress for the violation of the representative’s fiduciary duties to us, which could involve significant time and resources and divert management attention away from our regular business.
If a designated legal representative obtains control of the chops in an effort to obtain control over any of our subsidiaries in mainland China, the variable interest entity or its subsidiaries, we or our subsidiaries in mainland China, the variable interest entity and its subsidiaries would need to pass a new shareholder or board resolution to designate a new legal representative and we would need to take legal action to seek the return of the chops, apply for new chops with the authorities, or otherwise seek legal redress for the violation of the representative’s fiduciary duties to us, which could involve significant time and resources and divert management attention away from our regular business.
We may incur substantial financial, operational and managerial costs in response to and in anticipation to the relevant regulatory and policy risks, and we may not be able to effectively predict, estimate or manage those risks in a timely and cost-efficient manner.
We may incur substantial financial, operational and managerial costs in response to and in anticipation to the regulatory and policy risks, and we may not be able to effectively predict, estimate or manage those risks in a timely and cost-efficient manner.
In the meantime, our directors, executive officers and other employees who are mainland China citizens or who are non-mainland China residents residing in mainland China for a continuous period of not less than one year, subject to limited exceptions, and who have been granted incentive share awards by us, may follow the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly-Listed Company, or 2012 SAFE notices, promulgated by the SAFE in 2012.
In the meantime, our directors, executive officers and other employees who are mainland China citizens or who are non-mainland China residents residing in mainland China for a continuous period of not less than one year, subject to limited exceptions, and who have been granted incentive share awards by us, may follow the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly-Listed Company, promulgated by the State Administration of Foreign Exchange in 2012.
The mainland China enterprise income tax law requires every enterprise in mainland China to submit its annual enterprise income tax return together with a report on transactions with its affiliates or related parties to the relevant tax authorities.
The mainland China enterprise income tax law requires every enterprise in mainland China to submit its annual enterprise income tax return together with a report on transactions with its affiliates or related parties to the tax authorities.
In circumstances involving serious violations by us, governmental authorities of mainland China may force us to terminate our advertising operations or revoke our licenses. 50 Table of Contents In addition to the advertisements that were placed by the advertising agencies or advertisers we directly cooperate with, our platform also displays side-bar advertisements placed by broadcasters on their own streaming channels and offers native advertisements in cooperation with broadcasters.
In circumstances involving serious violations by us, governmental authorities of mainland China may force us to terminate our advertising operations or revoke our licenses. 52 Table of Contents In addition to the advertisements that were placed by the advertising agencies or advertisers we directly cooperate with, our platform also displays side-bar advertisements placed by broadcasters on their own streaming channels and offers native advertisements in cooperation with broadcasters.
Although we have required our users to post only legally compliant and inoffensive materials and have set up screening procedures, our screening procedures may fail to screen out all potentially offensive or non-compliant user-generated content and, even if properly screened, a third party may still find user-generated content posted on our platform offensive and take action against us in connection with such content.
Although we have required our users to post only legally compliant and inoffensive materials and have set up screening procedures, our screening procedures may fail to screen out all potentially offensive, unauthorized or non-compliant user-generated content and, even if properly screened, a third party may still find user-generated content posted on our platform offensive and/or infringing and take action against us in connection with such content.
If we fail to complete such filing procedures for any future offshore offering or listing, including our follow-on offerings, issuance of convertible bonds, offshore relisting after going-private transactions, and other equivalent offering activities, we may face sanctions by the CSRC or other regulatory authorities of mainland China, which may include fines and penalties on our operations in mainland China, limitations on our operating privileges in mainland China, restrictions on or delays to our future financing transactions offshore, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs.
If we fail to complete such filing procedures for any future offshore offering or listing, including our follow-on offerings, issuance of convertible bonds, offshore relisting after going-private transactions, and other equivalent offering activities, we may face sanctions by the China Securities Regulatory Commission or other regulatory authorities of mainland China, which may include fines and penalties on our operations in mainland China, limitations on our operating privileges in mainland China, restrictions on or delays to our future financing transactions offshore, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs.
Moreover, failure to comply with the SAFE registration described above could result in liability under laws of mainland China for evasion of applicable foreign exchange restrictions.
Moreover, failure to comply with the registration described above could result in liability under laws of mainland China for evasion of applicable foreign exchange restrictions.
We have followed our home country practice in lieu of the provisions of Section 302 and did not hold an annual general meeting of shareholders in 2022.
We have followed our home country practice in lieu of the provisions of Section 302 and did not hold an annual general meeting of shareholders in 2022 and 2023.
We will be a “passive foreign investment company,” or “PFIC,” if, in any particular taxable year, either (a) 75% or more of our gross income for such year consists of certain types of “passive” income or (b) 50% or more of the average quarterly value of our assets (generally as determined on the basis of a quarterly average) during such year produce or are held for the production of passive income.
We will be a “passive foreign investment company,” or PFIC, if, in any particular taxable year, either (a) 75% or more of our gross income for such year consists of certain types of “passive” income or (b) 50% or more of the average quarterly value of our assets (generally as determined on the basis of a quarterly average) during such year produce or are held for the production of passive income.
However, MOFCOM or other government agencies may publish explanations in the future determining that our business is in an industry subject to the security review, in which case our future acquisitions in mainland China, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited. 54 Table of Contents The regulations in mainland China relating to offshore investment activities by mainland China residents may limit the ability of our subsidiaries in mainland China to increase their registered capital or distribute profits to us or otherwise expose us to liability and penalties under law of mainland China.
However, the Ministry of Commerce or other government agencies may publish explanations in the future determining that our business is in an industry subject to the security review, in which case our future acquisitions in mainland China, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited. 54 Table of Contents The regulations in mainland China relating to offshore investment activities by mainland China residents may limit the ability of our subsidiaries in mainland China to increase their registered capital or distribute profits to us or otherwise expose us to liability and penalties under law of mainland China.
Risks Related to Our Relationship with Our Major Shareholders • Our major shareholders will control the outcome of shareholder actions in our company; • We may have conflicts of interest with Tencent and, because of Tencent’s controlling ownership interest in our company, we may not be able to resolve such conflicts on favorable terms for us; and • If we are no longer able to benefit from our business cooperation with Tencent, our business may be adversely affected.
Risks Related to Our Relationship with Our Controlling Shareholder ● Our controlling shareholder will control the outcome of shareholder actions in our company; ● We may have conflicts of interest with Tencent and, because of Tencent’s controlling ownership interest in our company, we may not be able to resolve such conflicts on favorable terms for us; and ● If we are no longer able to benefit from our business cooperation with Tencent, our business may be adversely affected.
While detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability of an overseas securities regulator to directly conduct investigation or evidence collection activities within mainland China and the potential obstacles for information provision may further increase difficulties you face in protecting your interests.
While detailed interpretation of or implementation rules under Article 177 of the PRC Securities Law have yet to be promulgated, the inability of an overseas securities regulator to directly conduct investigation or evidence collection activities within mainland China and the potential obstacles for information provision may further increase difficulties you face in protecting your interests.
Further, our subsidiaries in mainland China and the VIE are required to make appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds, which are not distributable as cash dividends and can only be used for specific purposes. For more details, see “Item 5. Operating and Financial Review and Prospects—B.
Furthermore, our subsidiaries in mainland China and the VIE are required to make appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds, which are not distributable as cash dividends and can only be used for specific purposes. For more details, see “Item 5. Operating and Financial Review and Prospects—B.
In connection with enforcing these rules, regulations, policies and requirements, relevant government authorities may suspend services by, or revoke licenses of, any internet or mobile content service provider that is deemed to provide illicit content online or on mobile devices, and such activities may be intensified in connection with any ongoing government campaigns to eliminate prohibited content online.
In connection with enforcing these rules, regulations, policies and requirements, the government authorities may suspend services by, or revoke licenses of, any internet or mobile content service provider that is deemed to provide illicit content online or on mobile devices, and such activities may be intensified in connection with any ongoing government campaigns to eliminate prohibited content online.
We use a variety of methods to ensure our platform remains a healthy and positive experience for our users. See “Item 4. Information on the Company—C. Business Overview—Content Moderation.” In response to the above-mentioned campaigns, we adopted various measures to prevent the dissemination of gambling, pornographic and other illicit information.
We use a variety of methods to ensure our platform remains a healthy and positive experience for our users. See “Item 4. Information on the Company—B. Business Overview—Content Moderation.” In response to the above-mentioned campaigns, we adopted various measures to prevent the dissemination of gambling, pornographic and other illicit information.
Neither our subsidiaries nor the VIE made cash dividends or other distributions to HUYA Inc., the holding company, or its offshore subsidiaries, in the years ended December 31, 2020, 2021 and 2022. Going forward, our subsidiaries and the VIE intend to retain most, if not all, of their available funds and any future earnings.
Neither our subsidiaries nor the VIE made cash dividends or other distributions to HUYA Inc., the holding company, or its offshore subsidiaries, in the years ended December 31, 2021, 2022 and 2023. Going forward, our subsidiaries and the VIE intend to retain most, if not all, of their available funds and any future earnings.
Further, if we are a PFIC for any year during which a U.S. holder holds our ADSs or Class A ordinary shares, we generally will continue to be treated as a PFIC for all succeeding years during which such U.S. holder holds our ADSs or Class A ordinary shares, unless we were to cease to be a PFIC and the U.S. holder were to make a “deemed sale” election with respect to the ADSs or Class A ordinary shares.
Furthermore, if we are a PFIC for any year during which a U.S. holder holds our ADSs or Class A ordinary shares, we generally will continue to be treated as a PFIC for all succeeding years during which such U.S. holder holds our ADSs or Class A ordinary shares, unless we were to cease to be a PFIC and the U.S. holder were to make a “deemed sale” election with respect to the ADSs or Class A ordinary shares.
In particular, we face a number of challenges relating to data from transactions and other activities on our platforms, including: • protecting the data in and hosted on our system, including against attacks on our system by outside parties or fraudulent behavior or improper use by our employees; • addressing concerns related to privacy and sharing, safety, security and other factors; and 34 Table of Contents • complying with applicable laws, rules and regulations relating to the collection, use, storage, transfer, disclosure and security of personal information, including any requests from regulatory and government authorities relating to these data.
In particular, we face a number of challenges relating to data from transactions and other activities on our platforms, including: ● protecting the data in and hosted on our system, including against attacks on our system by outside parties or fraudulent behavior or improper use by our employees; ● addressing concerns related to privacy and sharing, safety, security and other factors; and complying with applicable laws, rules and regulations relating to the collection, use, storage, transfer, disclosure and security of personal information, including any requests from regulatory and government authorities relating to these data.
Neither HUYA Inc. nor its investors has an equity ownership (including foreign direct investment) in, or control through such equity ownership of, the VIE, and the contractual arrangements are not equivalent to an equity ownership in the business of the VIE. For more details of these contractual arrangements, see “Item 4. Information on the Company—D.
Neither HUYA Inc. nor its investors has an equity ownership (including foreign direct investment) in, or control through such equity ownership of, the VIE, and the contractual arrangements are not equivalent to an equity ownership in the business of the VIE. For more details of these contractual arrangements, see “Item 4. Information on the Company—C.
Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—Uncertainties exist with respect to the interpretation and implementation of the newly enacted PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.” Our corporate structure is subject to risks associated with our contractual arrangements with the VIE.
Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—Uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.” Our corporate structure is subject to risks associated with our contractual arrangements with the VIE.
If fail to procure these content or fail to procure these content at commercially acceptable costs, our business and results of operations may be adversely impacted. In 2021 and 2022, our e-sports content costs also increased significantly due to our procurement of more high-quality events and the increasing prices of some leading e-sports tournaments.
If we fail to procure these content, or if we fail to procure these content at commercially acceptable costs, our business and results of operations may be adversely impacted. In 2021 and 2022, our e-sports content costs increased significantly due to our procurement of more high-quality events and the increasing prices of some leading e-sports tournaments.
We may incur significant managerial, financial and operational costs and expenses in dealing with the negative publicity or public complaints. 27 Table of Contents We rely on key operating metrics, to evaluate the performance of our business, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.
We may incur significant managerial, financial and operational costs and expenses in dealing with the negative publicity or public complaints. 29 Table of Contents We rely on key operating metrics, to evaluate the performance of our business, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.
Given the uncertainty in the interpretation and implementation of this notice, we may be required to subsequently implement further content monitoring measures, which could materially and adversely affect our business, financial condition and results of operations. For further information regarding this notice, see “Item 4. Information on the Company—C.
Given the uncertainty in the interpretation and implementation of this notice, we may be required to subsequently implement further content monitoring measures, which could materially and adversely affect our business, financial condition and results of operations. For further information regarding this notice, see “Item 4. Information on the Company—B.
If we fail to complete the necessary registration or obtain the necessary approval, our ability to make loans or equity contributions to our subsidiary in mainland China may be negatively affected, which could adversely affect the liquidity of our subsidiary in mainland China and the ability of our subsidiary in mainland China to fund its working capital and expansion projects and meet its obligations and commitments.
If we fail to complete the necessary registration or obtain the necessary approval, our ability to make loans or equity contributions to our subsidiaries in mainland China may be negatively affected, which could adversely affect the liquidity of our subsidiaries in mainland China and the ability of our subsidiaries in mainland China to fund its working capital and expansion projects and meet its obligations and commitments.
For example, we are subject to a variety of regulatory restrictions concerning the age limit for broadcasters, as well as restrictions on our products’ features. The existing and future regulations rules and guidelines that could affect us are beyond our control, and their potential impact on us is difficult to predict.
We are also subject to a variety of regulatory restrictions concerning the age limit for broadcasters, as well as restrictions on our products’ features. The existing and future regulations rules and guidelines that could affect us are beyond our control, and their potential impact on us is difficult to predict.
Since we operate in a highly competitive market, brand maintenance and enhancement directly affect our ability to maintain our market position. Although we have developed brand partly through word of mouth referrals, as we expand, we may conduct various marketing and brand promotion activities using various methods to continue promoting our brand.
Since we operate in a highly competitive market, brand maintenance and enhancement directly affect our ability to maintain our market position. Although we have developed brand partly through word-of-mouth referrals, as we develop, we may conduct various marketing and brand promotion activities using various methods to continue promoting our brand.
Any failure or perceived failure by us to comply with the Guideline and other anti-monopoly laws and regulations may result in governmental investigations or enforcement actions, litigation or claims against us and could have an adverse effect on our business, financial condition and results of operations.
Any failure or perceived failure by us to comply with this guideline and other anti-monopoly laws and regulations may result in governmental investigations or enforcement actions, litigation or claims against us and could have an adverse effect on our business, financial condition and results of operations.
Risk Factors—Risks Related to Our Corporate Structure—Our subsidiaries in mainland China and the variable interest entity are subject to restrictions on paying dividends or making other payments to us, which may restrict our ability to satisfy our liquidity requirements.” Under law of mainland China, HUYA Inc. and its offshore subsidiaries may provide funding to our subsidiaries in mainland China only through capital contributions or loans, including advances, and to the VIE only through loans, including advances, subject to satisfaction of applicable government registration and approval requirements.
Risk Factors—Risks Related to Our Corporate Structure—Our subsidiaries in mainland China and the variable interest entity are subject to restrictions on paying dividends or making other payments to us, which may restrict our ability to satisfy our liquidity requirements.” 6 Table of Contents Under law of mainland China, HUYA Inc. and its offshore subsidiaries may provide funding to our subsidiaries in mainland China only through capital contributions or loans, including advances, and to the VIE only through loans, including advances, subject to satisfaction of applicable government registration and approval requirements.
See “—Risks Related to Doing Business in Mainland China—Uncertainties with respect to the legal system of mainland China and the interpretation and enforcement of laws and regulations of mainland China could limit the legal protections available to you and us.” We may be held liable for information or content displayed on, retrieved from or linked to our platform, or distributed to our users, and government authorities may impose legal sanctions on us, including, in serious cases, suspending or revoking the licenses needed to operate our platform.
See “—Risks Related to Doing Business in Mainland China—Uncertainties with respect to the legal system of mainland China and the interpretation and enforcement of laws and regulations of mainland China could limit the legal protections available to you and us.” 26 Table of Contents We may be held liable for information or content displayed on, retrieved from or linked to our platform, or distributed to our users, and government authorities may impose legal sanctions on us, including, in serious cases, suspending or revoking the licenses needed to operate our platform.
As a result, we cannot assure you that all of our shareholders or beneficial owners who are mainland China residents or entities have complied with, and will in the future make or obtain any applicable registrations or approvals required by, SAFE regulations.
As a result, we cannot assure you that all of our shareholders or beneficial owners who are mainland China residents or entities have complied with, and will in the future make or obtain any applicable registrations or approvals required by, the laws and regulations.
As a result of the dual-class share structure and the concentration of ownership, holders of Class B ordinary shares will have considerable influence over matters such as decisions regarding mergers, consolidations and the sale of all or substantially all of our assets, election of directors and other significant corporate actions.
As a result of the dual-class share structure and the concentration of ownership, the holder of Class B ordinary shares will have considerable influence over matters such as decisions regarding mergers, consolidations and the sale of all or substantially all of our assets, election of directors and other significant corporate actions.
We believe that we were a passive foreign investment company, or PFIC, for United States federal income tax purposes for the taxable year ended December 31, 2022, which could subject United States investors in our ADSs or Class A ordinary shares to significant adverse United States income tax consequences.
We believe that we were a passive foreign investment company, or PFIC, for United States federal income tax purposes for the taxable year ended December 31, 2023, which could subject United States investors in our ADSs or Class A ordinary shares to significant adverse United States federal income tax consequences.
If Guangzhou Huya breaches its contractual arrangements with us and no longer remains under our control, this may significantly disrupt our business, subject us to sanctions, compromise enforceability of related contractual arrangements, or have other harmful effects on us. • There are uncertainties relating to the regulation of the internet business in mainland China, including evolving licensing practices and the requirement for real-name registrations and its implementation in actual practice.
If Guangzhou Huya breaches its contractual arrangements with us and no longer remains under our control, this may significantly disrupt our business, subject us to sanctions, compromise enforceability of related contractual arrangements, or have other harmful effects on us. 50 Table of Contents ● There are uncertainties relating to the regulation of the internet business in mainland China, including evolving licensing practices and the requirement for real-name registrations and its implementation in actual practice.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changePursuant to SAFE’s Notice on Relevant Issues Relating to Domestic Residents’ Investment and Financing and Round-Trip Investment through Special Purpose Vehicles, or SAFE Circular 37, issued and effective on July 4, 2014, and its appendixes, mainland China residents, including mainland China institutions and individuals, must register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such mainland China residents’ legally owned assets or equity interest in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special purpose vehicle.” SAFE Circular 37 further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, including but not limited to increase or decrease of capital contributed by mainland China individuals, share transfer or exchange, merger, division or other material event.
Biggest changePursuant to the Circular on Relevant Issues Relating to Domestic Residents’ Investment and Financing and Round-Trip Investment through Special Purpose Vehicles, or SAFE Circular 75 issued by the State Administration of Foreign Exchange and becoming effective on July 4, 2014 and its appendixes, mainland China residents, including mainland China institutions and individuals, must register with local branches of the State Administration of Foreign Exchange in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such mainland China residents’ legally owned assets or equity interest in domestic enterprises or offshore assets or interests, referred as a “special purpose vehicle.” This Circular further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, including but not limited to increase or decrease of capital contributed by mainland China individuals, share transfer or exchange, merger, division or other material event. 92 Table of Contents In the event that a mainland China shareholder holding interests in a special purpose vehicle fails to fulfill the required registration with the State Administration of Foreign Exchange, the mainland China subsidiaries of that special purpose vehicle may be prohibited from making distributions of profit to the offshore parent and from carrying out subsequent cross-border foreign exchange activities and the special purpose vehicle may be restricted in their ability to contribute additional capital into its mainland China subsidiary.
As of the date of this annual report, we have not obtained an internet publishing license. As the date of this annual report, online games developed or operated by us have been published through third-party partners who have internet publishing licenses. Currently, we allow broadcasters to upload their recorded video clips on our platform.
As of the date of this annual report, we have not obtained an internet publishing license. As of the date of this annual report, online games developed or operated by us have been published through third-party partners who have internet publishing licenses. Currently, we allow broadcasters to upload their recorded video clips on our platform.
Online e-commerce live streaming platforms shall conduct relevant qualification examination and real-name authentication on businesses and individuals providing live-streaming marketing services and keep complete examination and authentication records, and shall not enable imposters or businesses or individuals without qualification or real-name registration to conduct live-streaming marketing services.
Online e-commerce live streaming platforms shall conduct relevant qualification examination and real-name authentication on businesses and individuals providing live-streaming marketing services and keep complete examination and authentication records. Online e-commerce live streaming platforms shall not enable imposters or businesses or individuals without qualification or real-name registration to conduct live-streaming marketing services.
It further provides that any ICP provider that fails to fulfill the obligations related to internet information security administration as required by applicable laws and refuses to rectify upon orders will be subject to criminal liability.
It further provides that any ICP provider that fails to fulfill the obligations related to internet information security administration as required by applicable laws and refuses to rectify upon orders will be subject to criminal liability.
According to the Labor Law and Labor Contract Law, employers must execute written labor contracts with full-time employees. All employers must compensate their employees with wages equal to at least the local minimum wage standards.
According to the Labor Law and the Labor Contract Law, employers must execute written labor contracts with full-time employees. All employers must compensate their employees with wages equal to at least the local minimum wage standards.
Under the voting rights proxy agreement, Linzhi Tencent, as the shareholder of Guangzhou Huya, irrevocably executed a power of attorney and appointed Huya Technology as its attorney-in-fact to exercise such shareholder’s rights in Guangzhou Huya, including, without limitation, the power to vote on its behalf on all matters of Guangzhou Huya requiring shareholder approval under laws and regulations of mainland China and the articles of association of Guangzhou Huya and rights to information relating to all business aspects of Guangzhou Huya.
Under the shareholder voting rights proxy agreement, Linzhi Tencent, as the shareholder of Guangzhou Huya, irrevocably executed a power of attorney and appointed Huya Technology as its attorney-in-fact to exercise such shareholder’s rights in Guangzhou Huya, including, without limitation, the power to vote on its behalf on all matters of Guangzhou Huya requiring shareholder approval under laws and regulations of mainland China and the articles of association of Guangzhou Huya and rights to information relating to all business aspects of Guangzhou Huya.
Pursuant to the equity interest pledge agreement, Linzhi Tencent, as the shareholder of Guangzhou Huya, pledged all of its equity interests in Guangzhou Huya to Huya Technology to guarantee the performance by Guangzhou Huya and Linzhi Tencent of their respective obligations under the exclusive business cooperation agreement, exclusive option agreement and voting rights proxy agreement.
Pursuant to the equity interest pledge agreement, Linzhi Tencent, as the shareholder of Guangzhou Huya, pledged all of its equity interests in Guangzhou Huya to Huya Technology to guarantee the performance by Guangzhou Huya and Linzhi Tencent of their respective obligations under the exclusive business cooperation agreement, the exclusive option agreement and the shareholder voting rights proxy agreement.
In accordance with the circular, the People’s Bank of China, or PBOC, has the authority to regulate virtual currency, including: (a) setting limits on the aggregate amount of virtual currency that can be issued by online game operators and the amount of virtual currency that can be purchased by an individual; (b) stipulating that virtual currency issued by online game operators can only be used for purchasing virtual products and services within the online games and not for purchasing tangible or physical products; (c) requiring that the price for redemption of virtual currency shall not exceed the respective original purchase price; and (d) banning the trading of virtual currency.
In accordance with the circular, the People’s Bank of China has the authority to regulate virtual currency, including: (a) setting limits on the aggregate amount of virtual currency that can be issued by online game operators and the amount of virtual currency that can be purchased by an individual; (b) stipulating that virtual currency issued by online game operators can only be used for purchasing virtual products and services within the online games and not for purchasing tangible or physical products; (c) requiring that the price for redemption of virtual currency shall not exceed the respective original purchase price; and (d) banning the trading of virtual currency.
The Opinion stipulates that internet platforms shall, among other restrictions, (i) within one month of the publication of the Opinion terminate all billboard functions that rank users or broadcasters by the volume of virtual gifts that they send or receive, respectively, (ii) restrict certain interaction and engagement functions between 8:00 p.m. and 10:00 p.m. every day, and (iii) prohibit minors from purchasing virtual gifts.
This opinion stipulates that internet platforms shall, among other restrictions, (i) terminate all billboard functions that rank users or broadcasters by the volume of virtual gifts that they send or receive, respectively, within one month of the publication of this opinion, (ii) restrict certain interaction and engagement functions between 8:00 p.m. and 10:00 p.m. every day, and (iii) prohibit minors from purchasing virtual gifts.
And, failure to comply with the various SAFE registration requirements described above could result in liability under mainland China law for foreign exchange evasion, including (i) of up to 30% of the total amount of foreign exchange remitted overseas and deemed to have been evasive, and (ii) in circumstances involving serious violations, a fine of no less than 30% of and up to the total amount of remitted foreign exchange deemed evasive.
Failure to comply with the various registration requirements described above could result in liability under mainland China law for foreign exchange evasion, including (i) of up to 30% of the total amount of foreign exchange remitted overseas and deemed to have been evasive, and (ii) in circumstances involving serious violations, a fine of no less than 30% of and up to the total amount of remitted foreign exchange deemed evasive.
According to the Trial Measures, (i) domestic companies that seek to offer or list securities overseas, either directly or indirectly, should fulfill the filing procedure and report relevant information to the CSRC; if a domestic company fails to complete the filing procedure, conceals any material fact or falsifies any major content in its filing documents, the domestic company may be subject to administrative penalties, such as order to rectify, warnings and fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines; (ii) if the issuer meets both of the following conditions, the overseas offering and listing shall be determined as an indirect overseas offering and listing by a domestic company: (x) any of the total assets, net assets, revenues or profits of the domestic operating entities of the issuer in the most recent accounting year accounts for more than 50% of the corresponding figure in the issuer’s audited consolidated financial statements for the same period; (y) its major operational activities are carried out in mainland China or its main places of business are located in mainland China, or the senior managers in charge of operation and management of the issuer are mostly Chinese citizens or are domiciled in mainland China; and (iii) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC.
According to the trial measures, (i) domestic companies that seek to offer or list securities overseas, either directly or indirectly, should fulfill the filing procedure and report relevant information to the China Securities Regulatory Commission; if a domestic company fails to complete the filing procedure, conceals any material fact or falsifies any major content in its filing documents, the domestic company may be subject to administrative penalties, such as order to rectify, warnings and fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines; (ii) if the issuer meets both of the following conditions, the overseas offering and listing shall be determined as an indirect overseas offering and listing by a domestic company: (x) any of the total assets, net assets, revenues or profits of the domestic operating entities of the issuer in the most recent accounting year accounts for more than 50% of the corresponding figure in the issuer’s audited consolidated financial statements for the same period; (y) its major operational activities are carried out in mainland China or its main places of business are located in mainland China, or the senior managers in charge of operation and management of the issuer are mostly Chinese citizens or are domiciled in mainland China; and (iii) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the China Securities Regulatory Commission.
We believe the live streaming services offered through our platform constitute a type of value-added telecommunication services that foreign ownership and investment are restricted; and therefore we should operate our platform through contractual arrangements with a variable interest entity and its shareholders to ensure compliance with the relevant laws and regulations of mainland China.
We believe the live streaming services offered through our platform constitute a type of value-added telecommunication services that foreign ownership and investment are restricted; and therefore we should operate our platform through contractual arrangements with a variable interest entity and its shareholders to ensure compliance with the laws and regulations of mainland China.
To legally engage in commercial performances, a performance brokerage agency shall have three or more full-time performance brokers and funds for the relevant business, and file an application with the culture administrative department of the people’s government of a province, autonomous region or municipality directly under central government.
To legally engage in commercial performances, a performance brokerage agency shall have three or more full-time performance brokers and funds for the relevant business and file an application with the culture administrative department of the people’s government of a province, autonomous region or municipality directly under central government of China.
Network operators are also required to collect and use personal information in compliance with the principles of legitimacy, properness and necessity, and strictly within the scope of authorization by the subject of personal information unless otherwise prescribed by laws or regulations. The Civil Code promulgated in 2020 also provides specific provisions regarding the protection of personal information.
Network operators are also required to collect and use personal information in compliance with the principles of legitimacy, properness and necessity, and strictly within the scope of authorization by the subject of personal information unless otherwise prescribed by laws or regulations. The Civil Code of China promulgated in 2020 also provides specific provisions regarding the protection of personal information.
Network operators are also required to collect and use personal information in compliance with the principles of legitimacy, properness and necessity, and strictly within the scope of authorization by the subject of personal information unless otherwise prescribed by laws or regulations. The Civil Code promulgated in 2020 also provides specific provisions regarding the protection of personal information.
Network operators are also required to collect and use personal information in compliance with the principles of legitimacy, properness and necessity, and strictly within the scope of authorization by the subject of personal information unless otherwise prescribed by laws or regulations. The Civil Code of China promulgated in 2020 also provides specific provisions regarding the protection of personal information.
Internet Infringement On May 28, 2020, the National People’s Congress promulgated the Civil Code of the People’s Republic of China, or the Civil Code, which became effective on January 1, 2021. Under the Civil Code, an internet user or an internet service provider that infringes upon the civil rights or interests of others through using the internet assumes tort liability.
Internet Infringement On May 28, 2020, the National People’s Congress promulgated the Civil Code of China, which became effective on January 1, 2021. Under the Civil Code of China, an internet user or an internet service provider that infringes upon the civil rights or interests of others through using the internet assumes tort liability.
In respect of an indirect offshore transfer of assets of a mainland China establishment or place of business of a foreign enterprise, the resulting gain is to be included with the annual enterprise filing of the mainland China establishment or place of business being transferred, and would consequently be subject to mainland China enterprise income tax at a rate of 25%.
With respect to an indirect offshore transfer of assets of a mainland China establishment or place of business of a foreign enterprise, the resulting gain is to be included with the annual enterprise filing of the mainland China establishment or place of business being transferred, and would consequently be subject to mainland China enterprise income tax at a rate of 25%.
Under the PRC Enterprise Income Tax Law, an enterprise established outside mainland China with “de facto management bodies” within mainland China is considered a “resident enterprise” for mainland China enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income.
Under the Enterprise Income Tax Law, an enterprise established outside mainland China with “de facto management bodies” within mainland China is considered a “resident enterprise” for mainland China enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income.
The Anti-monopoly Law also requires relevant government authorities to strengthen the examination of concentration of undertakings in important fields, such as national economy and people’s livelihood, pursuant to the laws, and to enhance penalties for any violation of regulations regarding concentration of undertakings.
The Anti-monopoly Law also requires the government authorities to strengthen the examination of concentration of undertakings in important fields, such as national economy and people’s livelihood, pursuant to the laws, and to enhance penalties for any violation of regulations regarding concentration of undertakings.
The Suggestions, among other things, reiterate the requirement for an internet service provider to obtain an Internet Culture Operation License to carry out any business relating to internet music products. In addition, foreign investors are prohibited from operating internet culture businesses.
These suggestions, among other things, reiterate the requirement for an internet service provider to obtain an Internet Culture Operation License to carry out any business relating to internet music products. In addition, foreign investors are prohibited from operating internet culture businesses.
However, the laws and regulations on internet music products are still evolving, and there have not been any provisions clarifying whether music products will be regulated by the Suggestions or how such regulation would be carried out.
However, the laws and regulations on internet music products are still evolving, and there have not been any provisions clarifying whether music products will be regulated by these suggestions or how such regulation would be carried out.
Failure to complete the SAFE registrations may subject them to fines and legal sanctions and may also limit our ability to contribute additional capital into our wholly foreign owned subsidiaries in mainland China and limit these subsidiaries’ ability to distribute dividends to us.
Failure to complete the registrations may subject them to fines and legal sanctions and may also limit our ability to contribute additional capital into our wholly foreign owned subsidiaries in mainland China and limit these subsidiaries’ ability to distribute dividends to us.
Through close cooperation with e-sports tournament and game event organizers, as well as major game developers and publishers, we have developed e-sports live streaming as one of the most popular content genres on our platform.
Through cooperation with e-sports tournament and game event organizers, as well as major game developers and publishers, we have developed e-sports live streaming as one of the most popular content genres on our platform.
Our subsidiaries in mainland China have obligations to file documents related to employee share options with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options.
Our subsidiaries in mainland China have obligations to file documents related to employee share options with tax authorities and to withhold individual income taxes of those employees who exercise their share options.
We closely cooperate with e-sports tournament and game event organizers, game developers and game publishers to identify trending e-sports competitions and secure live streaming rights of matches and tournaments favored by our community.
We cooperate with e-sports tournament and game event organizers, game developers and game publishers to identify trending e-sports competitions and secure live streaming rights of matches and tournaments favored by our community.
If any business operator fails to comply with the mandatory declaration requirement, the anti-monopoly authority is empowered to order the operator to terminate and/or unwind the transaction, dispose of relevant assets, shares or businesses within certain periods and imposes fines of not more than 10% of its sales amount in the previous year; or not more than RMB5,000,000 if the concentration has no effect of eliminating or restricting competition.
If any business operator fails to comply with the mandatory declaration requirement, the anti-monopoly authority is empowered to order the operator to terminate and/or unwind the transaction, dispose of relevant assets, shares or businesses within certain periods and imposes fines of not more than 10% of its sales amount in the previous year; or not more than RMB5 million if the concentration has no effect of eliminating or restricting competition.
The Virtual Currency Notice regulates, among others, the amount of virtual currency a business can issue, the retention period of user records, the function of virtual currency and the return of unused virtual currency upon the termination of online services.
This notice regulates, among others, the amount of virtual currency a business can issue, the retention period of user records, the function of virtual currency and the return of unused virtual currency upon the termination of online services.
There are substantial uncertainties on the interpretation and implementation of current and future laws and regulations of mainland China, including those applicable to the live streaming industry and our business.
There are uncertainties on the interpretation and implementation of current and future laws and regulations of mainland China, including those applicable to the live streaming industry and our business.
The Guideline intends to regulate abuse of a dominant position and other anticompetitive practices by online platform operators and the related merchants and service providers on online platforms.
This guideline intends to regulate abuse of a dominant position and other anticompetitive practices by online platform operators and the related merchants and service providers on online platforms.
To comply with such foreign ownership restrictions, we operate our live streaming platform in mainland China through Guangzhou Huya, the variable interest entity, which is owned by Linzhi Tencent Technology Co., Ltd. We gained control and became the sole beneficiary of Guangzhou Huya through a series of contractual arrangements between Huya Technology, Guangzhou Huya and Guangzhou Huya’s shareholders.
To comply with such foreign ownership restrictions, we operate our live streaming platform in mainland China through Guangzhou Huya, the variable interest entity, which is owned by Linzhi Tencent Technology Co., Ltd. We gained control and became the sole beneficiary of Guangzhou Huya through a series of contractual arrangements between Huya Technology, Guangzhou Huya and Linzhi Tencent Technology Co., Ltd.
These measures, which became effective on May 30, 2005, apply to acts of automatically providing services such as uploading, storing, linking or searching works, audio or video products, or other contents through the internet based on the instructions of internet users who publish contents on the internet, or the Internet Content Providers, without editing, amending or selecting any stored or transmitted content.
These measures, which became effective on May 30, 2005, apply to acts of automatically providing services such as uploading, storing, linking or searching works, audio or video products, or other content through the internet based on the instructions of internet users who publish content on the internet without editing, amending or selecting any stored or transmitted content.
Any internet-based information service provider in violation of the present Provisions shall be punished in accordance with relevant laws and administrative regulations.
Any internet-based information service provider in violation of the present administrative provisions shall be punished in accordance with the laws and administrative regulations.
In addition, according to relevant laws, administrative regulations or rules of mainland China, providers of internet information services in respect of news, publishing, education, medical treatment, health, pharmaceuticals or medical apparatus shall obtain consent of the relevant competent authority of mainland China before applying for operating permit or carrying out record-filing procedures.
In addition, according to the laws, administrative regulations or rules of mainland China, providers of internet information services with respect to news, publishing, education, medical treatment, health, pharmaceuticals or medical apparatus shall obtain consent of the competent authority of mainland China before applying for operating permit or carrying out record-filing procedures.
In mainland China, it generally takes up to one year for the Patent Office under the State Intellectual Property Office to review, and approve or deny applications of patents in the category of utility model or design and two to five years in the category of invention. See “Item 4. Information on the Company—C.
In mainland China, it generally takes up to one year for the Patent Office under the State Intellectual Property Office to review, and approve or deny applications of patents in the category of utility model or design and two to five years in the category of invention. See “Item 4. Information on the Company—B.
Certain talent agencies with the capacity to produce a large volume of high-quality content and manage a considerable pool of talent may be recognized as platinum talent agencies upon our thorough assessment of their qualifications and broadcaster portfolios. We provide platinum talent agencies with additional resources to promote and develop their broadcasters.
Certain talent agencies with the capacity to produce a large volume of high-quality content and manage a considerable pool of talent may be recognized as platinum talent agencies or diamond talent agencies upon our thorough assessment of their qualifications and broadcaster portfolios. We provide platinum and diamond talent agencies with additional resources to promote and develop their broadcasters.
Risk Factors—Risks Related to Our Business and Our Industry—We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position.” 74 Table of Contents Seasonality We may experience seasonality in our business, reflecting seasonal fluctuations in online entertainment consumption.
Risk Factors—Risks Related to Our Business and Our Industry—We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position.” 73 Table of Contents Seasonality We may experience seasonality in our business, reflecting seasonal fluctuations in online entertainment consumption.
Risk Factors—Risks Related to Our Business and Industry—If we fail to obtain and maintain the licenses and approvals required under the complex regulatory environment for internet-based businesses in mainland China, our business, financial condition and results of operations may be materially and adversely affected.” 81 Table of Contents Moreover, the unauthorized posting of online music on our platforms by third parties may expose us to the risk of administrative penalties and intellectual property infringement lawsuits.
Risk Factors—Risks Related to Our Business and Industry—If we fail to obtain and maintain the licenses and approvals required under the complex regulatory environment for internet-based businesses in mainland China, our business, financial condition and results of operations may be materially and adversely affected.” Moreover, the unauthorized posting of online music on our platforms by third parties may expose us to the risk of administrative penalties and intellectual property infringement lawsuits.
Under the anti-fatigue compliance system, three hours or less of continuous game playing by minors, defined as game players under 18 years of age, is considered to be “healthy”, three to five hours is deemed “fatiguing”, and five hours or more is deemed “unhealthy.” Game operators are required to reduce the value of in-game benefits to a game player by half if it discovers that the amount of a time a game player spends online has reached the “fatiguing” level, and to zero in the case of the “unhealthy” level.
Under the anti-fatigue compliance system, three hours or less of continuous game playing by minors, defined as game players under 18 years of age, is considered to be “healthy,” three to five hours is deemed “fatiguing,” and five hours or more is deemed “unhealthy.” Game operators are required to reduce the value of in-game benefits to a game player by half if it discovers that the amount of a time a game player spends online has reached the “fatiguing” level, and to zero in the case of the “unhealthy” level.
The Measures for Internet Advertisement Administration stipulates that promotion of commodities or services in the form of paid listing on the internet must be conspicuously identified as an advertisement, and it requires advertisers, operators and publishers of internet advertisements containing links to examine the contents in the next level link.
The Measures for Internet Advertisement Administration stipulates that promotion of commodities or services in the form of paid listing on the internet must be conspicuously identified as an advertisement, and it requires advertisers, operators and publishers of internet advertisements containing links to examine the content in the next level link.
ITEM 4. INFORMATION ON THE COMPANY A. History and Development of the Company Our Huya platform was launched in 2014, as a game live streaming business unit of JOYY. In August 2016, Guangzhou Huya, the variable interest entity, was established. JOYY controlled Guangzhou Huya through a set of contractual arrangements.
ITEM 4. INFORMATION ON THE COMPANY A. History and Development of the Company Our Huya platform was launched in 2014, as a game live streaming business unit of JOYY Inc., or JOYY. In August 2016, Guangzhou Huya, the variable interest entity, was established. JOYY controlled Guangzhou Huya through a set of contractual arrangements.
On May 21, 2008, the government of mainland China issued a Notice on Relevant Issues Concerning Application and Approval of License for the Online Transmission of Audio-Visual Programs, as amended on August 28, 2015, which further set out detailed provisions concerning the application and approval process regarding the Audio-Visual License.
On May 21, 2008, the government of mainland China issued a Notice on Relevant Issues Concerning Application and Approval of License for the Online Transmission of Audio-Visual Programs, as amended on August 28, 2015, which further sets out detailed provisions concerning the application and approval process regarding the Audio-Visual License.
If an online performance business entity is found to be providing performance contents in violation of Article 6 of the Measures, including the presentation or narration of online games without relevant content approval number or filing number issued by competent administrative cultural authorities, it shall be ordered to suspend such online performance, have its illegal proceeds confiscated, and be imposed upon a fine of between RMB10,000 and RMB30,000.
If an online performance business entity is found to be providing performance content in violation of Article 6 of these measures, including the presentation or narration of online games without content approval number or filing number issued by competent administrative cultural authorities, it shall be ordered to suspend such online performance, have its illegal proceeds confiscated, and be imposed upon a fine of between RMB10,000 and RMB30,000.
The Notice further requires each live streaming service provider to implement real-name registration system for users, strengthen its management of internet broadcasters, establish blacklist system for internet broadcasters, integrate and enhance the monitoring and reviewing system for live broadcasting contents and the disposal measures for illegal and harmful contents.
The Notice further requires each live streaming service provider to implement real-name registration system for users, strengthen its management of internet broadcasters, establish blacklist system for internet broadcasters, integrate and enhance the monitoring and reviewing system for live broadcasting content and the disposal measures for illegal and harmful content.
In addition, relevant administration departments of each critical industry and sector, or Protection Departments, shall be responsible to formulate eligibility criteria and determine the critical information infrastructure operator in the respective industry or sector. The operators shall be informed about the final determination as to whether they are categorized as critical information infrastructure operators.
In addition, the administration departments of each critical industry and sector shall be responsible to formulate eligibility criteria and determine the critical information infrastructure operator in the respective industry or sector. The operators shall be informed about the final determination as to whether they are categorized as critical information infrastructure operators.
However, there are substantial uncertainties regarding the interpretation and application of current and future laws, regulations and rules of mainland China.
However, there are uncertainties regarding the interpretation and application of current and future laws, regulations and rules of mainland China.
Risk Factors—Risks Related to Our Business and Our Industry—We may be subject to intellectual property infringement claims or other allegations, which could result in our payment of substantial damages, penalties and fines, removal of relevant content from our platform or seeking license arrangements which may not be available on commercially reasonable terms.” Domain Name In June 2019, the China Internet Network Information Center, or the CNNIC issued the Implementation Rules for Registration of National First Tier Domain Names, which became effective on June 18, 2019.
Risk Factors—Risks Related to Our Business and Our Industry—We may be subject to intellectual property infringement claims or other allegations, which could result in our payment of substantial damages, penalties and fines, removal of relevant content from our platform or seeking license arrangements which may not be available on commercially reasonable terms.” 87 Table of Contents Domain Name In June 2019, the China Internet Network Information Center issued the Implementation Rules for Registration of National First Tier Domain Names, which became effective on June 18, 2019.
The notice also stipulates that internet audio-visual program services providers engaging in such services prior to the promulgation of the Audio-Visual Program Provisions are able to apply for the license so long as their violation of the laws and regulations is minor in scope and can be rectified in a timely manner and they have no records of violation during the last three months prior to the promulgation of the Audio-Visual Program Provisions.
The notice also stipulates that internet audio-visual program services providers engaging in such services prior to the promulgation of the Administrative Provisions on Internet Audio-Visual Program Service are able to apply for the license so long as their violation of the laws and regulations is minor in scope and can be rectified in a timely manner and they have no records of violation during the last three months prior to the promulgation of the Administrative Provisions on Internet Audio-Visual Program Service.
Pursuant to these legislations, entities are required to obtain the Online Culture Operating Permits from the applicable provincial level counterpart of the MCT if they intend to commercially engage in any of the following types of activities: production, duplication, import, release or broadcasting of online cultural products; publishing of online cultural products on the internet or transmission thereof to computers, fixed-line or mobile phones, radios, television sets or gaming consoles for the purpose of browsing, reading, reviewing, using or downloading such products by online users; or exhibitions or contests related to online cultural products.
Pursuant to these legislations, entities are required to obtain the Online Culture Operating Permits from the applicable provincial level counterpart of the Ministry of Culture and Tourism if they intend to commercially engage in any of the following types of activities: production, duplication, import, release or broadcasting of online cultural products; publishing of online cultural products on the internet or transmission thereof to computers, fixed-line or mobile phones, radios, television sets or gaming consoles for the purpose of browsing, reading, reviewing, using or downloading such products by online users; or exhibitions or contests related to online cultural products.
Unlike its first draft which was published in 2015, the approved Foreign Investment Law did not specifically expand the definition of foreign investment to include entities established through the VIE structure, which has been adopted by many mainland China-based companies, including us to obtain necessary licenses and permits in the industries that are currently subject to foreign investment restrictions in mainland China.
Unlike its first draft which was published in 2015, the approved Foreign Investment Law did not specifically expand the definition of foreign investment to include entities established through the VIE structure, which has been adopted by many mainland China-based companies, including our company, to obtain necessary licenses and permits in the industries that are currently subject to foreign investment restrictions in mainland China.
Guangzhou Huya holds an ICP License and other permits that are necessary for operating our business in mainland China. 67 Table of Contents Our principal executive offices are located at Building A3, E-Park, 280 Hanxi Road, Panyu District, Guangzhou, 511446, the People’s Republic of China. Our telephone number at this address is +86 (20) 2290-7888.
Guangzhou Huya holds an ICP License and other permits that are necessary for operating our business in mainland China. Our principal executive offices are located at Building A3, E-Park, 280 Hanxi Road, Panyu District, Guangzhou, 511446, the People’s Republic of China. Our telephone number at this address is +86 (20) 2290-7888.
We currently conduct our business through Guangzhou Huya and its subsidiaries based on these contractual arrangements, which allow us to: • exercise contractual rights over Guangzhou Huya and its subsidiaries; • receive substantially all of the economic benefits of Guangzhou Huya and its subsidiaries; and 97 Table of Contents • have an exclusive option to purchase all or part of the equity interests in Guangzhou Huya when and to the extent permitted by law of mainland China.
We currently conduct our business through Guangzhou Huya and its subsidiaries based on these contractual arrangements, which allow us to: ● exercise contractual rights over Guangzhou Huya and its subsidiaries; ● receive substantially all of the economic benefits of Guangzhou Huya and its subsidiaries; and ● have an exclusive option to purchase all or part of the equity interests in Guangzhou Huya when and to the extent permitted by law of mainland China.
Where a copyright holder finds that certain internet content infringes upon its copyright and sends a notice to the relevant internet information service operator, the relevant internet information service operator is required to (i) immediately take measures to remove the relevant contents, and (ii) retain all infringement notices for six months and to record the content, display time and IP addresses or the domain names related to the infringement for 60 days.
Where a copyright holder finds that certain internet content infringes its copyright and therefore the copyright holder sends a notice to the internet information service operator, the internet information service operator is required to (i) immediately take measures to remove the relevant content, and (ii) retain all infringement notices for six months and to record the content, display time and IP addresses or the domain names related to the infringement for 60 days.
Currently, Guangzhou Huya holds a valid Commercial Performance License issued by the Guangzhou Bureau of Culture, Radio, Television, Tourism and Sport Panyu District Branch. Online Transmission of Audio-Visual Programs On April 13, 2005, the PRC Council promulgated the Certain Decisions on the Entry of the Non-state-owned Capital into the Cultural Industry.
Currently, Guangzhou Huya holds a valid Commercial Performance License issued by the Guangzhou Bureau of Culture, Radio, Television, Tourism and Sport Panyu District Branch. 82 Table of Contents Online Transmission of Audio-Visual Programs On April 13, 2005, the PRC Council promulgated the Certain Decisions on the Entry of the Non-state-owned Capital into the Cultural Industry.
Under the Foreign Investment Law, it is not entirely certain that VIEs controlled via contractual arrangement would be deemed to be FIEs, if they are ultimately “controlled” by foreign investors. The Foreign Investment Law may materially impact our corporate governance practice and increase our compliance costs. For instance, the Foreign Investment Law establishes a foreign investment information reporting system.
Under the Foreign Investment Law, it is not entirely certain that VIEs controlled via contractual arrangement would be deemed to be foreign-invested enterprises, if they are ultimately “controlled” by foreign investors. The Foreign Investment Law may materially impact our corporate governance practice and increase our compliance costs. For instance, the Foreign Investment Law establishes a foreign investment information reporting system.
Foreign investors or foreign-funded enterprises shall submit the investment information to competent departments for commerce through the enterprise registration system and the enterprise credit information publicity system. The contents and scope of foreign investment information to be reported shall be determined under the principle of necessity.
Foreign investors or foreign-funded enterprises shall submit the investment information to competent departments for commerce through the enterprise registration system and the enterprise credit information publicity system. The content and scope of foreign investment information to be reported shall be determined under the principle of necessity.
Risk Factors—Risks Related to Doing Business in Mainland China—The regulations in mainland China relating to offshore investment activities by mainland China residents may limit the ability of our subsidiaries in mainland China to increase their registered capital or distribute profits to us or otherwise expose us to liability and penalties under law of mainland China.” 92 Table of Contents Stock option rules Pursuant to the Notice on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly Listed Company, or Circular 7, issued by SAFE in February 2012, employees, directors, supervisors and other senior management participating in any stock incentive plan of an overseas publicly listed company who are mainland China citizens or who are non-mainland China citizens residing in mainland China for a continuous period of not less than one year, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be a subsidiary in mainland China of such overseas listed company, and complete certain other procedures.
Risk Factors—Risks Related to Doing Business in Mainland China—The regulations in mainland China relating to offshore investment activities by mainland China residents may limit the ability of our subsidiaries in mainland China to increase their registered capital or distribute profits to us or otherwise expose us to liability and penalties under law of mainland China.” Stock option rules Pursuant to the Notice on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly Listed Company, issued by the State Administration of Foreign Exchange in February 2012, employees, directors, supervisors and other senior management participating in any stock incentive plan of an overseas publicly listed company who are mainland China citizens or who are non-mainland China citizens residing in mainland China for a continuous period of not less than one year, subject to a few exceptions, are required to register with the State Administration of Foreign Exchange through a domestic qualified agent, which could be a subsidiary in mainland China of such overseas listed company, and complete certain other procedures.
Risk Factors—Risks Related to Our Business and Our Industry—We may be subject to intellectual property infringement claims or other allegations, which could result in our payment of substantial damages, penalties and fines, removal of relevant content from our platform or seeking license arrangements which may not be available on commercially reasonable terms” and “—Intellectual Property Rights—Copyright Law.” In 2011, the MCT greatly intensified its regulation of the provision of online music products.
Risk Factors—Risks Related to Our Business and Our Industry—We may be subject to intellectual property infringement claims or other allegations, which could result in our payment of substantial damages, penalties and fines, removal of relevant content from our platform or seeking license arrangements which may not be available on commercially reasonable terms” and “—Intellectual Property Rights—Copyright Law.” In 2011, the Ministry of Culture and Tourism greatly intensified its regulation of the provision of online music products.
A circular issued by the SAT in April 2009 and amended in November 2013 and December 2017 regarding the standards used to classify certain Chinese invested enterprises controlled by Chinese enterprises or Chinese enterprise groups and established outside of mainland China as “resident enterprises” clarified that dividends and other income paid by such mainland China “resident enterprises” will be considered mainland China source income and subject to mainland China withholding tax, currently at a rate of 10%, when paid to non mainland China enterprise shareholders.
A circular issued by the State Administration of Taxation in April 2009 and amended in November 2013 and December 2017 regarding the standards used to classify certain Chinese invested enterprises controlled by Chinese enterprises or Chinese enterprise groups and established outside of mainland China as “resident enterprises” clarified that dividends and other income paid by such mainland China “resident enterprises” will be considered mainland China source income and subject to mainland China withholding tax, currently at a rate of 10%, when paid to non-mainland China enterprise shareholders.
According to SAT Circular 7, “China taxable properties” include assets of a mainland China establishment or place of business, real properties in mainland China, and equity investments in mainland China resident enterprises, in respect of which gains from their transfer by a direct holder, being a non-mainland China resident enterprise, would be subject to enterprise income taxes of mainland China.
According to SAT Bulletin 7, “China taxable properties” include assets of a mainland China establishment or place of business, real properties in mainland China, and equity investments in mainland China resident enterprises, with respect to which gains from their transfer by a direct holder, being a non-mainland China resident enterprise, would be subject to enterprise income taxes of mainland China.
On February 18, 2020, the MIIT issued a Circular on Employing the New Generation of Information Technology to Support and Serve Epidemic Prevention and Control and Resumption of Work and Production, or the Circular, to support the improvement of online retail services and logistics distribution systems during the epidemic period, strengthen the development of digital cultural products and services in e-books, films and televisions, games and other fields, and to form a rich variety of “zero-contact” shopping and entertainment modes.
On February 18, 2020, the Ministry of Industry and Information Technology issued a Circular on Employing the New Generation of Information Technology to Support and Serve Epidemic Prevention and Control and Resumption of Work and Production, to support the improvement of online retail services and logistics distribution systems during the epidemic period, strengthen the development of digital cultural products and services in e-books, films and televisions, games and other fields, and to form a rich variety of “zero-contact” shopping and entertainment modes.
In providing advertising services, advertising operators and advertising distributors must review the supporting documents provided by advertisers for advertisements and verify that the content of the advertisements complies with applicable laws and regulations of mainland China.
When providing advertising services, advertising operators and advertising distributors must review the supporting documents provided by advertisers for advertisements and verify that the content of the advertisements complies with applicable laws and regulations of mainland China.
As to our video clip services on our platform, although we currently hold an Audio-Visual License, due to the interpretation and implementation of existing and future laws and regulations, this may not be sufficient to meet regulatory requirements. For detailed analysis, see “Item 3. Key Information—D.
As to our video clip services on our platform, although we currently hold an Audio-Visual License, due to the interpretation and implementation of existing and future laws and regulations, this may not be sufficient to meet regulatory requirements. See “Item 3. Key Information—D.
We also allow broadcasters to upload their recorded video clips to our platform, and we selectively record and edit live streaming gameplays of certain popular broadcasters and turn them into video clip highlights. 70 Table of Contents Our effective management of broadcasters is also reflected in our ability to promptly attract and motivate broadcasters to live stream new popular games.
We also allow broadcasters to upload their recorded video clips to our platform, and we selectively record and edit live streaming gameplays of certain popular broadcasters and turn them into video clip highlights. Our effective management of broadcasters is also reflected in our ability to promptly attract and motivate broadcasters to live stream new popular games.
Furthermore, on August 30, 2021, the NPPA issued the Circular of the National Press and Publication Administration on Further Strengthening Regulation to Effectively Prevent Online Gaming Additions among Minors, which became effective on September 1, 2021, and online game companies shall provide minors with online game services within one hour at prescribed periods, namely between 8:00 PM and 9:00 PM on Fridays, Saturdays, Sundays and public holidays.
Furthermore, on August 30, 2021, the National Press and Publication Administration issued the Circular of the National Press and Publication Administration on Further Strengthening Regulation to Effectively Prevent Online Gaming Additions among Minors, effective on September 1, 2021, which mandates that online game companies shall provide minors with online game services within one hour at prescribed periods, namely between 8:00 PM and 9:00 PM on Fridays, Saturdays, Sundays and public holidays.
As of December 31, 2016, JOYY completed the transfer of all assets, including trademarks, domain names, business contracts and tangible assets, relating to our business from JOYY to Guangzhou Huya, or our carve-out from JOYY. JOYY incorporated Huya Limited in Hong Kong in January 2017 and HUYA Inc. in the Cayman Islands in March 2017 as our holding companies.
As of December 31, 2016, JOYY completed the transfer of all assets, including trademarks, domain names, business contracts and tangible assets, relating to our business from JOYY to Guangzhou Huya. JOYY incorporated Huya Limited in Hong Kong in January 2017 and HUYA Inc. in the Cayman Islands in March 2017 as our holding companies.
Features of our platform have been carefully designed to create a seamless viewing experience, an interactive environment, and a vibrant culture for our users. The basic features of our platform dedicated to users include watching and following, content exploring and recommendation, bullet chatting and messaging, purchasing and gifting, and community interaction. 71 Table of Contents Watching and following.
Features of our platform have been carefully designed to create a seamless viewing experience, an interactive environment, and a vibrant culture for our users. The basic features of our platform dedicated to users include watching and following, content exploring and recommendation, bullet chatting and messaging, purchasing and gifting, and community interaction. Watching and following.
Pursuant to the Regulations on Protection of Critical Information Infrastructure, critical information infrastructure shall mean any important network facilities or information systems of the important industry or field such as public communication and information service, energy, transportation, water conservation, finance, public services, e-government affairs and national defense science, which may endanger national security, people’s livelihood and public interest in case of damage, function loss or data leakage.
Pursuant to the Regulations on Protection of Critical Information Infrastructure, critical information infrastructures refer to any important network facilities or information systems of the important industry or field such as public communication and information service, energy, transportation, water conservation, finance, public services, e-government affairs and national defense science, which may endanger national security, people’s livelihood and public interest in case of damage, function loss or data leakage.
After the delivery of such counter-notice, the internet information service operator may immediately reinstate the removed contents and shall not bear administrative legal liability for such reinstatement.
After the delivery of such counter-notice, the internet information service operator may immediately reinstate the removed content and shall not bear administrative legal liability for such reinstatement.
New M&A regulations and overseas listings On August 8, 2006, six governmental agencies of mainland China jointly promulgated the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the New M&A Rule, which became effective on September 8, 2006, and amended on June 22, 2009.
M&A Regulations and Overseas Listings On August 8, 2006, six governmental agencies of mainland China jointly promulgated the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, which became effective on September 8, 2006, and amended on June 22, 2009.
According to the ICP Measures, internet information services refer to provision of information through internet to online subscribers, including commercial and non-commercial services. Pursuant to the ICP Measures, commercial internet information service providers shall obtain ICP licenses, from relevant local authorities of mainland China before engaging in commercial internet information services in mainland China.
According to these administrative measures, internet information services refer to provision of information through internet to online subscribers, including commercial and non-commercial services. Pursuant to the these administrative measures, commercial internet information service providers shall obtain ICP Licenses, from local authorities of mainland China before engaging in commercial internet information services in mainland China.
The cybersecurity review will evaluate, among others, the risk of critical information infrastructure, core data, important data, or the risk of a large amount of personal information being influenced, controlled or maliciously used by foreign governments after going public, and cyber information security risk.
The cybersecurity review evaluates, among others, the risk of critical information infrastructure, core data, important data, or the risk of a large amount of personal information being influenced, controlled or maliciously used by foreign governments after going public, and cyber information security risk.
According to the series of Notices on Clearing Online Music Products That Are in Violation of Relevant Regulations promulgated by the MCT since January 12, 2011, entities that provide any of the following will be subject to relevant penalties or sanctions imposed by the MCT: (a) online music products or relevant services without obtaining corresponding qualifications, (b) imported online music products that have not passed the content review of the MCT or (c) domestically developed online music products that have not been filed with the MCT.
According to the series of Notices on Clearing Online Music Products That Are in Violation of Relevant Regulations promulgated by the Ministry of Culture and Tourism since January 12, 2011, entities that provide any of the following will be subject to penalties or sanctions imposed by the Ministry of Culture and Tourism: (a) online music products or relevant services without obtaining corresponding qualifications, (b) imported online music products that have not passed the content review of the Ministry of Culture and Tourism or (c) domestically developed online music products that have not been filed with the Ministry of Culture and Tourism.
In response to users’ growing interests, we also encourage our broadcasters to create and share other entertainment content, which encompasses talent shows, anime, outdoor activities, live chats, online theater, and other genres. We have leveraged big data and AI technology to analyze our users’ viewing preferences and make more accurate content recommendations.
In response to users’ growing interests, we also encourage our broadcasters to create and share other entertainment content, which encompasses talent shows, anime, outdoor activities, live chats, online theater, and other genres. We have leveraged big data and AI technology to analyze our users’ viewing preferences, make more accurate content recommendations, and improve content creation quality and efficiency.
If any music provided through our platforms is found to lack necessary filings and/or approvals or infringe the copyright of third parties, we could be requested to cease providing such music or be subject to claims from third parties or penalties from the MCT or its local branches. See “Item 3. Key Information—D.
If any music provided through our platforms is found to lack necessary filings and/or approvals or infringe the copyright of third parties, we could be requested to cease providing such music or be subject to claims from third parties or penalties from the Ministry of Culture and Tourism or its local branches. See “Item 3. Key Information—D.
Moreover, on November 4, 2016, the State Internet Information Office promulgated the Internet Streaming Services Regulations, which implemented on December 1, 2016. The Regulations also require that, online performances and online audio-visual programs provided through internet streaming, when involving the above mentioned matters, should obtain a license according to the laws and regulations related to the qualifications.
Moreover, on November 4, 2016, the State Internet Information Office promulgated the Internet Streaming Services Regulations, which was implemented starting from December 1, 2016. The Regulations require that, online performances and online audio-visual programs provided through internet streaming, when involving the above mentioned matters, should obtain a license according to the laws and regulations related to the qualifications.
The FITE Regulations stipulate that foreign investors are prohibited from holding more than 50% of equity interest in a foreign-invested enterprise that provides value-added telecommunications services, including, among others, provision of internet content.
These regulations stipulate that foreign investors are prohibited from holding more than 50% of equity interest in a foreign-invested enterprise that provides value-added telecommunications services, including, among others, provision of internet content.
A platform shall report the number of its live streaming rooms, streamers and content analysts to the provincial branch of the National Radio and Television Administration on a quarterly basis. Online show live streaming platforms shall tag content and streamers by category.
Each of these platforms shall report the number of its live streaming rooms, streamers and content analysts to the provincial branch of the National Radio and Television Administration on a quarterly basis. Online show live streaming platforms shall tag content and streamers by category.
The Foreign Investment Law embodies an expected regulatory trend in mainland China to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments.
The Foreign Investment Law embodies a regulatory trend in mainland China to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments.
In 2022, we adopted a stricter screening process for content procurement and production to increase our investment efficiency and to offer high-quality live streams of e-sports tournament and game events to our users.
Staring from 2022, we adopted a stricter screening process for content procurement and production to increase our investment efficiency and to offer high-quality live streams of e-sports tournament and game events to our users.
The Internet Protection Measures requires all internet information services operators to take proper measures including anti-virus, data back-up and other related measures, and keep records of certain information about their users (including user registration information, log-in and log-out time, IP address, content and time of posts by users) for at least 60 days and submit the above information as required by laws and regulations.
These provisions require all internet information services operators to take proper measures including anti-virus, data back-up and other related measures, and keep records of certain information about their users (including user registration information, log-in and log-out time, IP address, content and time of posts by users) for at least 60 days and submit the above information as required by laws and regulations.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeResults of Operations The following table sets forth a summary of our consolidated statements of comprehensive income (loss) for the years indicated, both in absolute amounts and as percentages of our total net revenues: For the year ended December 31, 2020 2021 2022 RMB % RMB % RMB US$ % (in thousands, except for percentages) Net revenues Live streaming 10,311,624 94.5 10,186,204 89.7 8,195,907 1,188,295 88.9 Advertising and others 602,750 5.5 1,165,242 10.3 1,024,555 148,547 11.1 Total net revenues 10,914,374 100.0 11,351,446 100.0 9,220,462 1,336,842 100.0 Cost of revenues (1) (8,646,308 ) (79.2 ) (9,751,160 ) (85.9 ) (8,609,594 ) (1,248,274 ) (93.4 ) Gross profit 2,268,066 20.8 1,600,286 14.1 610,868 88,568 6.6 Operating expenses Research and development expenses (1) (734,261 ) (6.7 ) (818,882 ) (7.2 ) (680,383 ) (98,646 ) (7.4 ) Sales and marketing expenses (1) (558,012 ) (5.1 ) (759,507 ) (6.7 ) (482,871 ) (70,010 ) (5.2 ) General and administrative expenses (1) (445,006 ) (4.1 ) (326,772 ) (2.9 ) (320,386 ) (46,452 ) (3.5 ) Total operating expenses (1,737,279 ) (15.9 ) (1,905,161 ) (16.8 ) (1,483,640 ) (215,108 ) (16.1 ) Other income 194,169 1.8 274,704 2.4 166,307 24,112 1.8 Operating income (loss) 724,956 6.7 (30,171 ) (0.3 ) (706,465 ) (102,428 ) (7.7 ) Impairment loss of investments — — — — (55,201 ) (8,003 ) (0.6 ) Interest and short-term investments income 313,366 2.9 247,009 2.2 298,201 43,235 3.2 Gain on fair value change of investment 2,160 0.0 44,161 0.4 7,602 1,102 0.1 Other non-operating expenses (10,010 ) (0.1 ) — — — — — Foreign currency exchange gains (losses), net 2,056 0.0 (1,480 ) 0.0 (2,402 ) (348 ) 0.0 Income (loss) before income tax expenses 1,032,528 9.5 259,519 2.3 (458,265 ) (66,442 ) (5.0 ) Income tax expenses (176,784 ) (1.6 ) (55,227 ) (0.5 ) (27,871 ) (4,041 ) (0.3 ) Income (loss) before share of income (loss) in equity method investments, net of income taxes 855,744 7.9 204,292 1.8 (486,136 ) (70,483 ) (5.3 ) Share of income (loss) in equity method investments, net of income taxes 28,414 0.3 379,207 3.3 (520 ) (76 ) 0.0 Net income (loss) 884,158 8.2 583,499 5.1 (486,656 ) (70,559 ) (5.3 ) Note: (1) Share-based compensation was allocated in cost of revenues and operating expenses as follows: 100 Table of Contents For the year ended December 31, 2020 2021 2022 RMB RMB RMB US$ Cost of revenues 64,942 56,629 31,955 4,633 Research and development expenses 150,723 135,316 67,242 9,749 Sales and marketing expenses 9,879 8,318 4,477 649 General and administrative expenses 182,664 89,442 52,804 7,656 Net revenues Total net revenues decreased by 18.8% from RMB11,351.4 million in 2021 to RMB9,220.5 million (US$1,336.8 million) in 2022, and increased by 4.0% from RMB10,914.4 million in 2020 to RMB11,351.4 million in 2021.
Biggest changeResults of Operations The following table sets forth a summary of our consolidated statements of comprehensive income (loss) for the years indicated, both in absolute amounts and as percentages of our total net revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2021 2022 * 2023 ​ RMB % RMB % RMB US$ % ​ ​ (in thousands, except for percentages) Net revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Live streaming 10,186,204 89.7 8,195,907 88.5 6,450,782 908,574 92.2 Advertising and others 1,165,242 10.3 1,068,444 11.5 543,546 76,557 7.8 Total net revenues 11,351,446 100.0 9,264,351 100.0 6,994,328 985,131 100.0 Cost of revenues (1) (9,751,160) (85.9) (8,610,726) (92.9) (6,179,125) (870,312) (88.3) Gross profit 1,600,286 14.1 653,625 7.1 815,203 114,819 11.7 Operating expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development expenses (1) (818,882) (7.2) (684,446) (7.4) (578,610) (81,496) (8.3) Sales and marketing expenses (1) (759,507) (6.7) (530,482) (5.7) (440,605) (62,058) (6.3) General and administrative expenses (1) (326,772) (2.9) (341,243) (3.7) (320,838) (45,189) (4.6) Total operating expenses (1,905,161) (16.8) (1,556,171) (16.8) (1,340,053) (188,743) (19.2) Other income, net 274,704 2.4 166,307 1.8 81,258 11,445 1.2 Operating loss (30,171) (0.3) (736,239) (7.9) (443,592) (62,479) (6.3) Impairment loss of investments — — (55,201) (0.6) (225,800) (31,803) (3.2) Interest income and short-term investments income 247,009 2.2 298,205 3.2 479,681 67,562 6.9 Gain on fair value change of investment 44,161 0.4 7,602 0.1 — — — Goodwill impairment — — (34,640) (0.4) — — — Foreign currency exchange losses, net (1,480) (0.0) (2,516) (0.0) (1,593) (224) (0.0) Income (loss) before income tax expenses 259,519 2.3 (522,789) (5.6) (191,304) (26,944) (2.7) Income tax expenses (55,227) (0.5) (24,364) (0.3) (13,215) (1,861) (0.2) Income (loss) before share of income (loss) in equity method investments, net of income taxes 204,292 1.8 (547,153) (5.9) (204,519) (28,805) (2.9) Share of income (loss) in equity method investments, net of income taxes 379,207 3.3 (520) (0.0) — — — Net income (loss) 583,499 5.1 (547,673) (5.9) (204,519) (28,805) (2.9) Notes: * Our consolidated financial information for the year ended December 31, 2022 has been retrospectively adjusted due to the business combination under common control as discussed in Note 2(d) to our audited consolidated financial statements included elsewhere in this annual report. 101 Table of Contents (1) Share-based compensation was allocated in cost of revenues and operating expenses as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2021 2022 2023 ​ RMB RMB RMB US$ ​ ​ (in thousands) Cost of revenues 56,629 31,955 16,137 2,273 Research and development expenses 135,316 67,242 40,679 5,730 Sales and marketing expenses 8,318 4,477 2,842 400 General and administrative expenses 89,442 52,804 18,607 2,621 ​ Net revenues Total net revenues decreased by 18.4% from RMB11,351.4 million in 2021 to RMB9,264.4 million in 2022, and further decreased by 24.5% to RMB6,994.3 million (US$985.1 million) in 2023.
In April 2019, we raised from our public offering US$313.8 million in net proceeds after deducting underwriting commissions and the offering expenses payable by us.
In April 2019, we raised US$313.8 million in net proceeds from our public offering after deducting underwriting commissions and the offering expenses payable by us.
Commerce & Finance Law Offices, our legal counsel as to the law of mainland China, has advised us that if our holding company in the Cayman Islands or any of our subsidiaries outside of mainland 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%.
Commerce & Finance Law Offices, our legal counsel as to the law of mainland China, has advised us that if our holding company in the Cayman Islands or any of our subsidiaries outside of mainland China were deemed to be a “resident enterprise” under the Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%.
If our Hong Kong subsidiary satisfies all the requirements under the tax arrangement and submits required application materials to the relevant tax authority, the dividends paid to the Hong Kong subsidiary would be subject to withholding tax at the standard rate of 5%.
If our Hong Kong subsidiary satisfies all the requirements under the tax arrangement and submits required application materials to the tax authority, the dividends paid to the Hong Kong subsidiary would be subject to withholding tax at the standard rate of 5%.
Risk Factors—Risks Related to Doing Business in Mainland China—Fluctuations in exchange rates could have a material adverse effect on our results of operations and the value of your investment.” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk—Foreign Exchange Risk.” Impact of Governmental Policies See “Item 3. Key Information—D.
Key Information—D. Risk Factors—Risks Related to Doing Business in Mainland China—Fluctuations in exchange rates could have a material adverse effect on our results of operations and the value of your investment” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk—Foreign Exchange Risk.” Impact of Governmental Policies See “Item 3. Key Information—D.
Payment handling costs decreased by 33.9% from RMB151.9 million in 2021 to RMB100.4 million (US$14.6 million) in 2022, primarily attributable to a decrease in sales of virtual items on our platform. Share-based compensation decreased by 43.5% from RMB56.6 million in 2021 to RMB32.0 million (US$4.6 million) in 2022, primarily due to the lower price for awards granted in 2022.
Payment handling costs decreased by 33.9% from RMB151.9 million in 2021 to RMB100.4 million in 2022, primarily attributable to a decrease in sales of virtual items on our platform. Share-based compensation decreased by 43.5% from RMB56.6 million in 2021 to RMB32.0 million in 2022, primarily due to the lower price for awards granted in 2022.
In addition, our wholly foreign-owned subsidiary in mainland China may allocate a portion of its after-tax profits based on accounting standards of mainland China to enterprise expansion funds and staff bonus and welfare funds at its discretion, and the variable interest entity may allocate a portion of its after-tax profits based on accounting standards of mainland China to a discretionary surplus fund at its discretion.
In addition, our wholly foreign-owned subsidiaries in mainland China may allocate a portion of its after-tax profits based on accounting standards of mainland China to enterprise expansion funds and staff bonus and welfare funds at its discretion, and the variable interest entity may allocate a portion of its after-tax profits based on accounting standards of mainland China to a discretionary surplus fund at its discretion.
Qualified software enterprises, or the Software Enterprise, are exempt from EIT for two years, followed by a 50% reduction in the applicable tax rates for the next three years, commencing either from the first year of commercial operations or from the first year of profitable operation after offsetting tax losses generating from prior years.
Qualified software enterprises are exempt from enterprise income tax for two years, followed by a 50% reduction in the applicable tax rates for the next three years, commencing either from the first year of commercial operations or from the first year of profitable operation after offsetting tax losses generating from prior years.
An entity registered in Hainan Free Trade Port (“FTP”) and operating substantially that qualifies as an “Encouraged Industrial Enterprises” (an “EIE”) is entitled to a preferential income tax rate of 15% for five years since January 1, 2020.
An entity registered in Hainan Free Trade Port and operating substantially that qualifies as an “Encouraged Industrial Enterprises” is entitled to a preferential income tax rate of 15% for five years since January 1, 2020.
Although we consolidate the results of the variable interest entity and its subsidiaries, we only have access to the assets or earnings of the variable interest entity and its subsidiaries through our contractual arrangements with the variable interest entity and its shareholders. See “Item 4. Information on the Company—D.
Although we consolidate the results of the variable interest entity and its subsidiaries, we only have access to the assets or earnings of the variable interest entity and its subsidiaries through our contractual arrangements with the variable interest entity and its shareholders. See “Item 4. Information on the Company—C.
Our subsidiary in mainland China is required to set aside at least 10% of its after-tax profits after making up previous years’ accumulated losses each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of its registered capital. These reserves are not distributable as cash dividends.
Our subsidiaries in mainland China are required to set aside at least 10% of its after-tax profits after making up previous years’ accumulated losses each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of its registered capital. These reserves are not distributable as cash dividends.
In addition, our wholly foreign-owned subsidiary in mainland China is permitted to pay dividends to us only out of its retained earnings, if any, as determined in accordance with accounting standards and regulations of mainland China.
In addition, our wholly foreign-owned subsidiaries in mainland China is permitted to pay dividends to us only out of its retained earnings, if any, as determined in accordance with accounting standards and regulations of mainland China.
Material Cash Requirements Other than the ordinary cash requirements for our operations, our material cash requirements as of December 31, 2022 and any subsequent interim period primarily include our capital expenditures, operating lease obligations and other contractual obligations and commitments.
Material Cash Requirements Other than the ordinary cash requirements for our operations, our material cash requirements as of December 31, 2023 and any subsequent interim period primarily include our capital expenditures, operating lease obligations and other contractual obligations and commitments.
Revenue sharing fees and content costs decreased by 10.0% from RMB8,374.6 million in 2021 to RMB7,535.7 million (US$1,092.6 million) in 2022, primarily due to the decrease in revenue sharing fees associated with the decreased live streaming revenues and lower costs related to content creators, partially offset by the increase in spending on e-sports content.
Revenue sharing fees and content costs decreased by 10.0% from RMB8,374.6 million in 2021 to RMB7,535.7 million in 2022, primarily due to the decrease in revenue sharing fees associated with the decreased live streaming revenues and lower costs related to content creators, partially offset by the increase in spending on e-sports content.
We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us. Holding Company Structure HUYA Inc. is a holding company with no material operations of its own.
We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us. ​ 110 Table of Contents Holding Company Structure HUYA Inc. is a holding company with no material operations of its own.
However, current mainland China regulations permit our subsidiary in mainland China to pay dividends to us only out of its accumulated profits, if any, determined in accordance with accounting standards and regulations of mainland China.
However, current mainland China regulations permit our subsidiaries in mainland China to pay dividends to us only out of its accumulated profits, if any, determined in accordance with accounting standards and regulations of mainland China.
Our subsidiary in mainland China has not paid dividends and will not be able to pay dividends until it generates accumulated profits and meet the requirements for statutory reserve funds.
Our subsidiaries in mainland China has not paid dividends and will not be able to pay dividends until it generates accumulated profits and meet the requirements for statutory reserve funds.
The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. As of December 31, 2022, the majority of our cash, cash equivalents, short-term deposits and short-term investments were held by our wholly owned subsidiaries in offshore accounts.
The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. As of December 31, 2023, the majority of our cash, cash equivalents and short-term deposits were held by our wholly owned subsidiaries in offshore accounts.
Our subsidiary in mainland China may convert Renminbi amounts that it generates in its own business activities, including technical consulting and related service fees pursuant to its contracts with the variable interest entity, as well as dividends it receives from its own subsidiaries, into foreign exchange and pay them to its non-mainland China parent companies in the form of dividends.
Our subsidiaries in mainland China may convert Renminbi amounts that they generate in its own business activities, including technical consulting and related service fees pursuant to its contracts with the variable interest entity, as well as dividends it receives from its own subsidiaries, into foreign exchange and pay them to its non-mainland China parent companies in the form of dividends.
Certified High and New Technology Enterprises, or HNTE, are entitled to a preferential tax rate of 15% but are required to re-apply for the preferential tax treatment every three years. During the three-year period, an HNTE must conduct a self-review of its qualification each year to ensure it meets the HNTE criteria.
Certified High and New Technology Enterprises are entitled to a preferential tax rate of 15% but are required to re-apply for the preferential tax treatment every three years. During the three-year period, a High and New Technology Enterprise must conduct a self-review of its qualification each year to ensure it meets the criteria of High and New Technology Enterprises.
Other income Our other income decreased by 39.5% from RMB274.7 million in 2021 to RMB166.3 million (US$24.1 million) in 2022, primarily attributable to lower tax refunds and government subsidies in 2022 and realized damages received in the first quarter of 2021 from a favorable outcome in a broadcaster-related lawsuit.
Our other income decreased by 39.5% from RMB274.7 million in 2021 to RMB166.3 million in 2022, primarily attributable to lower indirect tax refunds and government subsidies in 2022 and realized damages received in the first quarter of 2021 from a favorable outcome in a broadcaster-related lawsuit.
When one of our estimates of individual user’s times of renewal based on historical data of users’ spending pattern and average times of renewal decreased/increased by 5% while holding all other estimates constant, there would be no significant impact to our consolidated results of operations. 111 Table of Contents Our estimate of the key assumptions did not change significantly throughout the periods presented.
When one of our estimates of individual user’s times of renewal based on historical data of users’ spending pattern and average times of renewal decreased/increased by 5% while holding all other estimates constant, there would be no significant impact to our consolidated results of operations. The nature of our key assumptions did not change significantly throughout the periods presented.
Risk Factors—Risks Related to Doing Business in Mainland China” and “Item 4. Information on the Company— C. Business Overview—Government Regulations.” 106 Table of Contents B. Liquidity and Capital Resources Our principal sources of liquidity have been cash generated from operating activities and financing activities.
Risk Factors—Risks Related to Doing Business in Mainland China” and “Item 4. Information on the Company— B. Business Overview—Government Regulations.” B. Liquidity and Capital Resources Our principal sources of liquidity have been cash generated from operating activities and financing activities.
Our state-of-the art audio and video coding and streaming technologies enable low-latency and low-loss rates in delivering voice and video data on our platform, even with weak internet connection, which provides our users with superior viewing experience. Audio and video technologies have been our main focus since our inception.
Our audio and video coding and streaming technologies enable low-latency and low-loss rates in delivering voice and video data on our platform, even with weak internet connection, which provides our users with superior viewing experience. Audio and video technologies have been our main focus since our inception.
If an HNTE fails to meet the criteria for any year, the enterprise cannot enjoy the 15% preferential tax rate that year and must instead be subject to the uniform 25% income tax rate. An entity that qualifies as a “Key National Software Enterprise” (a “KNSE”) is entitled to a further reduced preferential income tax rate of 10%.
If a High and New Technology Enterprise fails to meet the criteria for any year, the enterprise cannot enjoy the 15% preferential tax rate that year and must instead be subject to the uniform 25% income tax rate. An entity that qualifies as a “Key National Software Enterprise” is entitled to a further reduced preferential income tax rate of 10%.
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 period from January 1, 2020 to December 31, 2022 that are reasonably likely to have a material effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause 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 period since January 1, 2024 that are reasonably likely to have a material effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
See “Forward-Looking Information.” In evaluating our business, you should carefully consider the information provided under the caption “Item 3. Key Information—D. Risk Factors” in this annual report. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties. 99 Table of Contents A.
See “Forward-Looking Information.” In evaluating our business, you should carefully consider the information provided under the caption “Item 3. Key Information—D. Risk Factors” in this annual report. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties.
According to Hainan Provincial Tax Bureau Public Notice [2021] No. 1 (“Circular 1”), enterprises set up in Hainan FTP without any branches outside shall have substantive operations in Hainan FTP, which means that such enterprises shall maintain actual business operation, human resources, finance management as well as assets solely in Hainan FTP in order to enjoy the preferential tax rate.
According to Hainan Provincial Tax Bureau Public Notice [2021] No. 1, enterprises set up in Hainan Free Trade Port without any branches outside shall have substantive operations in Hainan Free Trade Port, which means that such enterprises shall maintain actual business operation, human resources, finance management as well as assets solely in Hainan Free Trade Port in order to enjoy the preferential tax rate.
Net cash provided by financing activities was RMB10.7 million in 2021, which was attributable to proceeds from exercise of vested share options. Net cash provided by financing activities was RMB265.3 million in 2020, which was attributable to proceeds from exercise of vested share options.
Net cash provided by financing activities was RMB10.7 million in 2021, which was attributable to proceeds from exercise of vested share options.
The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of mainland China is subject to examination by the banks designated by SAFE.
The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of mainland China is subject to examination by the banks designated by the State Administration of Foreign Exchange.
Organizational Structure—Contractual Arrangements with Guangzhou Huya.” For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see “—Holding Company Structure.” A majority of our future revenues are likely to continue to be in the form of Renminbi.
Organizational Structure—Contractual Arrangements with Guangzhou Huya.” For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see “—Holding Company Structure.” 107 Table of Contents A majority of our future revenues are likely to continue to be in Renminbi.
In 2020, 2021 and 2022, the first HK$2 million of profits earned by our subsidiaries incorporated in Hong Kong will be taxed at half the current tax rate (i.e. 8.25%) while the remaining profits will continue to be taxed at the existing 16.5% tax rate. Singapore HUYA PTE.
In 2021, 2022 and 2023, the first HK$2 million of profits earned by our subsidiaries incorporated in Hong Kong was taxed at half of the current tax rate (i.e., 8.25%) while the remaining profits continued to be taxed at the existing 16.5% tax rate. Singapore HUYA PTE.
The unpaid purchase price was RMB1,260 million as of December 31, 2022. In January 2023, the license agreement was amended, including that we were granted a non-exclusive, instead of exclusive, license for broadcasting League of Legends matches from 2023 to 2025 and that the license fee payable is decreased to a total of RMB450 million for these three years.
In January 2023, the license agreement was amended, pursuant to which we were granted a non-exclusive, instead of exclusive, license for broadcasting League of Legends matches from 2023 to 2025 and that the license fee payable is decreased to a total of RMB450 million for these three years. The unpaid purchase price was RMB300 million as of December 31, 2023.
We expect the content sub-licensing revenues to decline significantly in 2023, because we no longer have sub-licensing rights for those matches of League of Legends from 2023 to 2025, pursuant to the Supplemental Licensing Agreement for Broadcasting League of Legends Matches we entered into in January 2023.
Our sub-licensing revenues declined significantly in 2023, because we no longer have sub-licensing rights for those matches of League of Legends from 2023 to 2025, pursuant to the Supplemental Licensing Agreement for Broadcasting League of Legends Matches we entered into in January 2023.
The share of loss in equity method investments in 2022 was mainly attributable to impairment of an equity investment. The share of gain in equity method investments in 2021 was mainly attributable to the investment gain related to a disposal of equity investment in the third quarter of 2021.
The share of loss in equity method investments in 2022 was mainly attributable to impairment of an equity investment. The share of income in equity method investments in 2021 was mainly attributable to the investment gain related to a disposal of equity investment in the third quarter of 2021. Net (loss) income attributable to HUYA Inc.
Rental expenses under operating lease for 2020, 2021 and 2022 were RMB49.9 million, RMB56.4 million and RMB58.3 million (US$8.5 million), respectively. In 2021, we signed a contract to purchase an exclusive license for broadcasting League of Legends matches from another subsidiary of Tencent for the period from 2021 to 2025 at an aggregate purchase price of RMB2,013 million.
Rental expenses under operating lease for 2021, 2022 and 2023 were RMB56.4 million, RMB58.3 million and RMB53.9 million (US$7.6 million), respectively. In 2021, we signed a contract to purchase an exclusive license for broadcasting League of Legends matches from another subsidiary of Tencent for the period from 2021 to 2025 at an aggregate purchase price of RMB2,013 million.
Our advanced peer-to-peer streaming technologies help us manage bandwidth utilization more efficiently amid growing user base and constantly improving streaming video quality, which further enhanced scalability.
Our advanced peer-to-peer streaming technologies help us manage bandwidth utilization more efficiently and constantly improving streaming video quality, which further enhanced scalability.
Investing Activities Net cash used in investing activities was RMB848.6 million (US$123.0 million) in 2022, which was primarily attributable to net cash paid for long-term deposits of RMB1,086.7 million (US$157.6 million), net cash paid for short-term deposits of RMB169.0 million (US$24.5 million) and cash paid for investments of RMB244.5 million (US$35.5 million), partially offset by net maturities of short-term investments of RMB815.3 million (US$118.2 million).
Net cash used in investing activities was RMB848.6 million in 2022, which was primarily attributable to net cash paid for long-term deposits of RMB1,086.7 million, net cash paid for short-term deposits of RMB169.0 million and cash paid for investments of RMB244.5 million, partially offset by net maturities of short-term investments of RMB815.3 million.
Our income tax expenses decreased from RMB176.8 million in 2020 to RMB55.2 million in 2021, mainly due to the decreased profitability of certain operating entities in mainland China. For details on such income tax expenses, please see Note 18(b) to our audited consolidated financial statements included elsewhere in this annual report.
Our income tax expenses decreased from RMB55.2 million in 2021 to RMB24.4 million in 2022, mainly due to the decreased profitability of certain operating entities in mainland China. For details on such income tax expenses, please see Note 19(b) to our audited consolidated financial statements included elsewhere in this annual report.
Revenue sharing fees and content costs as a percentage of our total net revenues increased from 64.9% in 2020 to 73.8% in 2021. Bandwidth costs. Bandwidth costs consist of fees and charges relating to bandwidth usage in our operations.
Revenue sharing fees and content costs as a percentage of our total net revenues increased from 73.8% in 2021 to 81.3% in 2022. Bandwidth costs. Bandwidth costs consist of fees and charges relating to bandwidth usage in our operations.
Risk Factors—Risks Related to Doing Business in Mainland China—Under the enterprise income tax law of mainland China, we may be classified as a mainland China ‘resident enterprise,’ which could result in unfavorable tax consequences to us and our shareholders and have a material adverse effect on our results of operations and the value of your investment.” Inflation To date, inflation in mainland China has not materially impacted our results of operations.
Risk Factors—Risks Related to Doing Business in Mainland China—Under the enterprise income tax law of mainland China, we may be classified as a mainland China ‘resident enterprise,’ which could result in unfavorable tax consequences to us and our shareholders and have a material adverse effect on our results of operations and the value of your investment.” Impact of Foreign Currency Fluctuation See “Item 3.
Research and development expenses decreased by 16.9% from RMB818.9 million in 2021 to RMB680.4 million (US$98.6 million) in 2022, primarily attributable to a decrease in share-based compensation expenses and personnel-related expenses.
Research and development expenses decreased by 15.5% from RMB684.4 million in 2022 to RMB578.6 million (US$81.5 million) in 2023, primarily attributable to a decrease in personnel-related expenses and share-based compensation expenses. Research and development expenses decreased by 16.4% from RMB818.9 million in 2021 to RMB684.4 million in 2022, primarily attributable to a decrease in share-based compensation expenses and personnel-related expenses.
Our interest and short-term investment income increased from RMB247.0 million in 2021 to RMB298.2 million (US$43.2 million) in 2022, primarily attributable to increased interest rates for deposits of the funds. Our interest and short-term investment income decreased from RMB313.4 million in 2020 to RMB247.0 million in 2021, primarily attributable to decreased interest rates for deposits of the funds.
Our interest income and short-term investments income increased from RMB247.0 million in 2021 to RMB298.2 million in 2022, primarily attributable to increased interest rates for deposits of the funds.
Income tax expenses Our income tax expenses decreased from RMB55.2 million in 2021 to RMB27.9 million (US$4.0 million) in 2022, mainly due to the decreased profitability of certain operating entities in mainland China.
Income tax expenses Our income tax expenses decreased from RMB24.4 million in 2022 to RMB13.2 million (US$1.9 million) in 2023, mainly due to the decreased profitability of certain operating entities in mainland China.
In 2022, the difference between our net cash used in operating activities and our net loss attributable to HUYA Inc. of RMB486.7 million (US$70.6 million) was primarily attributable to certain non-cash expenses, including share-based compensation of RMB156.5 million (US$22.7 million) and impairment loss of investments of RMB55.2 million (US$8.0 million), and changes in certain working capital items, including a decrease of RMB88.9 million (US$12.9 million) in amounts due from related parties as a result of recoveries, partially offset by a decrease of RMB250.3 million (US$36.3 million) in accrued liabilities and other current liabilities.
In 2022, the difference between our net cash used in operating activities and our net loss attributable to HUYA Inc. of RMB547.7 million was primarily attributable to certain non-cash expenses, including share-based compensation of RMB156.5 million, amortization of acquired intangible assets of RMB58.6 million and impairment loss of investments of RMB55.2 million, and changes in certain working capital items, including a decrease of RMB248.8 million in accrued liabilities and other current liabilities, a decrease of RMB83.0 million in amounts due to related parties, partially offset by a decrease of RMB88.9 million in amounts due from related parties as a result of recoveries. 108 Table of Contents Net cash provided by operating activities was RMB327.5 million in 2021.
We had a net loss attributable to HUYA Inc. of RMB486.7 million (US$70.6 million) in 2022, as compared to a net income attributable to HUYA Inc. of RMB583.5 million in 2021.
We had a net loss attributable to HUYA Inc. of RMB204.5 million (US$28.8 million) in 2023, as compared to a net loss attributable to HUYA Inc. of RMB547.7 million in 2022. We had a net loss attributable to HUYA Inc. of RMB547.7 million in 2022, as compared to a net income attributable to HUYA Inc. of RMB583.5 million in 2021.
Share of (loss) income in equity method investments, net of income taxes We recorded share of loss in equity method investments, net of income taxes, of RMB0.5 million (US$0.1 million) in 2022, and share of gain in equity method investments, net of income taxes, of RMB379.2 million in 2021 and RMB28.4 million in 2020.
Share of (loss) income in equity method investments, net of income taxes We recorded share of loss in equity method investments, net of income taxes of nil in 2023 and RMB0.5 million in 2022, and share of income in equity method investments, net of income taxes, of RMB379.2 million in 2021.
Operating expenses Operating expenses decreased by 22.1% from RMB1,905.2 million in 2021 to RMB1,483.6 million (US$215.1 million) in 2022, and increased by 9.7% from RMB1,737.3 million in 2020 to RMB1,905.2 million in 2021. Research and development expenses. Research and development expenses consist primarily of salaries, welfare and share-based compensation for research and development personnel.
Operating expenses Operating expenses decreased by 18.3% from RMB1,905.2 million in 2021 to RMB1,556.2 million in 2022, and further decreased by 13.9% to RMB1,340.1 million (US$188.7 million) in 2023. Research and development expenses. Research and development expenses consist primarily of salaries, welfare and share-based compensation for research and development personnel.
Bandwidth costs decreased by 18.8% from RMB879.2 million in 2020 to RMB713.7 million in 2021, primarily due to improved management in bandwidth costs and continuous technology enhancement efforts. Others. Salaries and welfare consist of salaries, bonuses and other benefits for our employees involved in the operations of our platform.
Bandwidth costs decreased by 24.6% from RMB713.7 million in 2021 to RMB537.9 million in 2022, primarily due to improved bandwidth cost management, favorable pricing terms and continued technology enhancement efforts. Others. Salaries and welfare consist of salaries, bonuses and other benefits for our employees involved in the operations of our platform.
Capital Expenditures We made capital expenditures of RMB428.2 million, RMB98.1 million and RMB164.8 million (US$23.9 million) in 2020, 2021 and 2022, respectively. In these periods, our capital expenditures were mainly used for prepayment for purchasing of land use right, office building construction, obtaining licenses, purchasing of servers and other IT infrastructures, as well as for leasehold improvement.
Capital Expenditures We made capital expenditures of RMB98.1 million, RMB164.8 million and RMB131.3 million (US$18.5 million) in 2021, 2022 and 2023, respectively. In these periods, our capital expenditures were mainly used for payment of office building construction, purchasing of servers and other IT infrastructures, as well as for leasehold improvement.
As of December 31, 2022, our total capital commitments were RMB164.4 million, consisting of construction in progress and investments. We intend to fund our existing and future material cash requirements primarily with our existing cash balance and anticipated cash flows from operations.
As of December 31, 2023, our total capital commitments were RMB356.7 million, consisting of construction in progress. We intend to fund our existing and future material cash requirements primarily with our existing cash balance and anticipated cash flows from operations. We will continue to make cash commitments, including capital expenditures, to support the growth of our business.
Revenue sharing fees and content costs as a percentage of our total net revenues increased from 73.8% in 2021 to 81.7% in 2022.
Revenue sharing fees and content costs as a percentage of our total net revenues decreased from 81.3% in 2022 to 76.9% in 2023.
As of December 31, 2020, 2021 and 2022, we had RMB3,293.6 million, RMB1,790.8 million and RMB655.2 million (US$95.0 million), respectively, in cash and cash equivalents; RMB5,974.8 million, RMB8,351.9 million and RMB9,018.3 million (US$1,307.5 million), respectively, in short-term deposits; and RMB1,206.5 million, RMB816.3 million and RMB3.1 million (US$0.5 million), respectively, in short-term investments.
As of December 31, 2021, 2022 and 2023, we had RMB1,790.8 million, RMB694.1 million and RMB512.0 million (US$72.1 million), respectively, in cash and cash equivalents; RMB8,351.9 million, RMB9,018.3 million and RMB6,851.2 million (US$965.0 million), respectively, in short-term deposits; and RMB816.3 million, RMB3.1 million and nil, respectively, in short-term investments.
Entities must perform a self-assessment each year to ensure they meet the criteria for qualification, pursuant to SAT Public Notice [2020] No. 31 (“Circular 31”).
Entities must perform a self-assessment each year to ensure they meet the criteria for qualification, pursuant to the Circular about Preferential Corporate Income Tax Policy for Hainan Free Trade Port (SAT Public Notice [2020] No. 31).
Sales and marketing expenses consist primarily of advertising and market promotion expenses, salaries and welfare as well as shared-based compensation for sales and marketing personnel. Sales and marketing expenses decreased by 36.4% from RMB759.5 million in 2021 to RMB482.9 million (US$70.0 million) in 2022, primarily attributable to a decrease in marketing and promotion fees, as well as personnel-related expenses.
Sales and marketing expenses decreased by 30.2% from RMB759.5 million in 2021 to RMB530.5 million in 2022, primarily attributable to a decrease in marketing and promotion fees, as well as personnel-related expenses. General and administrative expenses. General and administrative expenses consist primarily of salaries and welfare for management and administrative personnel, and share-based compensation expense for management and administrative personnel.
Our commitment to providing strong support and resources to broadcasters and talent agencies allows us to offer high-quality content from diversified sources. Through close cooperation with e-sports tournament and game event organizers, as well as major game developers and publishers, we have developed e-sports live streaming as one of the most popular content genres on our platform.
Through cooperation with e-sports tournament and game event organizers, as well as major game developers and publishers, we have developed e-sports live streaming as one of the most popular content genres on our platform.
Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity.
We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity.
The statutory limit for the total amount of foreign debts of a foreign-invested company is the difference between the amount of total investment as approved by the MOFCOM or its local counterpart and the amount of registered capital of such foreign-invested company. 107 Table of Contents The following table sets forth a summary of our cash flows data for the years indicated.
The statutory limit for the total amount of foreign debts of a foreign-invested company is the difference between the amount of total investment as approved by the Ministry of Commerce of China or its local counterpart and the amount of registered capital of such foreign-invested company.
AI is used extensively in various aspects of our operations and is particularly useful for reviewing and screening contents through recognizing and analyzing patterns. The massive volume of data, such as viewing history, user interactions and purchase preference, enable us to further optimize our AI technology and enhance its accuracy.
The massive volume of data, such as viewing history, user interactions and purchase preference, enable us to further optimize our AI technology and enhance its accuracy.
Payment handling costs decreased by 1.7% from RMB154.5 million in 2020 to RMB151.9 million in 2021, primarily attributable to a decrease in sales of virtual items on our platform. Share-based compensation decreased by 12.8% from RMB64.9 million in 2020 to RMB56.6 million in 2021, primarily due to the grant of fewer share incentive awards in 2021.
Payment handling costs decreased by 35.6% from RMB100.4 million in 2022 to RMB64.7 million (US$9.1 million) in 2023, primarily attributable to a decrease in sales of virtual items on our platform. Share-based compensation decreased by 49.5% from RMB32.0 million in 2022 to RMB16.1 million (US$2.3 million) in 2023, primarily due to the decreased awards granted in 2023.
Maples and Calder (Hong Kong) LLP, our legal counsel as to Cayman Islands law, has advised us that there are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or brought within the jurisdiction of the Cayman Islands.
Taxation Cayman Islands According to Maples and Calder (Hong Kong) LLP, our legal counsel as to Cayman Islands law, the Cayman Islands currently levies no taxes on corporations based upon profits, income, gains or appreciation, there are no other taxes likely to be material to us levied by the government of the Cayman Islands, except for stamp duties, which may be applicable on instruments executed in, or brought within the jurisdiction of the Cayman Islands. 105 Table of Contents Hong Kong Huya Limited, our subsidiary incorporated in Hong Kong, is subject to 16.5% income tax on their taxable income generated from operations in Hong Kong.
General and administrative expenses decreased by 2.0% from RMB326.8 million in 2021 to RMB320.4 million (US$46.5 million) in 2022, primarily attributable to the decrease in share-based compensation expenses. 103 Table of Contents General and administrative expenses decreased by 26.6% from RMB445.0 million in 2020 to RMB326.8 million in 2021, primarily attributable to the decrease in share-based compensation expenses.
General and administrative expenses decreased by 6.0% from RMB341.2 million in 2022 to RMB320.8 million (US$45.2 million) in 2023, primarily attributable to a decrease in personnel-related expenses and share-based compensation expenses. General and administrative expenses increased by 4.4% from RMB326.8 million in 2021 to RMB341.2 million in 2022, primarily attributable to an increase in personnel-related expenses.
In the years ended December 31, 2020, 2021 and 2022, our research and development expenditures were RMB734.3 million, RMB818.9 million and RMB680.4 million (US$98.6 million), representing 6.7%, 7.2% and 7.4% of our total net revenues for the years ended December 31, 2020, 2021 and 2022, respectively.
In the years ended December 31, 2021, 2022 and 2023, our research and development expenditures were RMB818.9 million, RMB684.4 million and RMB578.6 million (US$81.5 million), representing 7.2%, 7.4% and 8.3% of our total net revenues for the same year, respectively. Our research and development expenses consist primarily of salaries, welfare and share-based compensation for research and development personnel. D.
Furthermore, capital account transactions, which include foreign direct investment and loans, must be approved by and/or registered with SAFE and its local branches. The total amount of loans we can make to our subsidiary in mainland China cannot exceed statutory limits and must be registered with the local counterpart of SAFE.
The total amount of loans we can make to our subsidiaries in mainland China cannot exceed statutory limits and must be registered with the local counterpart of the State Administration of Foreign Exchange.
In addition to rich content in game and e-sports genres, we also offer non-game entertainment content, such as talent shows, anime, outdoor activities, live chats, and online theater. Having high-quality content from numerous sources and in different genres enables us to continuously provide users with superior experience and enhance user stickiness to our platform.
In addition to rich content in game and e-sports genres, we also offer non-game entertainment content, such as talent shows, anime, outdoor activities, live chats, and online theater.
Our operating margin decreased from a negative 0.3% in 2021 to a negative 7.7% in 2022. Our operating loss was RMB30.2 million in 2021, compared with an operating income of RMB725.0 million in 2020. Our operating margin decreased from 6.6% in 2020 to a negative 0.3% in 2021.
Operating loss Our operating loss was RMB443.6 million (US$62.5 million) in 2023, compared with RMB736.2 million in 2022. Our operating margin increased from a negative 7.9% in 2022 to a negative 6.3% in 2023. 104 Table of Contents Our operating loss was RMB736.2 million in 2022, compared with RMB30.2 million in 2021.
The average mobile MAUs of Huya Live in 2022 reached 84.3 million, compared to 80.9 million in 2021. Our management regularly monitors these operating metrics, which are important and direct performance indicators, in managing our live streaming business and in making relevant operational and production decisions.
Our management regularly monitors these operating metrics, which are important and direct performance indicators, in managing our business and in making relevant operational and production decisions.
Other costs decreased by 14.4% from RMB154.0 million in 2020 to RMB131.8 million in 2021, primarily due to the improvement in efficiency. Gross profit and gross margin Our gross profit decreased by 61.8% from RMB1,600.3 million in 2021 to RMB610.9 million (US$88.6 million) in 2022, primarily attributable to lower revenues and increased content costs related to e-sports content.
Our gross margin increased from 7.1% in 2022 to 11.7% in 2023. Our gross profit decreased by 59.2% from RMB1,600.3 million in 2021 to RMB653.6 million in 2022, primarily attributable to lower revenues and increased content costs related to e-sports content. Our gross margin decreased from 14.1% in 2021 to 7.1% in 2022.
The table below sets forth the respective revenues contribution and assets of HUYA Inc. and our wholly-owned subsidiaries and the variable interest entity and its subsidiaries as of the dates and for the years indicated: Net revenues (1) Total assets (1) For the year ended December 31, As of December 31, 2020 2021 2022 2021 2022 HUYA Inc. and its wholly-owned subsidiaries 1.6 % 4.0 % 3.1 % 88.9 % 87.7 % Variable interest entity and its subsidiaries 98.4 % 96.0 % 96.9 % 11.1 % 12.3 % Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Note: (1) The percentages exclude the inter-company transactions and balances between HUYA Inc. and its wholly-owned subsidiaries and the variable interest entity and its subsidiaries.
The table below sets forth the respective revenues contribution and assets of HUYA Inc. and our wholly-owned subsidiaries and the variable interest entity and its subsidiaries as of the dates and for the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net revenues (1) Total assets (1) ​ For the year ended December 31, As of December 31, ​ 2021 2022 * 2023 2022 * 2023 HUYA Inc. and its wholly-owned subsidiaries 4.0 % 3.5 % 4.4 % 88.3 % 87.8 % Variable interest entity and its subsidiaries 96.0 % 96.5 % 95.6 % 11.7 % 12.2 % Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Notes: * Our consolidated financial information for the year ended December 31, 2022 and as of December 31, 2022 has been retrospectively adjusted due to the business combination under common control as discussed in Note 2(d) to our audited consolidated financial statements included elsewhere in this annual report.
In 2021, the difference between our net cash provided by operating activities and our net income attributable to HUYA Inc. of RMB583.5 million was primarily due to an increase of RMB245.6 million in prepayments and other receivables as a result of increases in prepayments and deposits to vendors and content providers.
In 2021, the difference between our net cash provided by operating activities and our net income attributable to HUYA Inc. of RMB583.5 million was primarily attributable to certain non-cash adjustments, including share of income in equity method investments, net of income taxes, of RMB379.2 million, partially offset by share-based compensation expenses of RMB289.7 million, and changes in certain working capital items, including an increase of RMB245.6 million in prepayments and other receivables as a result of increases in prepayments and deposits to vendors and content providers, a decrease of RMB85.5 million in advances from customers and deferred revenue, and an increase of RMB83.8 million in amounts due from related parties, partially offset by an increase of RMB138.1 million in accrued liabilities and other current liabilities and an increase of RMB120.7 million in amounts due to related parties.
C. Research and Development, Patents and Licenses, etc. Technology The success of our business is dependent on our strong technological capabilities that support us in delivering superior user experience, increasing operational efficiency and enabling innovations. Our technology platform has been designed for reliability, scalability and flexibility. 110 Table of Contents • AI and big data analytics .
(1) The percentages exclude the inter-company transactions and balances between HUYA Inc. and its wholly-owned subsidiaries and the variable interest entity and its subsidiaries. C. Research and Development, Patents and Licenses, etc. Technology The success of our business is dependent on our strong technological capabilities that support us in delivering superior user experience, increasing operational efficiency and enabling innovations.
Entities must perform a self-assessment each year to ensure they meet the criteria for qualification, pursuant to SAT Public Notice [2018] No. 23 (“Circular 23”). If a KNSE fails to meet the criteria for qualification as a KNSE in any year, the entity cannot enjoy the 10% preferential tax rate in that year.
Entities must perform a self-assessment each year to ensure they meet the criteria for qualification, pursuant to the Circular about Issuing the Revised Measures for the Handling of Matters concerning Preferential Enterprise Income Tax Policies (SAT Public Notice [2018] No. 23).
We will continue to make cash commitments, including capital expenditures, to support the growth of our business. 109 Table of Contents Other than the obligations set forth above, we do not have any significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2022.
Other than the obligations set forth above, we do not have any significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2023. Off-Balance Sheet Arrangements We have not entered into any off-balance sheet financial guarantees or other off-balance sheet commitments to guarantee the payment obligations of any third parties.
In addition, the Cayman Islands does not impose withholding tax on dividend payments. Hong Kong Huya Limited, our subsidiary incorporated in Hong Kong, is subject to 16.5% income tax on their taxable income generated from operations in Hong Kong. The payments of dividends by these companies to their shareholders are not subject to any withholding tax in Hong Kong.
The payments of dividends by these companies to their shareholders are not subject to any withholding tax in Hong Kong.
Payment due by period Total Less than 1 year 1 – 3 years 4 – 5 years More than 5 years (in RMB thousands) Operating Lease Obligations (1) 44,388 34,300 10,088 — — Note: (1) Represents our non-cancellable operating leases and property management fees for offices expiring on different dates.
We will continue to make capital expenditures to support the growth of our business. ​ 109 Table of Contents Contractual Obligations and Commitments The following table sets forth our contractual obligations by specified categories as of December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payment due by period ​ ​ Less than ​ ​ More than ​ Total 1 year 1 – 3 years 4 – 5 years 5 years ​ ​ (RMB in thousands) Operating Lease Obligations (1) ​ 98,483 ​ 37,563 ​ 60,920 ​ — ​ — Note: (1) Represents our non-cancellable operating leases and property management fees for offices expiring on different dates.
Commerce & Finance Law Offices, our legal counsel as to the law of mainland China, has advised us that dividends paid by our subsidiary in mainland China to our Hong Kong subsidiary will be subject to a withholding tax rate of 10%, unless the relevant Hong Kong entity satisfies all the requirements under the Arrangement between mainland China and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Capital.
The enterprise income tax applicable to each of our significant subsidiaries in mainland China and the VIE are as follows: ● Huya Technology enjoyed a preferential tax rate of 12.5% for the year ended December 31, 2021 as a qualified “software enterprise.” Huya Technology obtained the qualification as a High and New Technology Enterprise in 2022 and enjoyed a preferential tax rate of 15% for the years ended December 31, 2022 and 2023. ● Guangzhou Huya enjoyed a preferential tax rate of 15% for the years ended December 31, 2021, 2022 and 2023 as a qualified High and New Technology Enterprise. ● Hainan Huya Entertainment Information Technology Co., Ltd., as an enterprise in an encouraged industry registered in the Hainan Free Trade Port and engaging in substantive operations, is entitled to enjoy the preferential tax rate of 15% for five years starting from 2020, pursuant to Cai Shui [2020] No. 31. 106 Table of Contents Commerce & Finance Law Offices, our legal counsel as to the law of mainland China, has advised us that dividends paid by our subsidiaries in mainland China to our Hong Kong subsidiary will be subject to a withholding tax rate of 10%, unless the relevant Hong Kong entity satisfies all the requirements under the Arrangement between mainland China and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Capital.
Other costs consist primarily of share-based compensation, as well as depreciation and amortization expense. 102 Table of Contents Salaries and welfare decreased by 10.8% from RMB322.6 million in 2021 to RMB287.7 million (US$41.7 million) in 2022, primarily attributable to a decrease in headcount.
Payment handling costs consist primarily of channel fees charged by payment channels such as WeChat Pay and Alipay. Other costs consist primarily of share-based compensation, as well as depreciation and amortization expense. Salaries and welfare decreased by 16.3% from RMB288.1 million in 2022 to RMB241.2 million (US$34.0 million) in 2023, primarily attributable to a decrease in headcount.
The decrease in the number of average quarterly paying users was primarily due to soft macroeconomic environment, which adversely affected the users’ willingness to pay. Advertising and other revenues.
The number of average quarterly paying users on Huya Live was 4.6 million in 2023, compared to 5.6 million in 2022, primarily due to the soft macroeconomic environment, which adversely affected users’ willingness to pay, as well as our proactive adjustment in support of our strategic transformation and prudent operations.
Other costs decreased by 11.5% from RMB131.8 million in 2021 to RMB116.6 million (US$16.9 million) in 2022, primarily due to the improvement in efficiency. Salaries and welfare increased by 5.1% from RMB306.8 million in 2020 to RMB322.6 million in 2021, primarily attributable to an increase in average salary.
Other costs increased by 1.2% from RMB116.7 million in 2022 to RMB118.0 million (US$16.6 million) in 2023. Salaries and welfare decreased by 10.7% from RMB322.6 million in 2021 to RMB288.1 million in 2022, primarily attributable to a decrease in headcount.
In addition, we also generate a small portion of revenues from sales of in-game virtual items from certain mobile games that we developed and operated jointly with third-party distribution platforms. 101 Table of Contents Advertising and other revenues decreased by 12.1% from RMB1,165.2 million in 2021 to RMB1,024.6 million (US$148.5 million) in 2022, primarily due to less demand for advertising services resulting from the challenging macro environment.
In addition, we also generate a small portion of revenues from game-related services and sales of in-game items from certain mobile games that we developed and operated jointly with third-party distribution platforms.

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

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Biggest changeOrdinary Shares Beneficially Owned Class A ordinary Shares ( † ) Class B ordinary Shares ( † † ) Total ordinary shares on an as-converted basis % of total ordinary shares on an as converted basis % of aggregate voting power ( † † † ) Directors and Executive Officers: ** Lingdong Huang — — — — — Rongjie Dong (1) 1,301,157 — 1,301,157 0.5 0.0 David Xueling Li (2) * — * * * Qinghua Xie (3) — — — — — Hai Tao Pu (4) — — — — — Guang Xu — — — — — Lei Zheng — — — — — Hongqiang Zhao (5) — — — — — Tsang Wah Kwong (6) — — — — — Ashley Xin Wu * — * * * All directors and executive officers as a group 3,035,233 — 3,035,233 1.3 0.1 Principal Shareholders: Tencent Holdings Limited (7) — 112,012,054 112,012,054 46.7 70.3 JOYY (8) — 38,374,463 38,374,463 16.0 24.1 Morgan Stanley (9) 14,830,792 — 14,830,792 6.2 0.9 Notes: * Less than 1% of total outstanding ordinary shares. ** Except for Mr.
Biggest changeThese shares, however, are not included in the computation of the percentage ownership of any other person. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares Beneficially Owned ​ ​ ​ Total % of total ​ ​ ​ ​ ​ ​ ​ ordinary ​ ordinary ​ % of ​ ​ Class A ​ Class B ​ shares on an ​ shares on an ​ aggregate ​ ​ ordinary ​ ordinary ​ as-converted ​ as converted ​ voting ​ Shares † Shares †† basis basis power ††† Directors and Executive Officers: ** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Songtao Lin ​ — ​ — ​ — ​ — ​ — Junhong Huang ​ — ​ — ​ — ​ — ​ — Qinghua Xie — — — — — Hai Tao Pu — — — — — Guang Xu — — — — — Lei Zheng — — — — — Hongqiang Zhao — — — — — Tsang Wah Kwong — — — — — Ashley Xin Wu * — * * * All directors and executive officers as a group * — * * * Principal Shareholders: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tencent Holdings Limited (1) — 150,386,517 150,386,517 66.0 95.1 Notes: * Less than 1% of total outstanding ordinary shares. ** The business address for our executive director and officers listed in the table is Building A3, E-Park, 280 Hanxi Road, Panyu District, Guangzhou 511446, the People’s Republic of China.
The plan administrator has the power and authority to determine the persons who are eligible to receive awards, as well as other terms and conditions of awards.
The plan administrator has the power and authority to determine the persons who are eligible to receive awards, as well as other terms and conditions of awards.
For so long as Tencent and its affiliates collectively hold no less than 50% of the voting power in us, Tencent has the right to appoint, remove and replace up to the lowest number of directors that (x) constitutes a majority of the directors and (y) is no less than proportionate to its voting power in us, by delivering a written notice to us.
For so long as Tencent and its affiliates collectively hold no less than 50% of the voting power in us, Tencent has the right to appoint, remove and replace up to the lowest number of directors that (x) constitutes a majority of the directors and (y) is no less than proportionate to its voting power in us, by delivering a written notice to us.
Our directors are not subject to a term of office (unless otherwise specified in a written agreement between the Company and the relevant director) and hold office until such time as they are removed from office by ordinary resolution of the shareholders.
Our directors are not subject to a term of office (unless otherwise specified in a written agreement between our company and the relevant director) and hold office until such time as they are removed from office by ordinary resolution of the shareholders.
The audit committee is responsible for, among other things: • appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; • reviewing with the independent auditors any audit problems or difficulties and management’s response; • discussing the annual audited financial statements with management and the independent auditors; • reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; • reviewing and approving all proposed related party transactions; • meeting separately and periodically with management and the independent auditors; and • monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. 118 Table of Contents Compensation Committee .
The audit committee is responsible for, among other things: ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; ● meeting separately and periodically with management and the independent auditors; and 119 Table of Contents ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
Share Ownership Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our Class A and Class B ordinary shares as of March 31, 2023: • each of our directors and executive officers; and • each person known to us to own beneficially 5% or more of our total outstanding ordinary shares.
Share Ownership Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our Class A and Class B ordinary shares as of March 31, 2024: ● each of our directors and executive officers; and ● each person known to us to own beneficially 5% or more of our total outstanding ordinary shares.
A shareholder may in certain limited exceptional circumstances have the right to seek damages in our name if a duty owed by our directors is breached. 119 Table of Contents Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs.
A shareholder may in certain limited exceptional circumstances have the right to seek damages in our name if a duty owed by our directors is breached. 120 Table of Contents Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs.
The compensation committee is responsible for, among other things: • reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers; • reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors; • reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements, and • selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management.
The compensation committee is responsible for, among other things: ● reviewing and approving, or recommending to the board for its approval, the compensation for our acting co-chief executive officers and other executive officers; ● reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors; ● reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements, and ● selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management.
Lei Zheng is Building D2, Kexing Science Park, Nanshan District, Shenzhen, the People’s Republic of China. 121 Table of Contents † For each person and group included in this column, percentage ownership is calculated by dividing the number of Class A ordinary shares beneficially owned by such person or group, including Class A ordinary shares that such person or group has the right to acquire within 60 days of March 31, 2023, by the sum of the total number of Class A ordinary shares outstanding as of March 31, 2023 and the number of Class A ordinary shares underlying the options held by such person or group that are exercisable within 60 days of March 31, 2023. †† For each person and group included in this column, percentage ownership is calculated by dividing the number of Class B ordinary shares beneficially owned by such person or group, including Class B ordinary shares that such person or group has the right to acquire within 60 days of March 31, 2023, by the sum of the total number of Class B ordinary shares outstanding as of March 31, 2023 and the number of Class B ordinary shares underlying the options held by such person or group that are exercisable within 60 days of March 31, 2023. ††† For each person or group included in this column, percentage of total voting power represents voting power based on both Class A and Class B ordinary shares held by such person or group, including Class A and Class B ordinary shares that such person or group has the right to acquire within 60 days of March 31, 2023, with respect to all outstanding shares of our Class A and Class B ordinary shares as a single class.
Lei Zheng is Building D2, Kexing Science Park, Nanshan District, Shenzhen, the People’s Republic of China. † For each person and group included in this column, percentage ownership is calculated by dividing the number of Class A ordinary shares beneficially owned by such person or group, including Class A ordinary shares that such person or group has the right to acquire within 60 days of March 31, 2024, by the sum of the total number of Class A ordinary shares outstanding as of March 31, 2024 and the number of Class A ordinary shares underlying the options held by such person or group that are exercisable within 60 days of March 31, 2024. †† For each person and group included in this column, percentage ownership is calculated by dividing the number of Class B ordinary shares beneficially owned by such person or group, including Class B ordinary shares that such person or group has the right to acquire within 60 days of March 31, 2024, by the sum of the total number of Class B ordinary shares outstanding as of March 31, 2024 and the number of Class B ordinary shares underlying the options held by such person or group that are exercisable within 60 days of March 31, 2024. 122 Table of Contents ††† For each person or group included in this column, percentage of total voting power represents voting power based on both Class A and Class B ordinary shares held by such person or group, including Class A and Class B ordinary shares that such person or group has the right to acquire within 60 days of March 31, 2024, with respect to all outstanding shares of our Class A and Class B ordinary shares as a single class.
Subject to the foregoing, our directors may be elected by a resolution of our board of directors, or by an special resolution of our shareholders.
Subject to the foregoing, our directors may be elected by a resolution of our board of directors, or by a special resolution of our shareholders.
Our compensation committee consists of Mr. Qinghua Xie, Mr. Hongqiang Zhao and Mr. Tsang Wah Kwong. Mr. Qinghua Xie is the chairman of our compensation committee. We have determined that Mr. Hongqiang Zhao and Mr. Tsang Wah Kwong satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange.
Compensation Committee. Our compensation committee consists of Mr. Qinghua Xie, Mr. Hongqiang Zhao and Mr. Tsang Wah Kwong. Mr. Qinghua Xie is the chairperson of our compensation committee. We have determined that Mr. Hongqiang Zhao and Mr. Tsang Wah Kwong satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange.
Tsang Wah Kwong on the audit committees of these public companies would not impair the ability of Mr. Tsang Wah Kwong to effectively serve on the audit committee of our board of directors. The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company.
Tsang Wah Kwong on the audit committees of these public companies would not impair their ability to effectively serve on the audit committee of our board of directors. The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company.
For share incentive grants to our officers and directors, see “—Share Incentive Plan.” Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is employed for a specified time period.
For share incentive grants to our officers and directors, see “—Share Incentive Plans.” Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is employed for a specified time period.
Eligibility. We may grant awards to directors, officers, employees and consultants of our company or any of our subsidiaries. Vesting Conditions. In general, the plan administrator determines the vesting conditions, which are specified in the relevant award agreement. Form and Timing of Payment of Restricted Share Units .
Eligibility. We may grant awards to directors, officers, employees and consultants of our company or any of our subsidiaries. Vesting Conditions. In general, the plan administrator determines the vesting conditions, which are specified in the relevant award agreement. 117 Table of Contents Form and Timing of Payment of Restricted Share Units .
The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated.
The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our acting co-chief executive officers may not be present at any committee meeting during which his compensation is deliberated.
Any grant or amendment of awards to any committee member serving as the plan administrator shall then require an affirmative vote of a majority of the board members who are not on the committee serving as the plan administrator. 116 Table of Contents Award Agreement.
Any grant or amendment of awards to any committee member serving as the plan administrator shall then require an affirmative vote of a majority of the board members who are not on the committee serving as the plan administrator. Award Agreement.
However, a participant may also transfer one or more awards to a trust controlled by him or her for estate planning purposes. 115 Table of Contents Termination and amendment of the Amended and Restated 2017 Plan.
However, a participant may also transfer one or more awards to a trust controlled by him or her for estate planning purposes. Termination and amendment of the Amended and Restated 2017 Plan.
Guang Xu is Building C, Kexing Science Park, Nanshan District, Shenzhen, the People’s Republic of China. The business address of Mr.
Guang Xu is 13/F, Building C, Kexing Science Park, Nanshan District, Shenzhen, the People’s Republic of China. The business address of Mr.
The shares reserved and to be issued under our Amended and Restated 2017 Share Plan have been registered on the Registration Statements on Form S-8 on September 14, 2018. The following table summarizes, as of March 31, 2023, the outstanding options granted under the Amended and Restated 2017 Plan to grantees.
The shares reserved and to be issued under our Amended and Restated 2017 Share Plan have been registered on the Registration Statements on Form S-8 on September 14, 2018. ​ 116 Table of Contents The following table summarizes, as of March 31, 2024, the outstanding options granted under the Amended and Restated 2017 Plan to grantees.
Terms of Directors and Officers Tencent has the right to appoint, remove and replace at least one director as long as Tencent and its affiliates collectively hold no less than 20% of our issued share capital on a fully diluted basis, and JOYY has the right to appoint, remove and replace one director as long as JOYY and its affiliates collectively hold no less than 15% of our voting power on a fully diluted basis.
Terms of Directors and Officers Tencent has the right to appoint, remove and replace at least one director as long as Tencent and its affiliates collectively hold no less than 20% of our issued share capital on a fully diluted basis.
The maximum number of Class A ordinary shares that may be issued under the Amended and Restated 2021 Plan is 8,018,111. As of March 31, 2023, 5,307,603 restricted share units are outstanding under the Amended and Restated 2021 Plan. The following paragraphs describe the principal terms of the Amended and Restated 2021 Plan. Types of Awards.
The maximum number of Class A ordinary shares that may be issued under the Amended and Restated 2021 Plan is 8,018,111. As of March 31, 2024, 5,590,592 restricted share units are outstanding under the Amended and Restated 2021 Plan. The following paragraphs describe the principal terms of the Amended and Restated 2021 Plan. Types of Awards.
Specifically, each executive officer has agreed not to (i) approach our suppliers, clients, customers or contacts or other persons or entities introduced to the executive officer in his or her capacity as a representative of us for the purpose of doing business with such persons or entities that will harm our business relationships with these persons or entities; (ii) assume employment with or provide services to any of our competitors, or engage, whether as principal, partner, licensor or otherwise, any of our competitors, without our express consent; or (iii) seek directly or indirectly, to solicit the services of, or hire or engage any of our employees who is employed by us on or after the date of the executive officer’s termination, or in the year preceding such termination, without our express consent. 114 Table of Contents We have entered into indemnification agreements with each of our directors and executive officers.
Specifically, each executive officer has agreed not to (i) approach our suppliers, clients, customers or contacts or other persons or entities introduced to the executive officer in his or her capacity as a representative of us for the purpose of doing business with such persons or entities that will harm our business relationships with these persons or entities; (ii) assume employment with or provide services to any of our competitors, or engage, whether as principal, partner, licensor or otherwise, any of our competitors, without our express consent; or (iii) seek directly or indirectly, to solicit the services of, or hire or engage any of our employees who is employed by us on or after the date of the executive officer’s termination, or in the year preceding such termination, without our express consent.
The shares reserved and to be granted under our Amended and Restated 2021 Plan have been registered on the Registration Statements on Forms S-8 on July 8, 2021 and December 23, 2022.
The shares reserved and to be issued under our Amended and Restated 2021 Plan have been registered on the Registration Statements on Form S-8 on July 8, 2021 and December 23, 2022.
None of our non-executive directors has a service contract with us that provides for benefits upon termination of service. 117 Table of Contents Committees of the Board of Directors We have established three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporate governance committee.
None of our non-executive directors has a service contract with us that provides for benefits upon termination of service. Committees of the Board of Directors We have established three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporate governance committee. We have adopted a charter for each of the three committees.
Pursuant to our memorandum and articles of association, Tencent has the right to appoint, remove and replace at least one director as long as Tencent and its affiliates collectively hold no less than 20% of our issued share capital on a fully diluted basis, and JOYY has the right to appoint, remove and replace one director as long as JOYY and its affiliates collectively hold no less than 15% of our voting power on a fully diluted basis.
Board Practices Board of Directors Our board of directors consists of eight directors. Pursuant to our memorandum and articles of association, Tencent has the right to appoint, remove and replace at least one director as long as Tencent and its affiliates collectively hold no less than 20% of our issued share capital on a fully diluted basis.
(7) Represents 112,012,054 Class B ordinary shares directly held by Linen Investment Limited, based on our register of members. Tencent Holdings Limited is a Cayman Islands company. Linen Investment Limited is a British Virgin Islands company and a direct wholly owned subsidiary of Tencent Holdings Limited.
(1) Represents 150,386,517 Class B ordinary shares directly held by Linen Investment Limited, based on our register of members. Tencent Holdings Limited is a Cayman Islands company. Linen Investment Limited is a British Virgin Islands company and a direct wholly owned subsidiary of Tencent Holdings Limited.
Compensation of Directors and Executive Officers For the fiscal year ended December 31, 2022, the compensation to our executive officers and directors in cash by us amounted to an aggregate of RMB14.7 million (US$2.1 million). We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors.
Compensation of Directors and Executive Officers For the fiscal year ended December 31, 2023, the compensation we paid to our executive officers and directors in cash amounted to an aggregate of RMB17.0 million (US$2.4 million). We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors.
Tsang Wah Kwong currently also serves on the audit committees of China Merchants China Direct Investments Limited (SEHK: 00133), Sihuan Pharmaceutical Holdings Group Limited (SEHK: 00460), Shirble Department Store Holdings (China) Limited (SEHK: 00312) and TK Group (Holdings) Limited (SEHK: 02283). Our board of directors has determined that the simultaneous service of Mr.
Tsang Wah Kwong currently also serves on the audit committees of China Merchants China Direct Investments Limited (SEHK: 0133), Sihuan Pharmaceutical Holdings Group Limited (SEHK: 0460), Shirble Department Store Holdings (China) Limited (SEHK: 0312) and TK Group (Holdings) Limited (SEHK: 2283). Our board of directors has determined that the simultaneous service of Mr. Hongqiang Zhao and Mr.
The maximum number of Class A ordinary shares that may be issued under the Amended and Restated 2017 Plan is 28,394,117. As of March 31, 2023, options to purchase 126,002 Class A ordinary shares are outstanding, and 4,657,961 restricted share units are outstanding under the Amended and Restated 2017 Plan.
The maximum number of Class A ordinary shares that may be issued under the Amended and Restated 2017 Plan is 28,394,117. As of March 31, 2024, options to purchase 119,002 Class A ordinary shares are outstanding, and 2,779,503 restricted share units are outstanding under the Amended and Restated 2017 Plan.
Xie has served as a non-executive director of Yixin Group Limited (SEHK: 2858) since April 2022 and a non-executive director of Tongcheng Travel Holdings Limited (SEHK: 0780) since April 2023. Mr. Xie obtained a bachelor’s degree in economics from Sun Yat-Sen University in 2001. Mr. Hai Tao Pu has been serving as our director since April 2020. Mr.
Xie has served as a non-executive director of Yixin Group Limited (SEHK: 2858) since April 2022, a non-executive director of Tongcheng Travel Holdings Limited (SEHK: 0780) since April 2023 and a non-executive director of China Literature Limited (SEHK: 0772) since May 2023. Mr. Xie obtained a bachelor’s degree in economics from Sun Yat-Sen University in 2001. Mr.
We have adopted a charter for each of the three committees. Each committee’s members and functions are described below. Audit Committee . Our audit committee consists of Mr. Hongqiang Zhao and Mr. Tsang Wah Kwong. Mr. Hongqiang Zhao is the chairman of our audit committee. We have determined that Mr. Hongqiang Zhao and Mr.
Each committee’s members and functions are described below. Audit Committee. Our audit committee consists of Mr. Hongqiang Zhao and Mr. Tsang Wah Kwong. Mr. Hongqiang Zhao is the chairperson of our audit committee. We have determined that Mr. Hongqiang Zhao and Mr.
Nominating and Corporate Governance Committee . Our nominating and corporate governance committee consists of Mr. Hongqiang Zhao, Mr. Tsang Wah Kwong, Mr. Lingdong Huang and Mr. Rongjie Dong. Mr. Hongqiang Zhao is the chairperson of our nominating and corporate governance committee. Mr. Hongqiang Zhao and Mr.
Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Mr. Hongqiang Zhao, Mr. Tsang Wah Kwong and Mr. Songtao Lin. Mr. Hongqiang Zhao is the chairperson of our nominating and corporate governance committee. Mr. Hongqiang Zhao and Mr.
These contracts include a standard non-compete covenant that prohibits the employee from competing with us, directly or indirectly, during his or her employment and for two years after the termination of his or her employment, provided that we pay compensation during the restriction period in accordance with laws and regulations of mainland China in this regard. 120 Table of Contents We believe that we maintain a good working relationship with our employees, and we have not experienced any labor disputes.
These contracts include a standard non-compete covenant that prohibits the employee from competing with us, directly or indirectly, during his or her employment and for two years after the termination of his or her employment, provided that we pay compensation during the restriction period in accordance with laws and regulations of mainland China in this regard.
Li received a bachelor’s degree in philosophy from Renmin University of China. Mr. Qinghua Xie has been serving as our director since April 2023. Mr. Xie joined Tencent in December 2003, and currently serves as the corporate vice president of Tencent. Mr.
Qinghua Xie has been serving as our director since April 2023. Mr. Xie joined Tencent in December 2003, and currently serves as the corporate vice president of Tencent. Mr.
Name Class A Ordinary Shares Underlying Options Awarded Exercise Price (US$/Share) Date of Grant Date of Expiration Grantees as a group * US$2.55 August 9, 2017, March 15, 2018 and July 1, 2018 August 8, 2027, March 14, 2028 and June 30, 2028 Note: * Less than 1% of our total outstanding shares.
As of March 31, 2024, there are no outstanding options granted to our current directors or executive officers under the Amended and Restated 2017 Plan. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Class A Ordinary ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares Underlying ​ Exercise Price ​ ​ ​ Date of Name Options Awarded (US$/Share) Date of Grant Expiration Grantees as a group * ​ ​ US$2.55 August 9, 2017, March 15, 2018 and July 1, 2018 August 8, 2027, March 14, 2028 and June 30, 2028 Note: * Less than 1% of our total outstanding shares.
The calculations in the table below are based on 239,902,454 ordinary shares outstanding as of March 31, 2023, comprising of 89,515,937 Class A ordinary shares (excluding 3,059,325 Class A ordinary shares issued to our depositary bank for bulk issuance of ADSs reserved for issuances upon the exercise or vesting of awards under our share incentive plan) and 150,386,517 Class B ordinary shares.
The calculations in the table below are based on 227,697,240 ordinary shares outstanding as of March 31, 2024, comprising of 77,310,723 Class A ordinary shares (excluding 19,264,539 Class A ordinary shares issued to our depositary bank for bulk issuance of ADSs reserved for issuances upon the exercise or vesting of awards under our share incentive plan and treasury ADSs) and 150,386,517 Class B ordinary shares.
Prior to that, Ms. Wu worked as an assistant audit manager at KPMG Huazhen from August 2007 to September 2011. Ms. Wu received her bachelor’s degree in accounting from Sun Yat-sen University in 2007. Ms. Wu is a Certified Public Accountant in the United States and a member of the Chinese Institute of Certified Public Accountants. B.
Wu received her bachelor’s degree in accounting from Sun Yat-sen University in 2007. Ms. Wu is a Certified Public Accountant in the United States and a member of the Chinese Institute of Certified Public Accountants. B.
Name Class A Ordinary Shares Underlying Restricted Share Units Awarded Date of Grant Date of Expiration Rongjie Dong * March 31, 2018, and September 13, 2020 March 30, 2028 and September 12, 2030 Ashley Xin Wu * March 31, 2018, August 15, 2019, and May 29, 2020 March 30, 2028, August 14, 2029, and May 28, 2030 Other individuals as a group 4,002,564 March 31, 2018 to December 15, 2021 March 30, 2028 to December 14, 2031 Note: * Less than 1% of our total outstanding shares.
The following table summarizes, as of March 31, 2024, the outstanding restricted share units granted under the Amended and Restated 2017 Plan to our directors, executive officers and other grantees. ​ ​ ​ ​ ​ ​ ​ ​ ​ Class A Ordinary Shares ​ ​ ​ ​ ​ ​ Underlying Restricted ​ ​ ​ Date of Name Share Units Awarded Date of Grant Expiration Ashley Xin Wu * March 31, 2018, August 15, 2019, and May 29, 2020 March 30, 2028, August 14, 2029, and May 28, 2030 Other individuals as a group 2,730,375 March 31, 2018 to December 15, 2021 March 30, 2028 to December 14, 2031 Note: * Less than 1% of our total outstanding shares.
Tsang currently also serves as an independent non-executive director of China Merchants China Direct Investments Limited (SEHK: 00133), Sihuan Pharmaceutical Holdings Group Limited (SEHK: 00460), Shirble Department Store Holdings (China) Limited (SEHK: 00312) and TK Group (Holdings) Limited (SEHK: 02283). Prior to June 2011, Mr.
Tsang Wah Kwong has been serving as our independent director since May 2020. Mr. Tsang currently also serves as an independent non-executive director of China Merchants China Direct Investments Limited (SEHK: 0133), Sihuan Pharmaceutical Holdings Group Limited (SEHK: 0460), Shirble Department Store Holdings (China) Limited (SEHK: 0312) and TK Group (Holdings) Limited (SEHK: 2283). Prior to June 2011, Mr.
David Xueling Li is 30 Pasir Panjang Road #15-31A Mapletree Business City, Singapore 117440. (3) The business address of Mr. Qinghua Xie is 46/F, Tencent Binhai Towers, No.33 Haitian 2nd Road, Nanshan District, Shenzhen, the People’s Republic of China. (4) The business address of Mr. Hai Tao Pu is 29/F, Three Pacific Place, 1 Queen’s Road East, Wanchai, Hong Kong.
The business address of Mr. Songtao Lin and Qinghua Xie is Tencent Binhai Building, No. 33 Haitian 2nd Road, Nanshan District, Shenzhen, the People’s Republic of China. The business address of Mr. Hai Tao Pu is 29/F, Three Pacific Place, 1 Queen’s Road East, Wanchai, Hong Kong. The business address of Mr.
As of December 31, 2022 Number % Customer services and operations 486 32.0 Research and development 765 50.3 Sales and marketing 84 5.5 General and administrative 186 12.2 Total 1,521 100.0 We participate in various employee social security plans that are organized by municipal and provincial governments, including housing, pension, medical insurance and unemployment insurance, as required by laws and regulations in mainland China.
The following table sets forth the numbers of our employees categorized by function as of December 31, 2023. ​ ​ ​ ​ ​ ​ As of December 31, 2023 ​ Number % Customer services and operations 416 30.9 Research and development 705 52.4 Sales and marketing 59 4.4 General and administrative 165 12.3 Total 1,345 100.0 ​ We participate in various employee social security plans that are organized by municipal and provincial governments, including housing, pension, medical insurance and unemployment insurance, as required by laws and regulations in mainland China.
Our officers are elected by and serve at the discretion of the board of directors. D. Employees We had 1,521 employees as of December 31, 2022. As of December 31, 2022, 79.2%, 9.0% and 11.8% of our employees were located in Guangzhou, Foshan and other cities, respectively.
Our officers are elected by and serve at the discretion of the board of directors. D. Employees We had 1,345 employees as of December 31, 2023. We had 2,067 and 1,521 employees as of December 31, 2021 and December 31, 2022, respectively.
Name Class A Ordinary Shares Underlying Restricted Share Units Awarded Date of Grant Date of Expiration Rongjie Dong * April 22, 2022 April 21, 2032 Ashley Xin Wu * June 22, 2021, September 15, 2021, and September 9, 2022 June 21, 2031, September 14, 2031, and September 8, 2032 Other individuals as a group 4,920,765 June 22, 2021 to March 15, 2023 June 21, 2031 to March 14, 2033 Note: * Less than 1% of our total outstanding shares.
The following table summarizes, as of March 31, 2024, the outstanding restricted share units granted under the Amended and Restated 2021 Plan to our directors, executive officers and other grantees. ​ ​ ​ ​ ​ ​ ​ ​ ​ Class A Ordinary Shares ​ ​ ​ ​ ​ ​ Underlying Restricted ​ ​ ​ ​ Name Share Units Awarded Date of Grant Date of Expiration Junhong Huang ​ * ​ March 4, 2024 ​ March 3, 2034 Ashley Xin Wu * June 22, 2021, September 15, 2021, September 9, 2022 and March 4, 2024 June 21, 2031, September 14, 2031, September 8, 2032 and March 3, 2034 Other individuals as a group 5,330,212 June 22, 2021 to March 15, 2023 June 21, 2031 to March 14, 2033 Note: * Less than 1% of our total outstanding shares. 118 Table of Contents C.
Under these agreements, we may agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company.
Under these agreements, we may agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company. ​ 115 Table of Contents Share Incentive Plans Amended and Restated 2017 Plan In July 2017, our board of directors approved the 2017 Share Incentive Plan, as amended and restated in March 2018, to provide incentives to our employees, directors and consultants and promote the success of our business.
Xu served in the game planning department at Shenzhen Yamido Technology Co., Ltd. from 2004 to 2006. Mr. Xu received his bachelor’s degree in electronic information engineering from Huazhong University of Science and Technology in China. Mr. Lei Zheng has been serving as our director since March 2020. Mr.
Xu currently serves as a general manager at Tencent’s interactive entertainment group. Prior to joining Tencent in 2006, Mr. Xu served in the game planning department at Shenzhen Yamido Technology Co., Ltd. from 2004 to 2006. Mr. Xu received his bachelor’s degree in electronic information engineering from Huazhong University of Science and Technology in China. Mr.
Pu received his Juris Doctor from the Melbourne University Law School in Australia. Mr. Guang Xu has been serving as our director since April 2020. Mr. Xu currently serves as a general manager at Tencent’s interactive entertainment group. Prior to joining Tencent in 2006, Mr.
Prior to joining Tencent in 2010, Mr. Pu practiced corporate and M&A, capital markets and commercial law at Slaughter and May and Mallesons Stephen Jaques. Mr. Pu received his Juris Doctor from the Melbourne University Law School in Australia. Mr. Guang Xu has been serving as our director since April 2020. Mr.
Zheng currently also serves as the general manager of the user platform department of Tencent. Prior to that position, Mr. Zheng served as the assistant general manager of the interactive-entertainment-operation of Tencent from 2012 to 2018. Mr. Zheng received his bachelor’s degree in chemical engineering from Tsinghua University in China. Mr.
Lei Zheng has been serving as our director since March 2020. Mr. Zheng currently also serves as the general manager of the user platform department of Tencent. Prior to that position, Mr. Zheng served as the assistant general manager of the interactive-entertainment-operation of Tencent from 2012 to 2018. Mr.
Directors and Executive Officers Age Position/Title Lingdong Huang 46 Chairman of Board of Directors Rongjie Dong 46 Director, Chief Executive Officer David Xueling Li 48 Director Qinghua Xie 45 Director Hai Tao Pu 52 Director Guang Xu 39 Director Lei Zheng 46 Director Hongqiang Zhao 46 Independent Director Tsang Wah Kwong 70 Independent Director Ashley Xin Wu 38 Vice President of Finance 112 Table of Contents Mr.
Directors and Executive Officers The following table sets forth information regarding our directors and executive officers as of the date of this annual report. ​ ​ ​ ​ ​ Directors and Executive Officers Age Position/Title Songtao Lin ​ 45 ​ Chairman of Board of Directors Junhong Huang ​ 43 ​ Director, Acting Co-Chief Executive Officer and Senior Vice President Qinghua Xie ​ 46 ​ Director Hai Tao Pu ​ 53 ​ Director Guang Xu ​ 40 ​ Director Lei Zheng ​ 47 ​ Director Hongqiang Zhao ​ 47 ​ Independent Director Tsang Wah Kwong ​ 71 ​ Independent Director Ashley Xin Wu ​ 39 ​ Acting Co-Chief Executive Officer and Vice President of Finance ​ 113 Table of Contents Mr.
He is a fellow member of the Hong Kong Institute of Certified Public Accountants, a member of the Chinese Institute of Certified Public Accountants and a fellow member of the Chartered Association of Certified Accountants. Ms. Ashley Xin Wu has been serving as our Vice President of Finance since September 2021. Ms.
He is a fellow member of the Hong Kong Institute of Certified Public Accountants, a member of the Chinese Institute of Certified Public Accountants and a fellow member of the Chartered Association of Certified Accountants. 114 Table of Contents Ms.
Wu joined HUYA Inc. in September 2017 and has been a leader of our finance department since then. Prior to joining HUYA Inc., Ms. Wu served in various finance positions in JOYY Inc. (Nasdaq: YY) from July 2012 to September 2017. Between October 2011 and July 2012, Ms. Wu worked as a senior financial analyst at Amway (China) Co., Ltd.
(Nasdaq: YY) from July 2012 to September 2017. Between October 2011 and July 2012, Ms. Wu worked as a senior financial analyst at Amway (China) Co., Ltd. Prior to that, Ms. Wu worked as an assistant audit manager at KPMG Huazhen from August 2007 to September 2011. Ms.
The number of beneficial owners of our ADSs in the United States is likely to be much larger than the number of record holders of our ordinary shares in the United States. For options and restricted share units granted to our officers, directors and employees, see “—B. Compensation of Directors and Executive Officers—Share Incentive Plan.” F.
None of our outstanding Class B ordinary shares are held by record holders in the United States. The number of beneficial owners of our ADSs in the United States is likely to be much larger than the number of record holders of our ordinary shares in the United States.
Pu currently serves as a co-head of legal department of Tencent and a member of the Listing Committee of the Hong Kong Stock Exchange and listing committee member of Shenzhen Stock Exchange ChiNext. Prior to joining Tencent in 2010, Mr. Pu practiced corporate and M&A, capital markets and commercial law at Slaughter and May and Mallesons Stephen Jaques. Mr.
Hai Tao Pu has been serving as our director since April 2020. Mr. Pu currently serves as the co-head of legal department of Tencent. He served as a member of the Listing Committee of the Hong Kong Stock Exchange from 2018 to 2023 and a listing committee member of Shenzhen Stock Exchange ChiNext from 2020 to 2023.
The principal business address of each of Tencent Holdings Limited and Linen Investment Limited is Level 29, Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong. (8) Represents 38,374,463 Class B ordinary shares directly held by JOYY Inc., based on our register of members. JOYY Inc. is a Cayman Islands company.
The principal business address of each of Tencent Holdings Limited and Linen Investment Limited is Level 29, Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong. To our knowledge, as of March 31, 2024, we had one record holder of our shares in the United States, namely Deutsche Bank Trust Company Americas, the depositary of our ADS program.
Zhao received his bachelor’s degree in accounting from Tsinghua University and his master’s degree in accountancy from George Washington University. 113 Table of Contents Mr. Tsang Wah Kwong has served as our independent director since May 2020. Mr.
Zheng received his bachelor’s degree in chemical engineering from Tsinghua University in China. Mr. Hongqiang Zhao has been serving as our independent director since May 2018. Mr. Zhao currently also serves as an independent director of Li Auto Inc.
None of our employees are represented by labor unions. E.
We believe that we maintain a good working relationship with our employees, and we have not experienced any labor disputes. None of our employees are represented by labor unions. 121 Table of Contents E.
Zhao served as an assistant chief auditor at the PCAOB, a regulatory oversight agency under the SEC of the United States. Prior to that, Mr. Zhao was a manager at KPMG LLP in Washington D.C., providing professional services to internet, telecommunication and entertainment companies for more than eight years since August 2000. Mr.
Zhao was the chief financial officer of NetEase Lede Technology Co., Ltd. Beijing Branch from October 2014. Previously, Mr. Zhao served as an assistant chief auditor at the PCAOB, a regulatory oversight agency under the SEC of the United States.
Removed
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. Directors and Executive Officers The following table sets forth information regarding our directors and executive officers as of the date of this annual report.
Added
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A.
Removed
Lingdong Huang has been the chairman of our board of directors since April 2020. Mr. Huang currently serves as a general manager at Tencent’s interactive entertainment group and as a director of TJ Sports Culture Development (Shanghai) Co., Ltd. Prior to joining Tencent in 2010, Mr.
Added
Songtao Lin has been serving as the chairman of our board of directors since May 2023. Mr. Lin joined Tencent in 2003 and currently serves as the corporate vice president of Tencent. Mr. Lin has held management positions within various Tencent business lines, including QQ, Qzone, Open Platform, GuangDianTong, YingYongBao, and the On-line Video Business Unit. Mr.
Removed
Huang served on various positions, including as vice president, at The9 Limited (Nasdaq: NCTY) from 1999 to 2010. Mr. Huang received his bachelor’s degree in informatics from Shanghai University in 1999. Mr. Rongjie Dong has been our chief executive officer since August 2016 and our director since March 2017. From April 2013 to August 2016, Mr.
Added
Lin received his master’s degree in computer application technology from Tianjin University in 2003 and an executive MBA degree from China European International Business School in 2014. Mr. Junhong Huang has been serving as our director since March 2024 and our acting co-chief executive officer since August 2023. Currently, Mr. Huang also serves as our senior vice president.
Removed
Dong served as executive vice president of JOYY Inc. (Nasdaq:YY). From 2000 to 2006, Mr. Dong served as product manager and head of the technology department of 163.com . Mr. Dong received his bachelor’s degree in computer hardware from Beijing Information Engineering Institute (currently known as Beijing Information Science and Technology University). Mr.
Added
Prior to joining us, Mr. Huang served as vice president of Tencent Cloud and was responsible for the management and product development of QQ, Tencent Docs, and Tencent Cloud infrastructure products since 2007. Mr. Huang received his master of science degree in network engineering from the University of Paris VI (now Sorbonne University) in 2007. Mr.
Removed
David Xueling Li has been serving as our director since July 2017. Mr. Li is also a co-founder, chairman and chief executive officer of JOYY Inc. (Nasdaq:YY). Mr. Li as the chief executive officer of JOYY is responsible for setting the broader corporate strategy and the development of new and emerging applications and products.
Added
(Nasdaq: LI; SEHK: 2015), an independent non-executive director of Beisen Holding Limited (SEHK: 9669), Gogox Holdings Limited (SEHK: 2246) and YSB Inc. (SEHK: 9885). Previously, Mr. Zhao served as an executive director and chief financial officer at Bairong Inc. (SEHK: 6608) between June 2018 and May 2023. Prior to that, Mr.
Removed
Before founding JOYY in April 2005, Mr. Li worked at NetEase, Inc. (Nasdaq: NTES; SEHK: 9999) from July 2003 to April 2005 and served as its chief editor. In 2000, Mr. Li founded CFP.cn , a website that provided a copyright trading platform for journalists and amateur photographers. Mr.
Added
He worked at KPMG LLP in the United States from August 2001 to February 2009, with the most recent position being an audit manager. Mr. Zhao accumulated corporate governance knowledge and experience through his aforementioned positions and directorships. Mr. Zhao received his bachelor’s degree in accounting from Tsinghua University and his master’s degree in accountancy from George Washington University. Mr.
Removed
Hongqiang Zhao has been serving as our independent director since May 2018. Mr. Zhao currently also serves as an independent director of Li Auto (Nasdaq: LI; SEHK: 2015), an innovator in China’s new energy vehicle market. Mr. Zhao has served as the chief financial officer of BaiRong Yunchuang Technology Co. Ltd., or BaiRong (SEHK: 6608), since December 2015.
Added
Ashley Xin Wu has been serving as our acting co-chief executive officer since August 2023 and our vice president of finance since September 2021. Ms. Wu joined our company in September 2017 and has been a leader of our finance department since then. Prior to joining us, Ms. Wu served in various finance positions in JOYY Inc.
Removed
Prior to joining BaiRong, Mr. Zhao was the CFO of NetEase (Nasdaq: NTES; SEHK: 9999)’s e-commerce business, and the vice president of finance at SouFun Holdings Limited (NYSE: SFUN). Previously, Mr. Zhao worked in New York as the director of financial analysis for Viacom Inc. (Nasdaq: VIAB), a leading global entertainment content company. Between February 2009 and July 2011, Mr.
Added
We have entered into indemnification agreements with each of our directors and executive officers.
Removed
Share Incentive Plan Amended and Restated 2017 Plan In July 2017, our board of directors approved the 2017 Share Incentive Plan, as amended and restated in March 2018, to provide incentives to our employees, directors and consultants and promote the success of our business.
Added
Hongqiang Zhao currently also serves on the audit committees of Li Auto Inc. (Nasdaq: LI; SEHK: 2015), Beisen Holding Limited (SEHK: 9669), Gogox Holdings Limited (SEHK: 2246) and YSB Inc. (SEHK: 9885). Mr.
Removed
As of March 31, 2023, there are no outstanding options granted to our current directors or executive officers under the Amended and Restated 2017 Plan.
Added
As of December 31, 2023, 77.6%, 9.1% and 13.3% of our employees were located in Guangzhou, Foshan and other cities, respectively.
Removed
The following table summarizes, as of March 31, 2023, the outstanding restricted share units granted under the Amended and Restated 2017 Plan to our directors, executive officers and other grantees.
Added
Deutsche Bank Trust Company Americas held a total of 96,575,262 Class A ordinary shares of record as of March 31, 2024, including Class A ordinary shares issued for bulk issuance of ADSs reserved for issuances upon the exercise or vesting of awards under our share incentive plan and treasury ADSs.
Removed
The following table summarizes, as of March 31, 2023, the outstanding restricted share units granted under the Amended and Restated 2021 Plan to our directors, executive officers and other grantees.
Added
For options and restricted share units granted to our officers, directors and employees, see “—B. Compensation of Directors and Executive Officers—Share Incentive Plans.” We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. F. Disclosure of A Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable. ​

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Item 7. Management's Discussion & Analysis

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

8 edited+5 added−11 removed2 unchanged
Biggest changeThe table below provides a summary of our transactions with Tencent for the years ended December 31, 2020, 2021 and 2022: For the year ended December 31, 2020 2021 2022 RMB RMB RMB US$ Content costs charged by Tencent 127,224 485,988 539,451 78,213 Operation support services provided by Tencent 342,487 370,393 174,158 25,251 Advertising, sub-licensing and other revenues from Tencent 14,349 80,302 22,073 3,200 Disposal gain of an investment — 360,589 — — Others 30,540 14,617 12,867 1,866 Agreements and Transactions with JOYY The table below provides a summary of our transactions with JOYY for the years ended December 31, 2020, 2021 and 2022: For the year ended December 31, 2020 2021 2022 RMB RMB RMB US$ Purchase of services by JOYY on behalf of Huya 18,945 268 502 73 Operation support services provided by JOYY 4,187 2,543 351 51 Others 1,054 — — — We have entered a series of agreements with JOYY in areas of intellectual property and business cooperation.
Biggest changeAgreements and Transactions with JOYY The table below provides a summary of our transactions with JOYY for the years ended December 31, 2021, 2022 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ RMB RMB RMB US$ ​ ​ (in thousands) Purchase of services by JOYY on behalf of Huya ​ 268 ​ 502 ​ — ​ — Operation support services provided by JOYY 2,543 351 468 66 ​ We have entered a series of agreements with JOYY in areas of intellectual property and business cooperation.
In addition, we have entered into a registration rights agreement, under which we have granted JOYY certain registration rights, including: • Demand registration rights. So long as JOYY holds 25% or more of the voting power of our outstanding shares, it has the right to request us effect a registration for their shares.
In addition, we entered into a registration rights agreement, under which we granted JOYY certain registration rights, including: ● Demand registration rights. So long as JOYY holds 25% or more of the voting power of our outstanding shares, it has the right to request us effect a registration for their shares.
As a result, we operate our relevant business through Guangzhou Huya, the variable interest entity, and its subsidiaries based on a series of contractual arrangements. For a description of these contractual arrangements, see “Item 4. Information on the Company—D.
As a result, we operate our relevant business through Guangzhou Huya, the variable interest entity, and its subsidiaries based on a series of contractual arrangements. For a description of these contractual arrangements, see “Item 4. Information on the Company—C.
Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers—Employment Agreements and Indemnification Agreements.” Share Option Grants See “Item 6. Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers—Share Incentive Plan.” C. Interests of Experts and Counsel Not applicable.
Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers—Employment Agreements and Indemnification Agreements.” Share Option Grants See “Item 6. Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers—Share Incentive Plans.” C. Interests of Experts and Counsel Not applicable. ​
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders See “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” 122 Table of Contents B. Related Party Transactions Contractual Arrangements with the Variable Interest Entity and Its Shareholders Laws and regulations in mainland China currently restrict foreign ownership and investment in value-added telecommunications services in mainland China.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders See “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” B. Related Party Transactions Contractual Arrangements with the Variable Interest Entity and Its Shareholders Laws and regulations in mainland China currently restrict foreign ownership and investment in value-added telecommunications services in mainland China.
We have the right to terminate or withdraw any registration initiated by us under the piggyback registration rights prior to the effectiveness of such registration.
We have the right to terminate or withdraw any registration initiated by us under the piggyback registration rights prior to the effectiveness of such registration. In connection with JOYY’s disposal of its shareholding in HUYA Inc. to Linen Investment Limited, these registration rights have all been assigned to Linen Investment Limited.
We have the right to terminate or withdraw any registration initiated by us under the piggyback registration rights prior to the effectiveness of such registration. 123 Table of Contents Agreements and Transactions with Entities over which Tencent and/or Huya Have Significant Influence On April 3, 2020, Tencent’s related parties became our related parties as a result of Tencent gaining majority voting power in us and consolidating our financial statements.
As a result of the foregoing, JOYY ceased to be a related party of our company, and our transactions with JOYY thereafter were not recorded as related party transactions for the year ended December 31, 2023 in our consolidated financial statements for accounting purposes. 124 Table of Contents Agreements and Transactions with Entities over which Tencent and/or Huya Have Significant Influence On April 3, 2020, Tencent’s related parties became our related parties as a result of Tencent gaining majority voting power in us and consolidating our financial statements.
For the year ended December 31, 2020 2021 2022 RMB RMB RMB US$ Content cost and revenue sharing fees charged by Tencent and Huya’s related parties 85,361 102,311 100,627 14,590 Advertising, sub-licensing and other revenues from Tencent and Huya’s related parties 8,197 188,209 13,072 1,895 Others 34,044 21,013 18,213 2,641 Shareholders’ Agreement We entered into our amended and restated shareholders’ agreement on March 8, 2018 with our shareholders, which consist of holders of Class A and Class B ordinary shares, series A-1 preferred shares, series A-2 preferred shares and series B-2 preferred shares.
The table below provides a summary of our transactions with entities over which Tencent and/or Huya have significant influence in the years ended December 31, 2021, 2022 and 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2021 2022 2023 ​ RMB RMB RMB US$ ​ ​ (in thousands) Content cost and revenue sharing fees charged by Tencent and Huya’s related parties ​ 102,311 ​ 100,627 ​ 61,272 ​ 8,630 Advertising, sub-licensing and other revenues from Tencent and Huya’s related parties 188,209 13,072 23,902 3,367 Others 21,013 18,213 29,178 4,110 ​ Employment Agreements and Indemnification Agreements See “Item 6.
Removed
Organizational Structure.” Agreements and Transactions with Tencent Upon the completion of the issuance of Series B-2 Preferred Shares on March 8, 2018, Tencent became a related party of ours as our major shareholder. The transactions with Tencent prior to March 8, 2018 were not disclosed as related party transactions.
Added
Organizational Structure—Contractual Arrangements with Guangzhou Huya.” Agreements and Transactions with Tencent Upon the completion of the issuance of Series B-2 Preferred Shares on March 8, 2018, Tencent became a related party of ours as our major shareholder. 123 Table of Contents The table below provides a summary of our transactions with Tencent for the years ended December 31, 2021, 2022 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ 2021 2022 * 2023 ​ RMB RMB RMB US$ ​ ​ (in thousands) Acquisition under common control* ​ — ​ — ​ 574,826 ​ 80,963 Content costs charged by Tencent ​ 485,988 ​ 539,451 ​ 249,536 ​ 35,146 Operation support services provided by Tencent 370,393 225,808 142,372 20,053 Advertising, sub-licensing and other revenues from Tencent 80,302 22,073 118,844 16,739 Disposal gain of an investment 360,589 — ​ — — Others 14,617 12,867 6,422 905 Note: * In December 2023, we acquired a global mobile application service provider from Tencent Holdings Limited for an aggregate cash consideration of US$81 million (equivalent to RMB574,826 thousand).
Removed
The transactions with Tencent’s related parties prior to April 3, 2020 were not disclosed as related party transactions. The table below provides a summary of our transactions with entities over which Tencent and/or Huya have significant influence (“Tencent and Huya’s related parties”) in the years ended December 31, 2020, 2021 and 2022.
Added
As this acquisition constituted a business combination under common control, we consolidated the financial results of this mobile application service provider on a retrospective basis since the first quarter of 2022 in accordance with ASC 805, Business Combinations.
Removed
This shareholders’ agreement provides that our board of directors should consist of at least five directors, including no less than two independent directors.
Added
Accordingly, retrospective adjustments have been made to our consolidated financial information for the year ended December 31, 2022 presented in this annual report, including but not limited to the summary of our transactions with Tencent for the year ended December 31, 2022, reflecting the consolidation of this mobile application service provider.
Removed
Tencent has the right to appoint, remove and replace at least one director as long as Tencent holds no less than 20% of our issued share capital on a fully diluted basis, and JOYY has the right to appoint, remove and replace one director as long as JOYY holds no less than 15% of our issued share capital on a fully diluted basis.
Added
Given that this was a transaction that involved entities under common control of Tencent Holdings Limited, all assets and assumed liabilities transferred have been recognized at the historical cost of the parent. See Note 2(d) to our audited consolidated financial statements included elsewhere in this annual report.
Removed
For so long as Tencent holds no less than 50% of the voting power in us, Tencent has the right to appoint, remove and replace up to the lowest number of directors that (x) constitutes a majority of the directors and (y) is no less than proportionate to such holder’s voting power in us, by delivering a written notice to us.
Added
Furthermore, David Xueling Li resigned from our board of directors in May 2023.
Removed
Under this shareholders’ agreement, we have also granted certain registration rights to our preferred shareholders: Demand registration rights At any time after the date that is six months after the completion of our initial public offering, holders of 25% or more of voting power of the outstanding preferred shares or ordinary shares issued upon the conversion of the preferred shares have the right to request us effect a registration for their shares.
Removed
Except for certain circumstances where we are entitled to defer a filing, upon receiving a notice of demand registration, we should promptly give a written notice to all other holders of our preferred shares or ordinary shares issued upon the conversion of our preferred shares, and make best efforts to register the shares requested to be registered.
Removed
We are not obligated to effect more than three demand registrations that have been declared and ordered effective. Form F-3 registration rights Any holders of our preferred shares or ordinary shares issued upon the conversion of our preferred shares may request us to file an unlimited number of registration statements on Form F-3.
Removed
We should promptly give a written notice to all other preferred shareholders, and make best efforts to effect the registration of the securities on Form F-3 within 15 days after we delivered such written notice. We are not obligated to effect more than eight registrations that have been declared and ordered effective.
Removed
Piggyback registration rights If we propose to file a registration statement for a public offering of our securities, we must afford preferred shareholders or holders of ordinary shares issued upon the conversion of preferred shares an opportunity to participate in that offering.
Removed
In case of an underwritten offering, the underwriters have the right to exclude all of the shares requested to be registered in the initial public offering, or in any other public offering up to 75% of the shares requested to be registered by the holders of piggyback registration rights, subject to certain preconditions. 124 Table of Contents Employment Agreements and Indemnification Agreements See “Item 6.

Other HUYA 10-K year-over-year comparisons