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Waterdrop Inc.

Waterdrop Inc.WDHEarnings & Financial Report

NYSE · Financials · Insurance Agents, Brokers & Service

Waterdrop Inc. is a leading technology-powered health and protection platform based in China. Its core business lines include online insurance brokerage, medical crowdfunding services, and digital health management solutions, primarily serving individual consumers nationwide seeking affordable healthcare support and risk protection products.

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

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

1182 paragraphs added · 1151 removed · 986 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

475 edited+95 added−66 removed290 unchanged
If PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we continue to use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year.
If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we continue to use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year.
Furthermore, if the relevant governmental authorities consider that we were operating without the proper approvals, licenses or permits, or the relevant governmental authorities promulgate new laws and regulations that require additional approvals or licenses or impose additional restrictions on the operation of any part of our business and we are not able to obtain such approvals, licenses or permits or adjust our business model in a timely manner, it has the power, among other things, to levy fines, confiscate our income, revoke our business licenses, and require us to discontinue our relevant business.
Furthermore, if the governmental authorities consider that we were operating without the proper approvals, licenses or permits, or the governmental authorities promulgate new laws and regulations that require additional approvals or licenses or impose additional restrictions on the operation of any part of our business and we are not able to obtain such approvals, licenses or permits or adjust our business model in a timely manner, it has the power, among other things, to levy fines, confiscate our income, revoke our business licenses, and require us to discontinue our relevant business.
Along with growth and expansion of our business, we may be involved in litigations, regulatory proceedings and other disputes arising outside the ordinary course of our business.
Along with the growth and expansion of our business, we may be involved in litigations, regulatory proceedings and other disputes arising outside the ordinary course of our business.
Such litigations and disputes may result in claims for actual damages, freezing of our assets, diversion of our management’s attention and reputational damage to us and our management, as well as legal proceedings against our directors, officers or employees, and the probability and amount of liability, if any, may remain unknown for long periods of time.
Such litigations, proceedings and disputes may result in claims for actual damages, freezing of our assets, diversion of our management’s attention and reputational damage to us and our management, as well as legal proceedings against our directors, officers or employees, and the probability and amount of liability, if any, may remain unknown for long periods of time.
We are also subject to claims for indemnification related to these matters, and we cannot predict the impact that indemnification claims may have on our business or financial results. Our current risk management system may not be able to exhaustively identify or mitigate all risks to which we are exposed.
We also may be subject to claims for indemnification related to these matters, and we cannot predict the impact that indemnification claims may have on our business or financial results. Our current risk management system may not be able to exhaustively identify or mitigate all risks to which we are exposed.
Despite our good intention, participants of mutual aid programs or general public may view our action as adversely affecting their actual or expected interests, which may in turn harm our reputation. In the worst-case scenario, participants may choose to bring complaints and lawsuits against us.
Despite our good intention, participants of mutual aid programs or the general public may view our action as adversely affecting their actual or expected interests, which may in turn harm our reputation. In the worst-case scenario, participants may choose to bring complaints and lawsuits against us.
However, certain participants in the industry, especially traditional insurance companies, and many insurance clients have limited experience in handling insurance products and content online, and some insurance customers may have reservations about using online platforms. For example, clients may not find online content to be reliable sources of insurance product information.
However, certain participants in the insurance industry, especially traditional insurance companies, and many insurance clients have limited experience in handling insurance products and content online, and some insurance customers may have reservations about using online platforms. For example, clients may not find online content to be reliable sources of insurance product information.
Moreover, the Anti-Monopoly Law promulgated by the Standing Committee of the PRC National People’s Congress, which was promulgated on August 1, 2008 and most recently amended on June 24, 2022 requires that transactions which are deemed concentrations and involve parties with specified turnover thresholds must be cleared by the Ministry of Commerce before they can be completed.
Moreover, the PRC Anti-Monopoly Law promulgated by the Standing Committee of the PRC National People’s Congress, which was promulgated on August 1, 2008 and most recently amended on June 24, 2022, requires that transactions which are deemed concentrations and involve parties with specified turnover thresholds must be cleared by the Ministry of Commerce before they can be completed.
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.
This may happen because of broad market and industry factors, including the performance and fluctuation of the market prices of other companies in the relevant industries and those with business operations located mainly in China that have listed their securities in the United States.
This may happen because of broad market and industry factors, including the performance and fluctuation of the market prices of other companies in relevant industries and those with business operations located mainly in China that have listed their securities in the United States.
We are a Cayman Islands exempted company and substantially all of our assets are located outside of the United States. All of our current operations are conducted in China. In addition, substantially all of our current directors and officers are nationals and residents of countries other than the United States.
We are a Cayman Islands exempted company and substantially all of our assets are located outside of the United States. Substantially all of our current operations are conducted in China. In addition, substantially all of our current directors and officers are nationals and residents of countries other than the United States.
In accordance with the Draft Regulations, data processors shall apply for a cybersecurity review for the following activities: (i) merger, reorganization or division of Internet platform operators that have acquired a large number of data resources related to national security, economic development or public interests to the extent that affects or may affect national security; (ii) listing abroad of data processors which process over one million users’ personal information; (iii) the listing of data processors in Hong Kong which affects or may affect national security; or (iv) other data processing activities that affect or may affect national security.
In accordance with these draft regulations, data processors shall apply for a cybersecurity review for the following activities: (i) merger, reorganization or division of Internet platform operators that have acquired a large number of data resources related to national security, economic development or public interests to the extent that affects or may affect national security; (ii) listing abroad of data processors which process over one million users’ personal information; (iii) the listing of data processors in Hong Kong which affects or may affect national security; or (iv) other data processing activities that affect or may affect national security.
If occurrences of any of these events results in our inability to direct the activities of the VIEs and their subsidiaries in China that most significantly impact its economic performance, and/or our failure to receive the economic benefits and residual returns from the VIEs and their subsidiaries, and we are not able to restructure our ownership structure and operations in a satisfactory manner, we may not be able to consolidate the financial results of the VIEs or their subsidiaries in our consolidated financial statements in accordance with U.S.
If occurrences of any of these events results in our inability to direct the activities of the VIEs and their subsidiaries in China that most significantly impact its economic performance, and/or our failure to receive the economic benefits and residual returns from the VIEs and their subsidiaries, and we are not able to restructure our ownership structure and operations in a satisfactory manner, we may not be able to consolidate the financial results of the VIEs or their subsidiaries into our consolidated financial statements in accordance with U.S.
In addition, pursuant to the CBIRC Circular 108, insurance intermediary institutions that conduct the sales of ordinary life insurance products (excluding fixed term life insurance) and annuity insurance products longer than ten-year term shall meet certain conditions, including, among others, having not received any material administrative penalty or regulatory actions imposed or taken by any governmental authorities over the last twelve months.
In addition, pursuant to the Circular 108, insurance intermediary institutions that conduct the sales of ordinary life insurance products (excluding fixed-term life insurance) and annuity insurance products longer than ten-year term shall meet certain conditions, including, among others, having not received any material administrative penalty or regulatory actions imposed or taken by any governmental authorities over the last twelve months.
Companies operating in China are required to participate in various government sponsored employee benefit plans, including certain social insurance, housing funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of our employees up to a maximum amount specified by the local government from time to time at locations where we operate our businesses.
Companies operating in mainland China are required to participate in various government sponsored employee benefit plans, including certain social insurance, housing funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of our employees up to a maximum amount specified by the local government from time to time at locations where we operate our businesses.
Although we have taken measures to maintain the confidentiality of medical records and personal data of patients prior to enrolling in clinical trials so that they cannot be accessed without proper authorization, we cannot assure you that such measures are effective in ensuring our compliance with relevant laws and regulations, or that we are able to prevent the enrollees’ private or medical records being divulged without their consent.
Although we have taken measures to maintain the confidentiality of medical records and personal data of patients prior to enrolling in clinical trials so that they cannot be accessed without proper authorization, we cannot assure you that such measures are effective in ensuring our compliance with the laws and regulations, or that we are able to prevent the enrollees’ private or medical records being divulged without their consent.
These regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from our offshore offerings into China or take other actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our shares.
These regulatory authorities may impose fines and penalties on our operations in mainland China, limit our ability to pay dividends outside of mainland China, limit our operating privileges in mainland China, delay or restrict the repatriation of the proceeds from our offshore offerings into mainland China or take other actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our shares.
The Anti-Monopoly Law, which was amended in June 2022 increases the fines for illegal concentration of business operators to no more than ten percent of its last year’s sales revenue if the concentration of business operator has or may have an effect of excluding or limiting competitions, or a fine of up to RMB5 million if the concentration of business operator does not have an effect of excluding or limiting competition.
The PRC Anti-Monopoly Law, which was amended in June 2022, increases the fines for illegal concentration of business operators to no more than ten percent of its last year’s sales revenue if the concentration of business operator has or may have an effect of excluding or limiting competitions, or a fine of up to RMB5 million if the concentration of business operator does not have an effect of excluding or limiting competition.
We regard our software registrations, trademarks, patents, domain names, know-how, proprietary technologies and similar intellectual property as critical to our success, and we rely on a combination of intellectual property laws and contractual arrangements, including confidentiality and non-compete agreements with our employees and others to protect our proprietary rights. See “Item 4. Information On the Company—B.
We regard our software registrations, trademarks, patents, domain names, know-how, proprietary technologies and similar intellectual properties as critical to our success, and we rely on a combination of intellectual property laws and contractual arrangements, including confidentiality and non-compete agreements with our employees and others to protect our proprietary rights. See “Item 4. Information on the Company—B.
The CBIRC Circular 108 requires that the premium of certain short-term (i.e., less than one year) insurance products, such as accident insurance and health insurance, shall be paid in equal installments. We used to provide our consumers the option of monthly payments and the first month payment of premium of certain insurance products is typically lower than subsequent installments.
The Circular 108 requires that the premium of certain short-term (i.e., less than one year) insurance products, such as accident insurance and health insurance, shall be paid in equal installments. We used to provide our consumers the option of monthly payments and the first month payment of premium of certain insurance products is typically lower than subsequent installments.
Risks Related to Our Corporate Structure If the PRC government finds that the agreements that establish the structure for operating some of our operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.
Risks Related to Our Corporate Structure If the PRC government finds that the agreements that establish the structure for operating some of our operations do not comply with regulations in mainland China relating to relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.
Our platform stores and processes certain personal and other sensitive data provided by users on our platforms, and we make certain personal information provided by the user or third-party data providers available to banks or insurance carriers with user consent. Personally identifiable and other confidential information is increasingly subject to legislation and regulations in China and numerous foreign jurisdictions.
Our platform stores and processes certain personal and other sensitive data provided by users on our platforms, and we make certain personal information provided by the user or third-party data providers available to banks or insurance carriers with user consent. Personally identifiable and other confidential information is increasingly subject to legislation and regulations in mainland China and numerous foreign jurisdictions.
If the enacted versions of the Draft Regulations mandate clearance of cybersecurity review and other specific actions to be completed by China-based companies listed on a U.S. stock exchange, such as us, we face uncertainties as to whether such clearance can be timely obtained, or at all.
If the enacted versions of these draft regulations mandate clearance of cybersecurity review and other specific actions to be completed by China-based companies listed on a U.S. stock exchange, such as us, we face uncertainties as to whether such clearance can be timely obtained, or at all.
As a result, it may be difficult for our shareholders to effect service of process upon us or our management residing in China. In addition, China does not have treaties providing for reciprocal recognition and enforcement of judgments of courts with the Cayman Islands and some other countries and regions.
As a result, it may be difficult for our shareholders to effect service of process upon us or our management residing in China. In addition, mainland China does not have treaties providing for reciprocal recognition and enforcement of judgments of courts with the Cayman Islands and some other countries and regions.
Given the evolving regulatory environment of the insurance industry, we cannot assure you that we will not be required in the future by the relevant governmental authorities to obtain approval or license to continue our customer services or complete qualification registration for our customer service personnel in a timely manner.
Given the evolving regulatory environment of the insurance industry, we cannot assure you that we will not be required in the future by the governmental authorities to obtain approval or license to continue our customer services or complete qualification registration for our customer service personnel in a timely manner.
These China-based companies shall obtain approval from the relevant authorities and file with the confidential administration authorities, either by itself or its offshore listing entity, when providing or publicly filing documents and materials related to state secrets or secrets of the governmental authorities to the relevant securities companies, securities service institutions or offshore regulatory authorities.
These China-based companies shall obtain approval from the competent authorities and file with the confidential administration authorities, either by itself or its offshore listing entity, when providing or publicly filing documents and materials related to state secrets or secrets of the governmental authorities to relevant securities companies, securities service institutions or offshore regulatory authorities.
We cannot assure you that we will be able to complete the registration for all of our insurance brokerage personnel in a timely manner due to the increasing number of our insurance brokerage personnel, or that the relevant regulatory authorities would not retrospectively find deficiency in the registration of these personnel and subject us to penalties.
We cannot assure you that we will be able to complete the registration for all of our insurance brokerage personnel in a timely manner due to the increasing number of our insurance brokerage personnel, or that the regulatory authorities would not retrospectively find deficiency in the registration of these personnel and subject us to penalties.
In addition, Tencent may invest in our direct or indirect competitors, and may devote resources or attention to the other companies it has an interest in. Our success depends on the continuing efforts of our senior management and key employees. Our future success is significantly dependent upon the continued service of our senior management and other key employees.
In addition, Tencent may invest in our direct or indirect competitors, and may devote resources or attention to the other companies in which it has an interest. Our success depends on the continuing efforts of our senior management and key employees. Our future success is significantly dependent upon the continued service of our senior management and other key employees.
If we had direct ownership of the VIEs in China, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of the VIEs, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management and operational level.
If we had direct ownership of the VIEs in mainland China, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of the VIEs, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management and operational level.
Shareholder claims or regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to providing information needed for regulatory investigations or litigation initiated outside China.
Shareholder claims or regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law or practicality in China. For example, in mainland China, there are significant legal and other obstacles to providing information needed for regulatory investigations or litigation initiated outside mainland China.
We leverage third-party user acquisition channels to bring in some of new users to our platforms and may incur significant costs on paying our user acquisition channels service fees. In addition to growing our user base organically, we also cooperate with our user acquisition channels to convert their user traffic to user base of our platform.
We leverage third-party user acquisition channels to bring in some new users to our platforms and may incur significant costs on paying our user acquisition channels service fees. In addition to growing our user base organically, we also cooperate with our user acquisition channels to convert their user traffic into user base of our platform.
Accordingly, we may not be able to effectively protect our intellectual property rights or to enforce our contractual rights in China. In particular, some of our trademark applications for certain categories have been rejected, and we have applied for administrative reviews on such rejections.
Accordingly, we may not be able to effectively protect our intellectual property rights or to enforce our contractual rights in mainland China. In particular, some of our trademark applications for certain categories have been rejected, and we have applied for administrative reviews on such rejections.
Furthermore, if future laws, administrative regulations or provisions 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 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.
We are an exempted company incorporated under the laws of the Cayman Islands, however, we conduct substantially all of our operations in China and substantially all of our assets are located in China. In addition, all our senior executive officers reside within China for a significant portion of the time and substantially all of them are PRC nationals.
We are an exempted company incorporated under the laws of the Cayman Islands, however, we conduct substantially all of our operations in China and substantially all of our assets are located in China. In addition, all our senior executive officers reside within China for a significant portion of the time and substantially all of them are China nationals.
Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with “de facto management body” within China is considered a “resident enterprise” and will be subject to the enterprise income tax on its global income at the rate of 25%.
Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of mainland China with “de facto management body” within mainland China is considered a “resident enterprise” and will be subject to the enterprise income tax on its global income at the rate of 25%.
The U.S. government has recently imposed, and has recently proposed to impose additional, new, or higher tariffs on certain products imported from China to penalize China for what it characterizes as unfair trade practices. China has responded by imposing, and proposing to impose additional, new, or higher tariffs on certain products imported from the United States.
The U.S. government has imposed, and has proposed to impose additional, new, or higher tariffs on certain products imported from China to penalize China for what it characterizes as unfair trade practices. China has responded by imposing, and proposing to impose additional, new, or higher tariffs on certain products imported from the United States.
Pursuant to the Overseas Listing Regulations, companies in China that directly or indirectly offer or list their securities in an overseas market must file with the CSRC within three business days after submitting their listing application documents to the regulator in the place of intended listing.
Pursuant to these regulations, companies in China that directly or indirectly offer or list their securities in an overseas market must file with the CSRC within three business days after submitting their listing application documents to the regulator in the place of intended listing.
However, it has a catch-all provision under definition of “foreign investment” that includes investments made by foreign investors in China through other means as provided by laws, administrative regulations or the PRC State Council.
However, it has a catch-all provision under definition of “foreign investment” that includes investments made by foreign investors in mainland China through other means as provided by laws, administrative regulations or the PRC State Council.
The hypothetical book pre-tax earnings amount, not considering timing differences, is assumed to equal taxable income in China. (2) Under the terms of VIE agreements, our WFOE may charge the VIEs for services provided to the VIEs.
The hypothetical book pre-tax earnings amount, not considering timing differences, is assumed to equal taxable income in mainland China. (2) Under the terms of VIE agreements, our WFOE may charge the VIEs for services provided to the VIEs.
Moreover, if we are unable to boost the growth of our healthcare related business and operations, or implement our business strategies successfully, we may discontinue or adjust the relevant business model. Our constantly evolving business model makes it difficult to evaluate the risks and challenges we may encounter.
Moreover, if we are unable to boost the growth of our healthcare related business and operations, or implement our business strategies successfully, we may discontinue or adjust our business model. Our constantly evolving business model makes it difficult to evaluate the risks and challenges we may encounter.
Although these administrative penalties do not constitute material administrative penalties as defined in the CBIRC Circular 108, we would be restricted from selling such insurance products under the CBIRC Circular 108 if we are imposed with material administrative penalty imposed by PRC governmental authorities.
Although these administrative penalties do not constitute material administrative penalties as defined in the Circular 108, we would be restricted from selling such insurance products under the Circular 108 if we are imposed with material administrative penalty imposed by PRC governmental authorities.
In March 2021, we ceased the operation of our Waterdrop Mutual Aid platform in order to focus on our core businesses and offer enhanced protection to our users. We have offered to migrate all mutual aid participants as insurance policyholders of our Waterdrop Insurance Marketplace service.
In March 2021, we ceased the operation of our Waterdrop Mutual Aid platform in order to focus on our core businesses and offer enhanced protection to our users. We offered to migrate all mutual aid participants as insurance policyholders of our Waterdrop Insurance Marketplace service.
We provide social security insurance including pension insurance, unemployment insurance, work-related injury insurance, maternity insurance and medical insurance for our employees pursuant to applicable PRC laws. We do not maintain business interruption insurance. We consider our insurance coverage to be sufficient for our business operations in China.
We provide social security insurance including pension insurance, unemployment insurance, work-related injury insurance, maternity insurance and medical insurance for our employees pursuant to applicable laws. We do not maintain business interruption insurance. We consider our insurance coverage to be sufficient for our business operations in China.
The PRC government extensively regulates the internet industry, including foreign ownership of, and the licensing and permit requirements pertaining to, companies operating in the internet industry. These internet-related laws and regulations are relatively new and evolving, and their interpretation and enforcement involve significant uncertainties.
The PRC government extensively regulates the internet industry, including foreign ownership of, and the licensing and permit requirements pertaining to, companies operating in the internet industry. These internet-related laws and regulations are relatively new and evolving, and their interpretation and enforcement involve uncertainties.
Our dual-class voting structure will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.
Our dual-class voting structure may limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.
Risk Factors—Risks Related to Doing Business in China—Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China.
Risk Factors—Risks Related to Doing Business in China—Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in mainland China.
We could be adversely affected if legislation or regulations in China are expanded to require changes in business practices or privacy policies, or if the PRC governmental authorities interpret or implement their legislation or regulations in ways that negatively affect our business.
We could be adversely affected if legislation or regulations in mainland China are expanded to require changes in business practices or privacy policies, or if the PRC governmental authorities interpret or implement their legislation or regulations in ways that negatively affect our business.
Secondly, the medical crowdfunding industry in China could be affected by the medical cost borne by patients, development of self-discipline conventions driven by industry leaders, the coverage of China’s national social medical insurance provided by the Chinese government and regulatory policies.
Secondly, the medical crowdfunding industry in China could be affected by the medical cost borne by patients, development of self-discipline conventions driven by industry leaders, the coverage of China’s social medical insurance provided by the Chinese government and regulatory policies.
The Foreign Investment law does not explicitly classify whether variable interest entities that are controlled through contractual arrangements would be deemed as foreign invested enterprises if they are ultimately “controlled” by foreign investors.
The PRC Foreign Investment law does not explicitly classify whether variable interest entities that are controlled through contractual arrangements would be deemed as foreign invested enterprises if they are ultimately “controlled” by foreign investors.
In addition to market and industry factors, the price and trading volume for the ADSs may be highly volatile for factors specific to our own operations, including the following: • variations in our revenues, earnings, cash flow; • fluctuations in operating metrics; • announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors; • announcements of new solutions and services and expansions by us or our competitors; • termination or non-renewal of contracts or any other material adverse change in our relationship with our key customers or strategic investors; • changes in financial estimates by securities analysts; • detrimental negative publicity about us, our competitors or our industry; • additions or departures of key personnel; • release of lockup or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; 52 Table of Contents • regulatory developments affecting us or our industry; and • potential litigation or regulatory investigations.
In addition to market and industry factors, the price and trading volume for the ADSs may be highly volatile for factors specific to our own operations, including the following: ● variations in our revenues, earnings, cash flow; ● fluctuations in operating metrics; ● announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors; ● announcements of new solutions and services and expansions by us or our competitors; ● termination or non-renewal of contracts or any other material adverse change in our relationship with our key customers or strategic investors; ● changes in financial estimates by securities analysts; ● detrimental negative publicity about us, our competitors or our industry; ● additions or departures of key personnel; ● release of lockup or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; ● regulatory developments affecting us or our industry; and ● potential litigation or regulatory investigations.
(2) Includes amounts of the consolidated VIEs and subsidiaries of VIEs without recourse to us of RMB21.7 million, RMB22.0 million, RMB0.8 million and nil as of December 31, 2019, 2020, 2021 and 2022, respectively.
(2) Includes amounts of the consolidated VIEs and subsidiaries of VIEs without recourse to us of RMB21.7 million, RMB22.0 million, RMB0.8 million, nil and nil as of December 31, 2019, 2020, 2021, 2022 and 2023, respectively.
Given the uncertainty, complexity and scope of many of these litigation matters, their outcome generally cannot be predicted with any reasonable degree of certainty. Therefore, our reserves for such matters may be inadequate.
Given the uncertainty, complexity and scope of many of these litigation and regulatory matters, their outcome generally cannot be predicted with any reasonable degree of certainty. Therefore, our reserves for such matters may be inadequate.
Organizational Structure.” In the opinion of our PRC legal counsel, Han Kun Law Offices, as of the date of this annual report, (i) the ownership structures of our WFOE and the VIEs in China, currently are not in violation of any explicit provisions of PRC laws and regulations currently in effect; and (ii) the agreements under the contractual arrangements between our WFOE, the VIEs and their shareholders governed by PRC law are valid, binding and enforceable against each party thereto in accordance with their terms.
Organizational Structure.” In the opinion of our PRC legal counsel, Han Kun Law Offices, as of the date of this annual report, (i) the ownership structures of our WFOE and the VIEs in China, currently are not in violation of any explicit provisions of laws and regulations in mainland China that are currently in effect; and (ii) the agreements under the contractual arrangements between our WFOE, the VIEs and their shareholders governed by law in mainland China are valid, binding and enforceable against each party thereto in accordance with their terms.
Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by the State Administration of Foreign Exchange, or SAFE and declaration and payment of withholding tax.
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, or SAFE, and declaration and payment of withholding tax.
We may pursue selected strategic alliances and potential strategic acquisitions that are supplemental to our business and operations, including opportunities that can help us further expand our product and service offerings and improve our technology system.
We may pursue selected strategic alliances and potential strategic acquisitions that are supplemental to our business and operations, including opportunities that can help us expand our product and service offerings and improve our technology system.
The fees paid are recognized as a tax deduction by the VIEs and as income by our WFOE and are tax neutral. (3) Certain of our subsidiaries qualifies for a 15% preferential income tax rate in China.
The fees paid are recognized as a tax deduction by the VIEs and as income by our WFOE and are tax neutral. (3) Certain of our subsidiaries qualifies for a 15% preferential income tax rate in mainland China.
The inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests.
The inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may increase difficulties faced by you in protecting your interests.
The rights of shareholders to take action against our directors, actions by our minority shareholders and the fiduciary duties of our directors owed to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands.
The rights of shareholders to take actions against our directors, actions by our minority shareholders and the fiduciary duties of our directors owed to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands.
Companies in China that seek to offer and list securities in overseas markets, in direct or indirect means, are required to fulfill the filing procedures with the CSRC and submit relevant information.
Companies in China that seek to offer and list securities in overseas markets, in direct or indirect means, are required to fulfill the filing procedures with the CSRC and submit required information.
For this reason, we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report on Form 20-F for the fiscal year ended December 31, 2022. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions.
For this reason, we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report on Form 20-F for the fiscal year ended December 31, 2023. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions.
Furthermore, any changes in relevant laws and regulations may affect our ability to use medical data and subject us to liability for the use of such data for previously permitted purposes.
Furthermore, any changes in the laws and regulations may affect our ability to use medical data and subject us to liability for the use of such data for previously permitted purposes.
Risk Factors—Risks Related to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies may delay us from using the proceeds of financing activities to make loans or additional capital contributions to our PRC subsidiaries and to make loans to the VIEs, which could materially and adversely affect our liquidity and our ability to fund and expand our business” and “Item 3.
Risk Factors—Risks Related to Doing Business in China—Regulation in mainland China of loans to and direct investment in the entities in mainland China by offshore holding companies may delay us from using the proceeds of financing activities to make loans or additional capital contributions to our subsidiaries in mainland China and to make loans to the VIEs, which could materially and adversely affect our liquidity and our ability to fund and expand our business” and “Item 3.
We could face material and adverse tax consequences if the PRC tax authorities determine that the contractual arrangements in relation to the VIEs were not entered into on an arm’s length basis in such a way as to result in an impermissible reduction in taxes under applicable PRC laws, rules and regulations, and adjust income of the VIEs in the form of a transfer pricing adjustment.
We could face material and adverse tax consequences if the PRC tax authorities determine that the contractual arrangements in relation to the VIEs were not entered into on an arm’s length basis in such a way as to result in an impermissible reduction in taxes under applicable laws, rules and regulations in mainland China, and adjust income of the VIEs in the form of a transfer pricing adjustment.
If we lose their service, we may not be able to locate suitable or qualified replacements, and may incur additional expenses to recruit and train new staff, which could severely disrupt our business and growth. Our founder and chief executive officer, Dr. Peng Shen, and other management members are critical to our vision, strategic direction, culture and overall business success.
If we lose their service, we may not be able to locate suitable or qualified replacements, and may incur additional expenses to recruit and train new staff, which could severely disrupt our business and growth. Our founder and chief executive officer, Mr. Peng Shen, and other management members are critical to our vision, strategic direction, culture and overall business success.
Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval or clearance from the Ministry of Commerce or its local counterparts or other relevant governmental authorities, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.
Complying with the above-mentioned regulations and other rules to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval or clearance from the Ministry of Commerce or its local counterparts or other governmental authorities, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.
Item 3. Key Information Waterdrop Inc. is not an operating company in China but rather a Cayman Islands holding company with no material operations of its own and no equity ownership in the VIEs (defined below). We conduct our operations primarily through (i) our PRC subsidiaries and (ii) the VIEs, with which we maintain contractual agreements.
Item 3. Key Information Waterdrop Inc. is not an operating company in China but rather a Cayman Islands holding company with no material operations of its own and no equity ownership in the VIEs (defined below). We conduct our operations primarily through (i) our subsidiaries in mainland China and (ii) the VIEs, with which we maintain contractual agreements.
If we fail to retain our employees, we could incur significant expenses in hiring and training new employees, and our ability to serve users and business partners could diminish, resulting in a material adverse effect to our business. 31 Table of Contents We may not be able to raise additional capital when desired, on favorable terms or at all.
If we fail to retain our employees, we could incur significant expenses in hiring and training new employees, and our ability to serve users and business partners could diminish, resulting in a material adverse effect to our business. ​ 37 Table of Contents We may not be able to raise additional capital when desired, on favorable terms or at all.
Furthermore, if we are deemed a PRC resident enterprise, dividends payable to our non-PRC individual shareholders (including our ADS holders) and any gain realized on the transfer of ADSs or Class A ordinary shares by such shareholders may be subject to PRC tax at a rate of 20% (and such PRC tax may be withheld at source in the case of dividends).
Furthermore, if we are deemed a mainland China resident enterprise, dividends payable to our non-PRC individual shareholders (including our ADS holders) and any gain realized on the transfer of ADSs or Class A ordinary shares by such shareholders may be subject to mainland China tax at a rate of 20% (and such mainland China tax may be withheld at source in the case of dividends).
The PRC government authorities have enacted a series of laws and regulations relating to the protection of privacy and personal information, under which internet service providers and other network operators are required to clearly indicate the purposes, methods and scope of any information collection and usage, to obtain appropriate user consent and to establish user information protection systems with appropriate remedial measures.
The PRC governmental authorities have enacted a series of laws and regulations relating to the protection of privacy and personal information, under which internet service providers and other network operators are required to clearly indicate the purposes, methods and scope of any information collection and usage, to obtain appropriate user consent and to establish user information protection systems with appropriate remedial measures.
Therefore, we operate such businesses in China through the variable interest entities, Zhuiqiu Jizhi, Shuidi Hubao, Shuidi Hulian, Zongqing Xiangqian and Guangmu Weichen, which we refer to as the VIEs in this annual report, and rely on contractual arrangements among our PRC subsidiaries, the VIEs and their shareholders to control the business operations of the VIEs.
Therefore, we operate such businesses in China through the variable interest entities, Zhuiqiu Jizhi, Shuidi Hubao, Shuidi Hulian, Zongqing Xiangqian and Guangmu Weichen, which we refer to as the VIEs in this annual report, and rely on contractual arrangements among our subsidiaries in mainland China, the VIEs and their shareholders to control the business operations of the VIEs.
If we fail to comply with these laws and regulations, we could be subject to penalties and operational disruption and our financial condition and results of operations could be adversely affected. 18 Table of Contents Moreover, we have from time to time been subject, and are likely again in the future to be subject to PRC regulatory inquiries, inspections and investigations.
If we fail to comply with these laws and regulations, we could be subject to penalties and operational disruption and our financial condition and results of operations could be adversely affected. 21 Table of Contents Moreover, we have from time to time been subject, and are likely again in the future to be subject to PRC regulatory inquiries, inspections and investigations.
We currently also use external data sources for our business analysis, which can become unavailable due to regulatory restrictions or other reasons. 27 Table of Contents Our business may be negatively impacted if the information that we receive from third parties for user verification purpose is inaccurate.
We currently also use external data sources for our business analysis, which can become unavailable due to regulatory restrictions or other reasons. 32 Table of Contents Our business may be negatively impacted if the information that we receive from third parties for user verification purpose is inaccurate.
Therefore, it still leaves leeway for future laws, administrative regulations or provisions of the PRC State Council to provide for contractual arrangements as a form of foreign investment, at which time it will be uncertain whether our contractual arrangements will be deemed to be in violation of the market access requirements for foreign investment in the PRC and if yes, how our contractual arrangements should be dealt with. 39 Table of Contents The Foreign Investment Law grants national treatment to foreign-invested entities, except for those foreign-invested entities that operate in industries specified as either “restricted” or “prohibited” from foreign investment in the “negative list”, which is most recently jointly promulgated by the National Development and Reform Commission and the Ministry of Commerce and took effective on January 1, 2022.
Therefore, it still leaves leeway for future laws, administrative regulations or provisions of the PRC State Council to provide for contractual arrangements as a form of foreign investment, at which time it will be uncertain whether our contractual arrangements will be deemed to be in violation of the market access requirements for foreign investment in mainland China, and if yes, how our contractual arrangements should be dealt with. 45 Table of Contents The PRC Foreign Investment Law grants national treatment to foreign-invested entities, except for those foreign-invested entities that operate in industries specified as either “restricted” or “prohibited” from foreign investment in the “negative list”, which is most recently jointly promulgated by the National Development and Reform Commission and the Ministry of Commerce and took effective on January 1, 2022.
In addition, non-resident enterprise shareholders (including our ADS holders) may be subject to PRC tax at a rate of 10% on gains realized on the sale or other disposition of ADSs or Class A ordinary shares, if such income is treated as sourced from within China.
In addition, non-resident enterprise shareholders (including our ADS holders) may be subject to mainland China tax at a rate of 10% on gains realized on the sale or other disposition of ADSs or Class A ordinary shares, if such income is treated as sourced from within China.
The Draft Regulations remain unclear on whether the relevant requirements will be applicable to companies that have been listed in the United States, such as us. We cannot predict the impact of the Draft Regulations, if any, at this stage, and we will closely monitor and assess any development in the rule-making process.
These draft regulations remain unclear on whether the requirements will be applicable to companies that have been listed in the United States, such as us. We cannot predict the impact of these draft regulations, if any, at this stage, and we will closely monitor and assess any development in the rule-making process.
Accordingly, none of our wholly-owned PRC subsidiaries is eligible to provide value-added telecommunication services, insurance brokerage services or insurance agency services in China under PRC laws. To comply with the applicable PRC laws and regulations, we conduct such business through the VIEs and their subsidiaries, including Zongqing Xiangqian and Shuidi Insurance Brokerage.
Accordingly, none of our wholly-owned subsidiaries in mainland China is eligible to provide value-added telecommunication services, insurance brokerage services or insurance agency services in China under the laws in mainland China. To comply with the applicable laws and regulations in mainland China, we conduct such business through the VIEs and their subsidiaries, including Zongqing Xiangqian and Shuidi Insurance Brokerage.
If the PRC government finds that the agreements that establish the structure for operating our business do not comply with PRC laws and regulations, or if these regulations or their interpretations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.
If the PRC government finds that the agreements that establish the structure for operating our business do not comply with the laws and regulations in mainland China, or if these regulations or their interpretations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.
Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. 12 Table of Contents D. Risk Factors Summary of Risk Factors Investing in our ADSs involves significant risks. You should carefully consider all of the information in this annual report before making an investment in our ADSs.
Capitalization and Indebtedness Not applicable. ​ 14 Table of Contents C. Reasons for the Offer and Use of Proceeds Not applicable. D. Risk Factors Summary of Risk Factors Investing in our ADSs involves significant risks. You should carefully consider all of the information in this annual report before making an investment in our ADSs.
If the PRC government finds that the agreements that establish the structure for operating our business do not comply with the PRC laws and regulations, or if these regulations or their interpretations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.
If the PRC government finds that the agreements that establish the structure for operating our business do not comply with the laws and regulations in mainland China, or if these regulations or their interpretations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.
The funds contributed by donors in our crowdfunding platform and participants of mutual aid plans are deposited in segregated bank accounts. We have entered into agreements with a commercial bank to act as a custodian bank and manage the different accounts. The bank follows our instruction with regard to withdrawal or transfer of funds.
The funds contributed by donors in our crowdfunding platform and participants of mutual aid plans are deposited in segregated bank accounts. We have entered into agreements with a commercial bank to act as a custodian bank and manage the different accounts. The bank follows our instructions with regard to withdrawal or transfer of funds.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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It streamlines various transaction processes, ensures smooth user experience, and reduces the time between first query and the completion of a transaction. We believe that we are well-positioned to capitalize on the accelerating trend of digitalization across the insurance landscape. Insurance consumers are increasingly conducting research online and ultimately, purchasing online.
It streamlines various transaction processes, ensures smooth user experience, and reduces the time between the first query and the completion of a transaction. We believe that we are well-positioned to capitalize on the accelerating trend of digitalization across the insurance landscape. Insurance consumers are increasingly conducting research online and ultimately, purchasing online.
In addition, we provide risk management services to certain insurance companies. New Business Initiatives To enhance our online sales force and cater to the various needs of different consumer groups, we have introduced experienced insurance planners to our online sales team to provide private on-one-on consultation service to consumers with relatively higher demand for a comprehensive insurance coverage plan.
In addition, we provide risk management services to certain insurance companies. New Insurance Business Initiatives To enhance our online sales force and cater to the various needs of different consumer groups, we have introduced experienced insurance planners to our online sales team to provide private on-one-on consultation service to consumers with relatively higher demand for a comprehensive insurance coverage plan.
Healthcare and Pharmaceutical Services We proactively seek innovative opportunities in broader healthcare industry to achieve a full user life-cycle coverage and enrich our ecosystem. We believe our healthcare and pharmaceutical services extend our service coverage to capture patients’ healthcare spending after getting crowdfunding fund raised or insurance claim payment.
Healthcare and Pharmaceutical Services We proactively seek innovative opportunities in a broader healthcare industry to achieve a full user life-cycle coverage and enrich our ecosystem. We believe our healthcare and pharmaceutical services extend our service coverage to capture patients’ healthcare spending after getting crowdfunding fund raised or insurance claim payment.
We leverage core competencies in data analysis, efficient and customized services, and healthcare expertise, focused on improving health outcomes, lowering healthcare costs and creating value for patients, medical service providers and pharmaceutical companies. Digital Clinical Trial Solution E-Find patient recruitment We have developed a digital platform, E-Find Patient Recruitment, for patients recruitment since late 2021.
We leverage core competencies in data analysis, efficient and customized services, and healthcare expertise, focused on improving health outcomes, lowering healthcare costs and creating value for patients, medical service providers and pharmaceutical companies. Digital Clinical Trial Solution E-Find patient recruitment We have developed a digital platform, E-Find Patient Recruitment, for patient recruitment since late 2021.
Leveraging the patients resources from Waterdrop Medical Crowdfunding, we have a wide reach of patients for potential trial enrollment across all major therapeutic areas and all geographical locations, which greatly improves the efficiency in patient recruitment for clinical trials.
Leveraging the patient resources from Waterdrop Medical Crowdfunding, we have a wide reach of patients for potential trial enrollment across all major therapeutic areas and all geographical locations, which greatly improves the efficiency in patient recruitment for clinical trials.
In addition, we also offered a one-year complementary health insurance policy to each participant with a similar coverage as the participant’s original mutual aid plan. Brand Image and Omni-Channel Marketing Strategies Branding We have focused on offering affordable and innovative health and life insurance products since our inception and are committed to building a trusted brand.
In addition, we also offered a one-year complementary health insurance policy to each participant with similar coverage as the participant’s original mutual aid plan. Brand Image and Omni-Channel Marketing Strategies Branding We have focused on offering affordable and innovative health and life insurance products since our inception and are committed to building a trusted brand.
We operate dozens of proprietary technology systems, which support a data-driven user acquisition, service, and retention lifecycle within the life and health insurance market. Our systems are entirely integrated, so data generated in a customer service interaction can inform the claims process, while claims data routinely impacts marketing campaigns, and so forth.
We operate dozens of proprietary technology systems, which support data-driven user acquisition, service, and retention lifecycle within the life and health insurance market. Our systems are entirely integrated, so data generated in a customer service interaction can inform the claims process, while claims data routinely impacts marketing campaigns, and so forth.
Our intelligent verification system conducts initial verification on eligibility based on information provided by users. User identification is aided with facial recognition technologies. For eligible users, we further conduct secondary verification focusing on risk management.
Our intelligent verification system conducts initial eligibility verification based on information provided by users. User identification is aided with facial recognition technologies. For eligible users, we further conduct secondary verification focusing on risk management.
The Insurance Law of the PRC, comprising general principles, insurance contracts, insurance institutions, insurance operational standards, supervision and regulation of the insurance industry, insurance agencies and insurance brokerage companies, legal liabilities and supplementary provisions, sets out the legal framework for regulating the insurance companies.
The PRC Insurance Law, comprising general principles, insurance contracts, insurance institutions, insurance operational standards, supervision and regulation of the insurance industry, insurance agencies and insurance brokerage companies, legal liabilities and supplementary provisions, sets out the legal framework for regulating the insurance companies.
It also requires that when receiving complaints and reports regarding to untruthful help-seeking information, network service providers should promptly take the necessary measures to eliminate and reduce the impact. Regulations on Online Public Crowdfunding Information Platform On March 16, 2016, the PRC National People’s Congress published the PRC Charity Law which came into effect on September 1, 2016.
It also requires that when receiving complaints and reports regarding untruthful help-seeking information, network service providers should promptly take the necessary measures to eliminate and reduce the impact. Regulations on Online Public Crowdfunding Information Platform On March 16, 2016, the PRC National People’s Congress published the PRC Charity Law, which came into effect on September 1, 2016.
Personal information, as defined in the PRC Personal Information Protection Law, refers to information related to identified or identifiable natural persons and recorded by electronic or other means, but excluding the anonymized information.
Personal information, as defined in the PRC Personal Information Protection Law, refers to information related to identified or identifiable natural persons and recorded by electronic or other means, but excluding anonymized information.
Copyright owners enjoy certain legal rights, including right of publication, right of authorship, and right of reproduction. The Copyright Law as revised in 2010 extends copyright protection to internet activities, products disseminated over the internet, and software products. In addition, the Copyright Law provides for a voluntary registration system administered by the China Copyright Protection Center.
Copyright owners enjoy certain legal rights, including rights of publication, right of authorship, and right of reproduction. The Copyright Law as revised in 2010 extends copyright protection to internet activities, products disseminated over the internet, and software products. In addition, the Copyright Law provides for a voluntary registration system administered by the China Copyright Protection Center.
The Circular on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Circular 13, which became effective on June 1, 2015 and was amended in 2019, cancels the administrative approvals of foreign exchange registration of direct domestic investment and direct overseas investment and simplifies the procedure of foreign exchange-related registration.
The Circular on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or the SAFE Circular 13, which became effective on June 1, 2015 and was amended in 2019, cancels the administrative approvals of foreign exchange registration of direct domestic investment and direct overseas investment and simplifies the procedure of foreign exchange-related registration.
In addition, the China-based companies shall complete corresponding procedures when (i) providing or publicly filing documents and materials which may adversely affect national security and public interests to the relevant securities companies, securities service agencies or the offshore regulatory authorities, (ii) providing or publicly filing such documents and materials through its offshore listing entity, or (iii) providing accounting files or copies to relevant securities companies, securities service institutions, overseas regulators and individuals.
In addition, the China-based companies shall complete corresponding procedures when (i) providing or publicly filing documents and materials which may adversely affect national security and public interests to relevant securities companies, securities service agencies or the offshore regulatory authorities, (ii) providing or publicly filing such documents and materials through its offshore listing entity, or (iii) providing accounting files or copies to relevant securities companies, securities service institutions, overseas regulators and individuals.
We have completed the registration of the equity interest pledge under the equity interest pledge agreements in relation to the VIEs with the relevant offices of the State Administration of Market Regulation in accordance with the PRC Civil Code. Agreements that allow us to receive economic benefits from the VIEs Exclusive Business Cooperation Agreements .
We have completed the registration of the equity interest pledge under the equity interest pledge agreements in relation to the VIEs with relevant offices of the State Administration of Market Regulation in accordance with the PRC Civil Code. Agreements that allow us to receive economic benefits from the VIEs Exclusive Business Cooperation Agreements.
The spouses of the individual shareholders of the VIEs have each signed a spousal consent letter agreeing that the equity interests in the VIEs held by and registered under the name of the respective individual shareholders will be disposed pursuant to the contractual agreements with our WFOE, without seeking further authorization or consent of such spouses.
The spouses of the individual shareholders of the VIEs have each signed a spousal consent letter agreeing that the equity interests in the VIEs held by and registered under the name of the respective individual shareholders will be disposed of pursuant to the contractual agreements with our WFOE, without seeking further authorization or consent of such spouses.
The multi-dimension vetting process ensures that we can take appropriate and timely steps when fraud and risks arise. Public disclosure before fund withdrawal We set an additional 24-hour contestability period before issuing funds from a specific donor to relevant patients for inspection and supervision. If any complaints or rejections are received, we will suspend fund remittance and initiate investigation process.
The multi-dimension vetting process ensures that we can take appropriate and timely steps when fraud and risks arise. Public disclosure before fund withdrawal We set an additional 24-hour contestability period before issuing funds from a specific donor to patients for inspection and supervision. If any complaints or rejections are received, we will suspend fund remittance and initiate an investigation process.
Risk Factors—Risks Related to Our Corporate Structure—If the PRC government finds that the agreements that establish the structure for operating some of our operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations” and “Item 3.
Risk Factors—Risks Related to Our Corporate Structure—If the PRC government finds that the agreements that establish the structure for operating some of our operations in China do not comply with the regulations in mainland China relating to relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations” and “Item 3.
Regulations on Insurance Agency Business Pursuant to the Insurance Law of PRC and the Provisions on the Supervision and Administration of Insurance Agencies, or the Insurance Agencies Provisions, which was promulgated on November 12, 2020 and came into effect on January 1, 2021, an insurance agency is an entity, which has been authorized by an insurer to transact insurance business on its behalf within the scope of authorization and gets in return agency’s commissions to be collected from the insurer.
Regulations on Insurance Agency Business Pursuant to the PRC Insurance Law and the Provisions on the Supervision and Administration of Insurance Agencies, which was promulgated on November 12, 2020 and came into effect on January 1, 2021, an insurance agency is an entity, which has been authorized by an insurer to transact insurance business on its behalf within the scope of authorization and gets in return agency’s commissions to be collected from the insurer.
We combine user group profiling and modeling by marketing channels to maximize our return on investment (ROI). Within our platforms, data analysis is used to push tailored marketing messages and campaigns in real time to achieve higher conversion. Our primary channel of marketing includes various social networks, news media, short-video platforms and searches.
We combine user group profiling and modeling by marketing channels to maximize our return on investment. Within our platforms, data analysis is used to push tailored marketing messages and campaigns in real time to achieve higher conversion. Our primary channel of marketing includes various social networks, news media, short-video platforms and searches.
Pursuant to the Rectification Plan, all insurance institutions (including insurance companies and insurance intermediaries) shall conduct internet insurance business, regulate the business cooperation with third-party online platforms, prohibit third-party platforms from illegally engaging in insurance intermediary business in accordance with the Interim Regulatory Measures for Internet Insurance Business and relevant regulations, and focus their rectification on the following: (i) whether the activities of any cooperative third-party online platform of the insurance institution and its employees are limited to providing sales support services such as insurance product display and description and web links, and whether it illegally engages in insurance sales, underwriting, settlement of claims, and surrender or other insurance business links; (ii) whether there is a cooperation between the insurance institution and any third-party online platform engaging in internet finance involving wealth management, peer-to-peer lending and finance lease, etc.; (iii) whether the insurance institution performs the primary responsibility for supervising and managing its cooperative third-party platforms as required; (iv) whether all cooperative third-party online platforms of the insurance institution conform to relevant provisions of the Interim Regulatory Measures for Internet Insurance Business; (v) whether the insurance institution owns the interfaces where customers purchase insurance policies on its cooperative third-party online platforms and bears the compliance responsibility, and whether any of its third-party platforms engages in the collection of insurance premiums on its behalf and transfer of payments; (vi) whether each cooperative third-party online platform of the insurance institution discloses the information of all its cooperative insurance institutions at an eye-catching position, and that of such third-party online platform disclosed on the information disclosure platform of the Insurance Association of China at an eye-catching position, and indicates that the insurance business is provided by insurance institutions; and (vii) whether any cooperative third-party online platform of the insurance institution restricts such insurance institutions from accessing relevant information of customers in a truthful, complete and timely manner.
Pursuant to the rectification plan, all insurance institutions (including insurance companies and insurance intermediaries) shall conduct internet insurance business, regulate the business cooperation with third-party online platforms, prohibit third-party platforms from illegally engaging in insurance intermediary business in accordance with the Interim Regulatory Measures for Internet Insurance Business and other regulations, and focus their rectification on the following: (i) whether the activities of any cooperative third-party online platform of the insurance institution and its employees are limited to providing sales support services such as insurance product display and description and web links, and whether it illegally engages in insurance sales, underwriting, settlement of claims, and surrender or other insurance business links; (ii) whether there is a cooperation between the insurance institution and any third-party online platform engaging in internet finance involving wealth management, peer-to-peer lending and finance lease, etc.; (iii) whether the insurance institution performs the primary responsibility for supervising and managing its cooperative third-party platforms as required; (iv) whether all cooperative third-party online platforms of the insurance institution conform to the Interim Regulatory Measures for Internet Insurance Business; (v) whether the insurance institution owns the interfaces where customers purchase insurance policies on its cooperative third-party online platforms and bears the compliance responsibility, and whether any of its third-party platforms engages in the collection of insurance premiums on its behalf and transfer of payments; (vi) whether each cooperative third-party online platform of the insurance institution discloses the information of all its cooperative insurance institutions at an eye-catching position, and that of such third-party online platform disclosed on the information disclosure platform of the Insurance Association of China at an eye-catching position, and indicates that the insurance business is provided by insurance institutions; and (vii) whether any cooperative third-party online platform of the insurance institution restricts such insurance institutions from accessing customers’ information in a truthful, complete and timely manner.
To maintain flexibility and our bargaining position, for each particular product or category, we generally work with a focused group of insurance carriers. With the large sales volume, we are also able to develop a deeper understanding of insurance carriers’ objectives, and to further optimize product matching, enhance product sales on our insurance marketplace, and strengthen our bargaining power.
To maintain flexibility and our bargaining position, for each particular product or category, we generally work with a focused group of insurance carriers. With the large sales volume, we are also able to develop a deeper understanding of insurance carriers’ objectives, and to optimize product matching, enhance product sales on our insurance marketplace, and strengthen our bargaining power.
If the fund is used for other purposes or any fraud is detected afterwards, we initiate investigations immediately. Successfully retrieved fund will be refunded to each respective donor. Where necessary, we may also report to law enforcement authorities or bring litigation against fraud to protect donors on our platform.
If the fund is used for other purposes or any fraud is detected afterwards, we initiate investigations immediately. Successfully retrieved funds will be refunded to each respective donor. Where necessary, we may also report to law enforcement authorities or bring litigation against fraud to protect donors on our platform.
To ensure the confidentiality and integrity of our data, we maintain comprehensive and rigorous data security measures. We anonymize and encrypt confidential personal information and take other technological measures to ensure the secure processing, transmission and usage of data. All user information we provide to insurance carriers are on a need-to-know basis, and are strictly redacted and encrypted.
To ensure the confidentiality and integrity of our data, we maintain comprehensive and rigorous data security measures. We anonymize and encrypt confidential personal information and take other technological measures to ensure the secure processing, transmission and usage of data. All user information we provide to insurance carriers are on a need-to-know basis, and is strictly redacted and encrypted.
An insurance broker and its practitioners shall not solicit or accept any remuneration or other property other than those as agreed upon in the contract and granted by any insurance company or its staff or take advantage of executing the insurance brokerage business to obtain other illegal benefits in the course of carrying out the insurance brokerage business.
An insurance broker and its practitioners shall not solicit or accept any remuneration or other property other than those as agreed upon in the contract and granted by any insurance company or its staff or take advantage of executing the insurance brokerage business to obtain other illegal benefits during the course of carrying out the insurance brokerage business.
The VIEs and the shareholders of the VIEs also covenant that, without the prior written consent of our WFOE, they shall not transfer the pledged equity interests, create or allow any new pledge or any other encumbrance on the pledged equity interests. The equity interest pledge agreements will remain effective until the contractual obligations are fully fulfilled.
The VIEs and the shareholders of the VIEs also covenant that, without the prior written consent of our WFOE, they shall not transfer the pledged equity interests, create or allow any new pledge or any other encumbrance on the pledged equity interests. The equity interest pledge agreements remain effective until the contractual obligations are fully fulfilled.
They help discern the consumers’ insurance needs, deliver appropriate guidance, and help the consumers identify suitable insurance packages. Since the beginning of 2021, we have been rolling out our offline brokerage business in an effort to further integrate online and offline insurance business, empower insurance brokers and enhance consumer experience.
They help discern the consumers’ insurance needs, deliver appropriate guidance, and help the consumers identify suitable insurance packages. Since the beginning of 2021, we have been rolling out our offline brokerage business in an effort to integrate online and offline insurance business, empower insurance brokers and enhance consumer experience.
Fund raised for successfully challenged campaigns will be refunded to each respective donor through the same route. Direct fund remittance to hospitals We also collaborate with hospitals to prevent fraud. In certain situations, we may arrange fund remittance into the hospital’s account directly rather than into the patient’s personal account.
Funds raised for successfully challenged campaigns will be refunded to each respective donor through the same route. Direct fund remittance to hospitals We also collaborate with hospitals to prevent fraud. In certain situations, we may arrange fund remittance into the hospital’s account directly rather than into the patient’s personal account.
We train our rating and projection models with the vast amount of anonymized claim data accumulated on our platforms, conduct single or multiple variable analysis and discovery of variables, and identify highly relevant characteristics for the purpose of claim review and settlement projection, and ultimately improve precision and recall of our model.
We train our rating and projection models with a vast amount of anonymized claim data accumulated on our platforms, conduct single or multiple variable analysis and discovery of variables, and identify highly relevant characteristics for the purpose of claim review and settlement projection, and ultimately improve precision and recall of our model.
Pursuant to the Provisions on the Supervision and Administration of Insurance Adjustors, the term “insurance adjustment” refers to the assessment, survey, authentication, loss estimation and relevant risk assessment of the insured subject matters or the insurance incidents conducted by an appraisal firm and its professional appraisers upon the entrustment of the parties concerned.
Pursuant to the Provisions on the Supervision and Administration of Insurance Adjustors, the term “insurance adjustment” refers to the assessment, survey, authentication, loss estimation and risk assessment of the insured subject matters or the insurance incidents conducted by an appraisal firm and its professional appraisers upon the entrustment of the parties concerned.
If over 30% of the quantity (i.e., number of data items or amount of data stored) of important and core data changes or there is any material change to other filing information, data processors must update the filing information with the relevant authorities within three months after such change.
If over 30% of the quantity (i.e., number of data items or amount of data stored) of important and core data changes or there is any material change to other filing information, data processors must update the filing information with the authorities within three months after such change.
The opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies.
The opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies.
A claims adjusting firm in the form of a partnership must have at least two claims adjustors and two-thirds of its partners should be claims adjustors, who have least three years’ working experience in claims adjustment and have no record of administrative penalties in relation to claims adjustment activities in the past three years.
A claim adjusting firm in the form of a partnership must have at least two claims adjustors and two-thirds of its partners should be claims adjustors, who have least three years’ working experience in claims adjustment and have no record of administrative penalties in relation to claims adjustment activities in the past three years.
In addition, under the employment agreements we enter into with our employees and consultants, they acknowledge that the intellectual property made by them in connection with their employment with us are our property. We also regularly monitor any infringement or misappropriation of our intellectual property rights.
In addition, under the employment agreements we enter into with our employees and consultants, they acknowledge that the intellectual properties made by them in connection with their employment with us are our property. We also regularly monitor any infringement or misappropriation of our intellectual property rights.
This circular also provides an integrated standard for conversion of foreign exchange under capital account items (including, but not limited to, foreign currency capital and foreign debts) on a self-discretionary basis, which applies to all enterprises registered in China.
This circular also provides an integrated standard for conversion of foreign exchange under capital account items (including, but not limited to, foreign currency capital and foreign debts) on a discretionary basis, which applies to all enterprises registered in China.
Non-resident enterprises are defined as enterprises that are organized under the laws of foreign countries and whose actual management is conducted outside China, but have established institutions or premises in China, or have no such established institutions or premises but have income generated from inside China.
Non-resident enterprises are defined as enterprises that are organized under the laws of foreign countries and whose actual management is conducted outside mainland China, but have established institutions or premises in mainland China, or have no such established institutions or premises but have income generated from inside mainland China.
On October 17, 2017, SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non- resident Enterprise Income Tax at Source, or Bulletin 37, which was amended by the Announcement of the State Administration of Taxation on Revising Certain Taxation Normative Documents issued on June 15, 2018 by SAT.
On October 17, 2017, the State Administration of Taxation issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non- resident Enterprise Income Tax at Source, or Bulletin 37, which was amended by the Announcement of the State Administration of Taxation on Revising Certain Taxation Normative Documents issued on June 15, 2018 by the State Administration of Taxation.
Specifically, foreign direct investment in telecommunications companies in China is governed by the Administrative Regulations on Foreign-Invested Telecommunications Enterprises, which was promulgated by the PRC State Council on December 11, 2001, and amended on September 10, 2008 and February 6, 2016.
Specifically, foreign direct investment in telecommunications companies in mainland China is governed by the Administrative Regulations on Foreign-Invested Telecommunications Enterprises, which was promulgated by the PRC State Council on December 11, 2001 and amended on September 10, 2008 and February 6, 2016.
In addition, the main foreign investor who invests in a foreign-invested value-added telecommunications enterprise in China must satisfy a number of stringent performance and operational experience requirements, including demonstrating a good track record and experience in operating value-added telecommunication business overseas.
In addition, the main foreign investor who invests in a foreign-invested value-added telecommunications enterprise in mainland China must satisfy a number of stringent performance and operational experience requirements, including demonstrating a good track record and experience in operating value-added telecommunication business overseas.
Regulations on Insurance Brokerage Business Pursuant to the Insurance Law of the PRC, an insurance broker is an entity that, in the interest of the insurance applicants, provides intermediary services between the insurance applicants and the insurance companies for the conclusion of insurance contracts, and collects commissions for such services in accordance with relevant laws.
Regulations on Insurance Brokerage Business Pursuant to the PRC Insurance Law, an insurance broker is an entity that, in the interest of the insurance applicants, provides intermediary services between the insurance applicants and the insurance companies for the conclusion of insurance contracts, and collects commissions for such services in accordance with the laws.
Shuidi Insurance Brokerage conducts online insurance brokerage business and is subject to the Regulatory Measures. Pursuant to the Regulatory Measures, “Internet insurance business” refers to insurance operating activities such as conclusion of insurance contracts and provision of insurance services that are conducted by insurance institutions based on internet.
Shuidi Insurance Brokerage conducts online insurance brokerage business and is subject to the such measures. Pursuant to the Regulatory Measures for Online Insurance Business, “Internet insurance business” refers to insurance operating activities such as conclusion of insurance contracts and provision of insurance services that are conducted by insurance institutions based on internet.
An insurance broker is required to conduct insurance brokerage business within the business scope and business area of the underwriter. An insurance broker and its practitioners may not sell non-insurance financial products, except for non-insurance financial products that have been approved by the relevant financial regulatory authorities.
An insurance broker is required to conduct insurance brokerage business within the business scope and business area of the underwriter. An insurance broker and its practitioners may not sell non-insurance financial products, except for non-insurance financial products that have been approved by the financial regulatory authorities.
Furthermore, the data processor shall conduct a self-assessment on the risk of data cross-border transfer prior to applying for the foregoing security assessment, under which the data processor shall consider certain factors including, among other things, (i) the purpose, scope and manner of the cross-border data transfer and the overseas data recipient processing data and the legality, legitimacy and necessity thereof, (ii) the scale, scope, type and sensitivity of the transferred data, the risks to national security, public interests and the legitimate rights and interests of individuals or organizations arising from the cross-border data transfer, (iii) the overseas data recipient’s commitment to assume responsibility and obligations, the management and technical measures to fulfill the responsibilities and obligations, and the ability to ensure the security of the transferred data, (iv) the risk of data being tampered with, destroyed, leaked, lost, transferred, or illegally obtained or illegally used during and after the cross-border transfer, and the existence of channels for safeguarding the rights and interests of personal information, and (v) adequate compliance of data transfer-related contracts or other legally binding documents between the data processor and the overseas recipient with the data security protection responsibilities and obligations.
Furthermore, the data processor shall conduct an assessment on the risk of data cross-border transfer prior to applying for the foregoing security assessment, under which the data processor shall consider certain factors including, among other things, (i) the purpose, scope and manner of the cross-border data transfer and the overseas data recipient processing data and the legality, legitimacy and necessity thereof, (ii) the scale, scope, type and sensitivity of the transferred data, the risks to national security, public interests and the legitimate rights and interests of individuals or organizations arising from the cross-border data transfer, (iii) the overseas data recipient’s commitment to assume responsibility and obligations, the management and technical measures to fulfill the responsibilities and obligations, and the ability to ensure the security of the transferred data, (iv) the risk of data being tampered with, destroyed, leaked, lost, transferred, or illegally obtained or illegally used during and after the cross-border transfer, and the existence of channels for safeguarding the rights and interests of personal information, and (v) adequate compliance of data transfer-related contracts or other legally binding documents between the data processor and the overseas recipient with the data security protection responsibilities and obligations.
In case of any actual or potential leakage of the user personal information, internet information service providers must take immediate remedial measures and make timely report to the relevant regulatory authorities and inform users in accordance with the regulations.
In case of any actual or potential leakage of the user personal information, internet information service providers must take immediate remedial measures and make timely report to the regulatory authorities and inform users in accordance with the regulations.
Enterprises must file with SAFE in its capital item information system after entering into the relevant cross-border financing contracts and prior to three business days before drawing any money from the foreign debts.
Enterprises must file with SAFE in its capital item information system after entering into cross-border financing contracts and prior to three business days before drawing any money from the foreign debts.
This regulation further illustrates certain commonly seen illegal practices of apps operators in terms of the protection of personal information, including: “failure to publicize rules for collecting and using personal information”; “failure to expressly state the purpose, manner and scope of collecting and using personal information”; “collection and use of personal information without consent of users of the App”; “collecting personal information irrelevant to the services provided by the app in violation of the principle of necessity,” “provision of personal information to others without users’ consent”; “failure to provide the function of deleting or correcting personal information as required by laws”; and “failure to publish information such as methods for complaints and reporting.” Any of the following acts, among others, of an app operator will constitute “collection and use of personal information without consent of users:” (i) collecting any user’s personal information or activating the permission for collecting any user’s personal information without obtaining such user’s consent; (ii) collecting personal information or activating the permission for collecting the personal information of any user who explicitly refuses such collection, or repeatedly seeking any user’s consent such that the user’s normal use of such app is disturbed; (iii) collecting any user’s personal information which has been actually collected by the app operator or activating the permission for collecting any user’s personal information by the app operator that is beyond the scope of personal information which the user authorizes the app operator to collect; (iv) seeking any user’s consent in a non-explicit manner; (v) modifying any user’s settings for activating the permission for collecting any personal information without such user’s consent; (vi) using users’ personal information and any algorithms to directionally push any information, without providing the option of non-directed pushing of such information; (vii) misleading users to permit collecting their personal information or activating the permission for collecting the users’ personal information by improper methods, such as fraud and deception; (viii) failing to provide users with the means and methods to withdraw their permission for collecting personal information; and (ix) collecting and using personal information in violation of the rules for collecting and using personal information promulgated by the app operator.
This regulation further illustrates certain commonly seen illegal practices of application operators in terms of the protection of personal information, including: “failure to publicize rules for collecting and using personal information”; “failure to expressly state the purpose, manner and scope of collecting and using personal information”; “collection and use of personal information without consent of application users”; “collecting personal information irrelevant to the services provided by the application in violation of the principle of necessity,” “provision of personal information to others without users’ consent”; “failure to provide the function of deleting or correcting personal information as required by laws”; and “failure to publish information such as methods for complaints and reporting.” Any of the following acts, among others, of an application operator will constitute “collection and use of personal information without consent of users:” (i) collecting any user’s personal information or activating the permission for collecting any user’s personal information without obtaining such user’s consent; (ii) collecting personal information or activating the permission for collecting the personal information of any user who explicitly refuses such collection, or repeatedly seeking any user’s consent such that the user’s normal use of such application is disturbed; (iii) collecting any user’s personal information which has been actually collected by the application operator or activating the permission for collecting any user’s personal information by the application operator that is beyond the scope of personal information which the user authorizes the application operator to collect; (iv) seeking any user’s consent in a non-explicit manner; (v) modifying any user’s settings for activating the permission for collecting any personal information without such user’s consent; (vi) using users’ personal information and any algorithms to directionally push any information, without providing the option of non-directed pushing of such information; (vii) misleading users to permit collecting their personal information or activating the permission for collecting the users’ personal information by improper methods, such as fraud and deception; (viii) failing to provide users with the means and methods to withdraw their permission for collecting personal information; and (ix) collecting and using personal information in violation of the rules for collecting and using personal information promulgated by the application operator.
If the operator of the third-party internet platform fails to perform the fiduciary obligations as agreed, causes damages to the rights and interests of financial consumers or causes other adverse effects, it shall bear relevant responsibilities accordingly.
If the operator of the third-party internet platform fails to perform the fiduciary obligations as agreed, causes damages to the rights and interests of financial consumers or causes other adverse effects, it shall bear responsibilities accordingly.
Regulations on Internet Security The Decision in Relation to Protection of Internet Security enacted by the Standing Committee of the National People’s Congress on December 28, 2000, as amended in August 2009, provides that, among other things, the following activities conducted through the internet, if constituted a crime under PRC laws, are subject to criminal punishment: (i) hacking into a computer or system of strategic importance; (ii) intentionally inventing and spreading destructive programs such as computer viruses to attack computer systems and communications networks, thus damaging computer systems and the communications networks; (iii) in violation of national regulations, discontinuing computer networks or the communications services without authorization; (iv) leaking state secrets; (v) spreading false commercial information; or (vi) infringing intellectual property rights through internet.
Regulations on Internet Security The Decision in Relation to Protection of Internet Security enacted by the Standing Committee of the National People’s Congress on December 28, 2000, as amended in August 2009, provides that, among other things, the following activities conducted through the internet, if constituted a crime under criminal laws in mainland China, are subject to criminal punishment: (i) hacking into a computer or system of strategic importance; (ii) intentionally inventing and spreading destructive programs such as computer viruses to attack computer systems and communications networks, thus damaging computer systems and the communications networks; (iii) in violation of national regulations, discontinuing computer networks or the communications services without authorization; (iv) leaking state secrets; (v) spreading false commercial information; or (vi) infringing intellectual property rights through internet.
Foreign exchange proceeds under the current accounts may be either retained or sold to a financial institution engaged in settlement and sale of foreign exchange pursuant to relevant SAFE rules and regulations.
Foreign exchange proceeds under the current accounts may be either retained or sold to a financial institution engaged in settlement and sale of foreign exchange pursuant to the SAFE rules and regulations.
Intelligent lead generation We utilize a broad user acquisition funnel strategy, generating unique new business leads across crowdfunding and third-party channels, which include social network platform, short-video platforms, search engine, and other third-party marketing partners. We built a database based on consumer lead records that enable us to efficiently target those leads that are more likely to convert to policyholders.
Intelligent lead generation We utilize a broad user acquisition funnel strategy, generating unique new business leads across crowdfunding and third-party channels, which include social network platform, short-video platforms, search engine, and other third-party marketing partners. We built a database based on consumer lead records that enables us to efficiently target those leads that are more likely to convert to policyholders.
Network service providers who do not comply with the Cybersecurity Law may be subject to fines, suspension of their businesses, shutdown of their websites, and revocation of their business licenses.
Network service providers who do not comply with the PRC Cybersecurity Law may be subject to fines, suspension of their businesses, shutdown of their websites, and revocation of their business licenses.
If the employer still fails to rectify the failure to make the relevant contributions within the prescribed time, it may be subject to a fine ranging from one to three times the amount overdue.
If the employer still fails to rectify the failure to make the contributions within the prescribed time, it may be subject to a fine ranging from one to three times the amount overdue.
Pursuant to the powers of attorney, between our WFOE and the shareholders of the VIEs, each of the shareholders of the VIEs has executed a power of attorney to irrevocably authorize our WFOE, or any person designated by our WFOE, to act as his attorney-in-fact to exercise all of his rights as a shareholder of the VIE, including, but not limited to, the right to (i) propose, convene and attend shareholders’ meetings, (ii) vote on any resolution on behalf of the shareholders that require the shareholders to vote under PRC law and the VIE’s articles of association, such as the sale, transfer, pledge and disposal of all or part of a shareholder’s equity interest in the VIE, and (iii) designate and appoint the VIE’s legal representative, director, supervisor, manager and other senior management members on behalf of the shareholders.
Pursuant to the powers of attorney, between our WFOE and the shareholders of the VIEs, each of the shareholders of the VIEs has executed a power of attorney to irrevocably authorize our WFOE, or any person designated by our WFOE, to act as his attorney-in-fact to exercise all of his rights as a shareholder of the VIE, including, but not limited to, the right to (i) propose, convene and attend shareholders’ meetings, (ii) vote on any resolution on behalf of the shareholders that require the shareholders to vote under law in mainland China and the VIE’s articles of association, such as the sale, transfer, pledge and disposal of all or part of a shareholder’s equity interest in the VIE, and (iii) designate and appoint the VIE’s legal representative, director, supervisor, manager and other senior management members on behalf of the shareholders.
The Cybersecurity Review Measures further elaborate the factors to be considered when assessing the national security risks of the relevant activities, including, among others: (i) the risk of any critical information infrastructure being illegally controlled, interfered, or sabotaged; (ii) the harm to the business continuity of any critical information infrastructure caused by the disruption of supply of these products and services; (iii) the security, openness, transparency and variety of sources of these products or services, the reliability of supply channels, as well as risks of supply interruptions due to factors such as politics, diplomacy and trade; (iv) the level of compliance with PRC laws and regulations of the product and service providers; (v) the risk of core data, important data, or a large amount of personal information being stolen, leaked, destroyed, and illegally used or cross-border transferred, (vi) the risk of critical information infrastructure, core data, important data, or a large amount of personal information being affected, controlled, or maliciously used by foreign governments and the cyber information security risk in connection with public offering, and (vii) other factors that may adversely affect the security of critical information infrastructures, cyber security or data security.
The Cybersecurity Review Measures further elaborate on the factors to be considered when assessing the national security risks of relevant activities, including, among others: (i) the risk of any critical information infrastructure being illegally controlled, interfered, or sabotaged; (ii) the harm to the business continuity of any critical information infrastructure caused by the disruption of supply of these products and services; (iii) the security, openness, transparency and variety of sources of these products or services, the reliability of supply channels, as well as risks of supply interruptions due to factors such as politics, diplomacy and trade; (iv) the level of compliance with laws and regulations in mainland China of the product and service providers; (v) the risk of core data, important data, or a large amount of personal information being stolen, leaked, destroyed, and illegally used or cross-border transferred, (vi) the risk of critical information infrastructure, core data, important data, or a large amount of personal information being affected, controlled, or maliciously used by foreign governments and the cyber information security risk in connection with public offering, and (vii) other factors that may adversely affect the security of critical information infrastructures, cyber security or data security.
The Provisions on Technological Measures for Internet Security Protection, or the Internet Security Protection Measures, promulgated on December 13, 2005 and came into effect on March 1, 2006 by the Ministry of Public Security requires internet service providers and organizations that use interconnection implementing technical measures for internet security protection, like technical measures for preventing any matter or act that may endanger network security, for example, computer viruses, invasion or attacks to or destruction of the network.
The Provisions on Technological Measures for Internet Security Protection, which was promulgated on December 13, 2005 by the Ministry of Public Security and came into effect on March 1, 2006, requires internet service providers and organizations that use interconnection implementing technical measures for internet security protection, like technical measures for preventing any matter or act that may endanger network security, for example, computer viruses, invasion or attacks to or destruction of the network.
Hui Min Insurance (“惠民保”) is endorsed by the local governmental authorities in China and underwritten by leading insurance carriers, which provides insurance coverage supplementary to the national basic medical insurance.
Hui Min Insurance ( 惠民保 ) is endorsed by the local governmental authorities in China and underwritten by leading insurance carriers, which provides insurance coverage supplementary to the national basic medical insurance.
However, if non-resident enterprises have not formed permanent establishments or premises in China, or if they have formed permanent establishments or premises in China but there is no actual relationship between the relevant income derived in China and the established institutions or premises set up by them, withholding income tax is set at the rate of 10% with respect to their income sourced from inside the PRC.
However, if non-resident enterprises have not formed permanent establishments or premises in mainland China, or if they have formed permanent establishments or premises in mainland China but there is no actual relationship between their relevant income derived in mainland China and the established institutions or premises set up by them, withholding income tax is set at the rate of 10% with respect to their income sourced from inside mainland China.
Pursuant to Bulletin 7, an “indirect transfer” of assets, including equity interests in a PRC resident enterprise, by non-PRC resident enterprises, may be recharacterized and treated as a direct transfer of PRC taxable assets, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax.
Pursuant to Bulletin 7, an “indirect transfer” of assets, including equity interests in a mainland China resident enterprise, by non-PRC resident enterprises, may be recharacterized and treated as a direct transfer of taxable assets in mainland China, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of enterprise income tax in mainland China.
Pursuant to PBOC Notice No. 9, within a transition period of one year from January 12, 2017, FIEs may adopt the currently valid foreign debt management mechanism, or the mechanism as provided in PBOC Notice No. 9, at their own discretions. PBOC Notice No. 9 provides that enterprises may conduct independent cross-border financing in Renminbi or foreign currencies as required.
Pursuant to the notice, within a transition period of one year from January 12, 2017, foreign-invested enterprises may adopt the currently valid foreign debt management mechanism, or the mechanism as provided in PBOC Notice No. 9, at their own discretions. The notice provides that enterprises may conduct independent cross-border financing in Renminbi or foreign currencies as required.
According to the Insurance Agencies Provisions, an insurance agency may engage in the following insurance agency businesses: (i) sale of insurance products on behalf of the insurance companies; (ii) collection of insurance premium on behalf of the insurance companies; (iii) conducting loss surveys and handling claims of insurance businesses on behalf of the insurer principal; and (iv) other business activities approved by the insurance regulatory authority under the PRC State Council.
According to the Provisions on the Supervision and Administration of Insurance Agencies, an insurance agency may engage in the following insurance agency businesses: (i) sale of insurance products on behalf of the insurance companies; (ii) collection of insurance premium on behalf of the insurance companies; (iii) conducting loss surveys and handling claims of insurance businesses on behalf of the insurer principal; and (iv) other business activities approved by the insurance regulatory authority under the PRC State Council.
Bulletin 7 does not apply to transactions of sale of shares by investors through a public stock exchange where such shares are acquired on a public stock exchange.
Bulletin 7 does not apply to sale of shares by investors through a public stock exchange where such shares are acquired on a public stock exchange.
The Regulatory Measures also sets forth specific operation and management requirements in relation to an insurance institution, including, among others, (i) an insurance institution shall adopt effective technical methods to verify the authenticity of each policyholder’s identity information, and completely record and keep the main internet insurance business process; (ii) an insurance institution shall complete practice registration for their personnel, and shall identify their qualification to engage in internet insurance business for public inquiry; (iii) the relevant fees paid by insurance companies to insurance intermediary service providers shall not be settled in cash; (iv) an insurance institution shall assume the primary responsibility for the protection of customer information, and shall collect, process and use personal information following the principles of legality, legitimacy and necessity, and ensure the security and legality of the collection, processing and use of information; and (v) an insurance institution shall make several internal operation plans and protocols, for example, an emergency response plan for the interruption of internet insurance business operation, an internal control protocol for anti-money laundering, a customer due diligence protocol, a protocol for keeping customer identity data and transaction records, a protocol for the reporting of large-value transactions and suspicious transactions and an anti-fraud protocol. 82 Table of Contents The Regulatory Measures sets out a ramp-up process allowing the insurance institutions to achieve full compliance in phases until February 1, 2022.
The Regulatory Measures for Online Insurance Business also set forth specific operation and management requirements in relation to an insurance institution, including, among others, (i) an insurance institution shall adopt effective technical methods to verify the authenticity of each policyholder’s identity information, and completely record and keep the main internet insurance business process; (ii) an insurance institution shall complete practice registration for their personnel, and shall identify their qualification to engage in internet insurance business for public inquiry; (iii) the fees paid by insurance companies to insurance intermediary service providers shall not be settled in cash; (iv) an insurance institution shall assume the primary responsibility for the protection of customer information, and shall collect, process and use personal information following the principles of legality, legitimacy and necessity, and ensure the security and legality of the collection, processing and use of information; and (v) an insurance institution shall make several internal operation plans and protocols, for example, an emergency response plan for the interruption of internet insurance business operation, an internal control protocol for anti-money laundering, a customer due diligence protocol, a protocol for keeping customer identity data and transaction records, a protocol for the reporting of large-value transactions and suspicious transactions and an anti-fraud protocol. 90 Table of Contents The Regulatory Measures for Online Insurance Business set out a ramp-up process allowing the insurance institutions to achieve full compliance in phases until February 1, 2022.
This circular further requires that: (i) PRC domestic telecommunications business enterprises must not lease, transfer or sell a telecommunications businesses operation license to a foreign investor through any form of transaction or provide resources, offices and working places, facilities or other assistance to support the illegal telecommunications services operations of a foreign investor; (ii) value-added telecommunications enterprises or their shareholders must directly own the domain names and trademarks used by such enterprises in their daily operations; (iii) each value-added telecommunications enterprise must have the necessary facilities for its approved business operations and maintain such facilities in the regions covered by its license; and (iv) all providers of value-added telecommunications services are required to maintain network and internet security in accordance with the standards set forth in relevant PRC regulations.
This circular further requires that: (i) domestic telecommunications business enterprises in mainland China must not lease, transfer or sell a telecommunications businesses operation license to a foreign investor through any form of transaction or provide resources, offices and working places, facilities or other assistance to support the illegal telecommunications services operations of a foreign investor; (ii) value-added telecommunications enterprises or their shareholders must directly own the domain names and trademarks used by such enterprises in their daily operations; (iii) each value-added telecommunications enterprise must have the necessary facilities for its approved business operations and maintain such facilities in the regions covered by its license; and (iv) all providers of value-added telecommunications services are required to maintain network and internet security in accordance with the standards set forth in the regulations in mainland China.
To comply with PRC laws and regulations, we conduct certain of our business in China through Zhuiqiu Jizhi, Shuidi Hubao, Shuidi Hulian, Zongqing Xiangqian and Guangmu Weichen, the variable interest entities in the PRC, based on a series of contractual arrangements by and among Waterdrop Technology, the VIEs and their shareholders.
To comply with laws and regulations in mainland China, we conduct certain of our business in China through Zhuiqiu Jizhi, Shuidi Hubao, Shuidi Hulian, Zongqing Xiangqian and Guangmu Weichen, the variable interest entities in mainland China, based on a series of contractual arrangements by and among Waterdrop Technology, the VIEs and their shareholders.
On December 3, 2021, the General Office of the CBIRC issued the Circular on Clarifying Relevant Measures on Open up of Insurance Agency Markets, which provides that qualified foreign insurance brokerage companies with actual operation experience are allowed to set up insurance brokerage companies in China to conduct insurance brokerage business, and the following qualification requirements for the foreign investor of an insurance brokerage company are abolished (i) the foreign investor shall have engaged in insurance brokerage business for more than thirty years within the territories of World Trade Organization members; (ii) the foreign investor shall have established its representative office in China for two consecutive years; and (iii) the total assets of the foreign investor shall be no less than US$200 million as of the end of the year prior to its application.
On December 3, 2021, the General Office of the China Banking and Insurance Regulatory Commission issued the Circular on Clarifying Relevant Measures on Open up of Insurance Agency Markets, which provides that qualified foreign insurance brokerage companies with actual operation experience are allowed to set up insurance brokerage companies in China to conduct insurance brokerage business, and the following qualification requirements for the foreign investor of an insurance brokerage company are abolished (i) the foreign investor shall have engaged in insurance brokerage business for more than thirty years within the territories of World Trade Organization members; (ii) the foreign investor shall have established its representative office in China for two consecutive years; and (iii) the total assets of the foreign investor shall be no less than US$200 million as of the end of the year prior to its application.
The measures are aimed to regulate the processing activities of data in the field of industry and information technology field conducted by relevant data processors in China.
The measures are aimed to regulate the processing activities of data in the field of industry and information technology field conducted by data processors in China.
On December 6, 2007, the PRC State Council enacted the Regulations for the Implementation of the Enterprise Income Tax Law, which became effective on January 1, 2008 and was amended on April 23, 2019. Under the Enterprise Income Tax Law and the relevant implementing regulations, both resident enterprises and non-resident enterprises are subject to tax in China.
On December 6, 2007, the PRC State Council enacted the Regulations for the Implementation of the Enterprise Income Tax Law, which became effective on January 1, 2008 and was amended on April 23, 2019. Under the PRC Enterprise Income Tax Law and its implementing regulations, both resident enterprises and non-resident enterprises are subject to tax in China.
The CBIRC Notice 87 provides, among others, the insurance companies shall (i) conduct comprehensive investigations on their Internet insurance business since 2020, and find out the weak links and violations in the Internet insurance business; (ii) clarify responsibility of business department and management and strictly implement rules on accountability for relevant responsible personnel; and (iii) strengthen internal control and compliance management, including without limitation, establish and improve the Internet insurance operation mechanism and compliance management system, regularly assess the security and effectiveness of the information system, and ensure compliance throughout the process of the Internet insurance business operation.
The notice provides, among others, the insurance companies shall (i) conduct comprehensive investigations on their Internet insurance business since 2020, and find out the weak links and violations in the Internet insurance business; (ii) clarify responsibility of business department and management and strictly implement rules on accountability for responsible personnel; and (iii) strengthen internal control and compliance management, including without limitation, establish and improve the Internet insurance operation mechanism and compliance management system, regularly assess the security and effectiveness of the information system, and ensure compliance throughout the process of the Internet insurance business operation.
These China-based companies shall obtain the approvals from relevant authorities and file with the competent confidential administration authorities when providing or publicly filing documents and materials related to state secrets or secrets of the government authorities to the relevant securities companies, securities service agencies or the offshore regulatory authorities, or providing or publicly filing such documents and materials through its offshore listing entity.
These China-based companies shall obtain the approvals from competent authorities and file with the competent confidential administration authorities when providing or publicly filing documents and materials related to state secrets or secrets of the governmental authorities to relevant securities companies, securities service agencies or the offshore regulatory authorities, or providing or publicly filing such documents and materials through its offshore listing entity.
Once insurance claims are substantiated with documentation and reports are completed via our platforms, relevant data could be fetched through our proprietary core system and adjustment system. The intelligent system then analyzes claim information, medical record, and treatment data to model and grade the claim, and generating a health score.
Once insurance claims are substantiated with documentation and reports are completed via our platforms, relevant data would be fetched through our proprietary core system and adjustment system. The intelligent system then analyzes claim information, medical record, and treatment data to model and grade the claim, and generating a health score.
We apply Light GBM (gradient boosted machine)-based machine learning to predict settlement outcome, and use access rules to preliminarily screen out users not meeting application conditions first. The remaining users are then rated for settlement projections according to user profiling based on our machine learning model.
We apply Light GBM (gradient boosted machine)-based machine learning to predict settlement outcome, and use access rules to preliminarily screen out users not satisfying application conditions first. The remaining users are then rated for settlement projections according to user profiling based on our machine learning model.
In particular, data processors processing important data and core data are required to complete filing with relevant authorities for the catalogue of important data and core data.
In particular, data processors processing important data and core data are required to complete filing with the authorities for the catalogue of important data and core data.
The third party internet platform must be filed with the Insurance Association of China before conducting life insurance publicity activities. The fees paid by insurance companies or insurance intermediaries to such third party platforms shall be true and reasonable and shall not be linked to premium income or sales assessment indicators.
The third party internet platform must be filed with the Insurance Association of China before conducting life insurance publicity activities. The fees paid by insurance companies or insurance intermediaries to such third party platforms shall be true and reasonable and shall not be associated with premium income or sales assessment indicators.
The measures apply to industrial enterprises, software and information technology service companies, and companies holding licenses for operation of telecommunication services that independently determine the purposes and methods of data processing in the course of data processing activities. Data processing activities include, among others, the collection, storage, use, processing, transmission, provision, and disclosure of data.
The measures apply to industrial enterprises, software and information technology service companies, and companies holding licenses for operation of telecommunication services that independently determine the purposes and methods of data processing during the course of data processing activities. Data processing activities include, among others, the collection, storage, use, processing, transmission, provision, and disclosure of data.
These measures require the data processor providing data overseas to apply for the security assessment of cross-border transfer of data with the local provincial-level counterparts of the national cybersecurity authority under any of the following circumstances: (i) where the data processor intends to provide important data overseas; (ii) where a critical information infrastructure operator and a data processor who has processed personal information of more than 1,000,000 individuals intends to provide personal information overseas; (iii) where a data processor who has provided personal information of 100,000 individuals or sensitive personal information of 10,000 individuals to overseas recipients, in each case as calculated cumulatively, since January 1 of the last year intends to provide personal information overseas; or (iv) other circumstances where the security assessment of data cross-border transfer is required as prescribed by the CAC.
These measures require the data processor providing data overseas to apply for the security assessment of cross-border transfer of data with the local provincial-level counterparts of the national cybersecurity authority under any of the following circumstances: (i) where the data processor intends to provide important data overseas; (ii) where a critical information infrastructure operator and a data processor who has processed personal information of more than 1,000,000 individuals intends to provide personal information overseas; (iii) where a data processor who has provided personal information of 100,000 individuals or sensitive personal information of 10,000 individuals to overseas recipients, in each case as calculated cumulatively, since January 1 of the last year intends to provide personal information overseas; or (iv) other circumstances where the security assessment of data cross-border transfer is required as prescribed by the Cyberspace Administration of China.
In addition, the Foreign Investment Law also provides several protective rules and principles for foreign investors and their investments in the PRC, including, among others, (i) that local governments shall abide by their commitments to the foreign investors; (ii) FIEs are allowed to issue stocks and corporate bonds; except for special circumstances, in which case statutory procedures shall be followed and fair and reasonable compensation shall be made in a timely manner, expropriation or requisition of the investment of foreign investors is prohibited; (iii) mandatory technology transfer is prohibited; and (iv) the capital contributions, profits, capital gains, proceeds out of asset disposal, licensing fees of intellectual property rights, indemnity or compensation legally obtained, or proceeds received upon settlement by foreign investors within the PRC, may be freely remitted inward and outward in Renminbi or a foreign currency.
In addition, the PRC Foreign Investment Law also provides several protective rules and principles for foreign investors and their investments in mainland China, including, among others, (i) that local governments shall abide by their commitments to the foreign investors; (ii) foreign-invested enterprises are allowed to issue stocks and corporate bonds; except for special circumstances, in which case statutory procedures shall be followed and fair and reasonable compensation shall be made in a timely manner, expropriation or requisition of the investment of foreign investors is prohibited; (iii) mandatory technology transfer is prohibited; and (iv) the capital contributions, profits, capital gains, proceeds out of asset disposal, licensing fees of intellectual property rights, indemnity or compensation legally obtained, or proceeds received upon settlement by foreign investors within mainland China, may be freely remitted inward and outward in Renminbi or a foreign currency.
In addition, the CBIRC Circular 108 provides the upper limit for the predetermined fee rate and average supplemental fee rate for certain insurance products.
In addition, the Circular 108 provides the upper limit for the predetermined fee rate and average supplemental fee rate for certain insurance products.
The Administrative Measures for the Services of Public Crowdfunding Platform also provides certain requirements for public charity crowdfunding platform service providers, including: (i) public charity crowdfunding platform service providers shall inspect the charity organizations’ registration certificates and public charity crowdfunding permits; (ii) public charity crowdfunding platform service providers shall not accept donations on behalf of charity organizations; (iii) an agreement shall be entered into by and between parties involved in the public charity crowdfunding platform service to clarify each party’s rights and obligations regarding the truthfulness and other aspects of the public charity crowdfunding; (iv) public charity crowdfunding platform service providers shall promptly report to the MCA if violation of laws or regulations by charity organizations is discovered; and (v) public charity crowdfunding platform service providers shall record and preserve copies of charity organizations’ registration certificates and public charity crowdfunding permits, as well as relevant information published by charity organizations on the platform.
The Administrative Measures for the Services of Public Crowdfunding Platform also provides certain requirements for public charity crowdfunding platform service providers, including: (i) public charity crowdfunding platform service providers shall inspect the charity organizations’ registration certificates and public charity crowdfunding permits; (ii) public charity crowdfunding platform service providers shall not accept donations on behalf of charity organizations; (iii) an agreement shall be entered into by and between parties involved in the public charity crowdfunding platform service to clarify each party’s rights and obligations regarding the truthfulness and other aspects of the public charity crowdfunding; (iv) public charity crowdfunding platform service providers shall promptly report to the Ministry of Civil Affairs if violation of laws or regulations by charity organizations is discovered; and (v) public charity crowdfunding platform service providers shall record and preserve copies of charity organizations’ registration certificates and public charity crowdfunding permits, as well as relevant information published by charity organizations on the platform.
A patent is valid for twenty years in the case of an invention and ten years in the case of utility models and designs.
A patent is valid for twenty years in the case of an invention, ten years in the case of utility models and fifteen years in the case of designs.
Pursuant to the Arrangement Between the Mainland of China and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital, and other applicable PRC laws, if a Hong Kong resident enterprise is determined by the competent PRC tax authority to have met the relevant conditions and requirements under this arrangement and other applicable laws, the 10% withholding tax on the dividends the Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5%.
Pursuant to the Arrangement Between the Mainland of China and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital, and other applicable laws in mainland China, if a Hong Kong resident enterprise is determined by the competent tax authority in mainland China to have met the conditions and requirements under this arrangement and other applicable laws, the 10% withholding tax on the dividends the Hong Kong resident enterprise receives from a mainland China resident enterprise may be reduced to 5%.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Financing activities Net cash used in financing activities in 2022 was RMB57.5 million (US$8.3 million), consisting primarily of the payment in connection with the share repurchase program. Net cash provided by financing activities in 2021 was RMB2,119.7 million, consisting primarily of net proceeds from our IPO, partially offset by the payment of share repurchase program.
Net cash used in financing activities in 2022 was RMB57.5 million (US$8.3 million), consisting primarily of the payment in connection with the share repurchase program. Net cash provided by financing activities in 2021 was RMB2,119.7 million, consisting primarily of net proceeds from our IPO, partially offset by the payment of share repurchase program.
Operating costs primarily consists of (i) payroll and related expenses for insurance agents and customer service personnel, (ii) transaction fees charged by third-party payment platforms relating to insurance brokerage services, (iii) costs for medical expenses and one-year health insurance coverage we offered related to termination of the Waterdrop Mutual Aid business in March 2021, (iv) charges for the usage of the server and cloud service incurred for operational support of the platforms, and the expenses of facilities and equipment, such as depreciation expenses, rental and others, attributed to our principal operations, (v) costs for patient recruitment consultants team, and (vi) costs for the crowdfunding consultants team and cost related to the information review and investigation of medical crowdfunding campaigns as we started to generate revenue from crowdfunding service fees since April 2022.
Operating costs primarily consists of (i) payroll and related expenses for insurance agents and customer service personnel, (ii) transaction fees charged by third-party payment platforms relating to insurance brokerage services, (iii) costs of referral and service fees, (iv) charges for the usage of the server and cloud service incurred for operational support of the platforms, and the expenses of facilities and equipment, such as depreciation expenses, rental and others, attributed to our principal operations, (v) costs for patient recruitment consultants team, (vi) costs for the crowdfunding consultants team and cost related to the information review and investigation of medical crowdfunding campaigns as we started to generate revenue from crowdfunding service fees since April 2022, and (vii) costs for medical expenses and one-year health insurance coverage we offered related to termination of the Waterdrop Mutual Aid business in March 2021.
The impact of an uncertain income tax position is recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained.
The impact of an uncertain income tax position is recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the tax authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained.
The difference between the net profit of RMB607.7 million (US$88.1 million) and positive operating cash flow of RMB765.7 million was non-cash expenses items such as share-based compensation expenses of RMB112.0 million, and depreciation of property, equipment and software of RMB22.8 million, and changes in working capital accounts, which mainly include (i) RMB168.4 million decrease in insurance premium payables, (ii) RMB42.8 million increase in accounts receivable, partially offset by (i) RMB85.1 million decrease in prepaid expense and other assets, (ii) RMB85.0 million increase in accrued expenses and other current liabilities, and (iii) RMB39.8 million decrease in contract assets.
The difference between the net profit of RMB607.7 million and positive operating cash flow of RMB765.7 million was non-cash expenses items such as share-based compensation expenses of RMB112.0 million, and depreciation of property, equipment and software of RMB22.8 million, and changes in working capital accounts, which mainly include (i) RMB168.4 million decrease in insurance premium payables, (ii) RMB42.8 million increase in accounts receivable, partially offset by (i) RMB85.1 million decrease in prepaid expense and other assets, (ii) RMB85.0 million increase in accrued expenses and other current liabilities, and (iii) RMB39.8 million decrease in contract assets.
Operating costs Our operating costs decreased by 3.3% from RMB1,054.5 million in 2021 to RMB1,019.4 million (US$147.8 million) in 2022, which was mainly due to RMB219.9 million decrease in personnel cost for our insurance consultants and insurance agents team, partially offset by an increase of RMB181.8 million, mainly because we recorded the costs in relation to the crowdfunding consultants team as operating costs rather than sales and marketing expense, as we started to charge crowdfunding service fees and record net operating revenue from crowdfunding service since April 2022.
Operating costs Our operating costs decreased by 3.3% from RMB1,054.5 million in 2021 to RMB1,019.4 million in 2022, which was mainly due to RMB219.9 million decrease in personnel cost for our insurance consultants and insurance agents team, partially offset by an increase of RMB181.8 million, mainly because we recorded the costs in relation to the crowdfunding consultants team as operating costs rather than sales and marketing expense, as we started to charge crowdfunding service fees and record net operating revenue from crowdfunding service since April 2022.
The presumption may be overcome if we have sufficient evidence to demonstrate that the undistributed dividends will be re-invested and the remittance of the dividends will be postponed indefinitely. We did not record any deferred tax liabilities for dividend withholding tax, as we have no retained earnings for the years ended December 31, 2020, 2021 and 2022. See “Item 3.
The presumption may be overcome if we have sufficient evidence to demonstrate that the undistributed dividends will be re-invested and the remittance of the dividends will be postponed indefinitely. We did not record any deferred tax liabilities for dividend withholding tax, as we have no retained earnings for the years ended December 31, 2021, 2022 and 2023. See “Item 3.
Sales and marketing expenses Our sales and marketing expenses decreased by 79.9% from RMB3,104.8 million in 2021 to RMB624.5 million (US$90.5 million) in 2022, which was mainly due to (i) RMB2,112.5 million decrease in marketing expenses to third-party traffic channels as part of our cost control measures, and (ii) RMB358.2 million decrease in outsourced sales and marketing service fee to third parties.
Sales and marketing expenses Our sales and marketing expenses decreased by 79.9% from RMB3,104.8 million in 2021 to RMB624.5 million in 2022, which was mainly due to (i) RMB2,112.5 million decrease in marketing expenses to third-party traffic channels as part of our cost control measures, and (ii) RMB358.2 million decrease in outsourced sales and marketing service fee to third parties.
Other than as discussed above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of December 31, 2022. Holding Company Structure Our Company, Waterdrop Inc., is a holding company with no material operations of its own. We conduct our operations primarily through our WFOE and the VIEs.
Other than as discussed above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of December 31, 2023. Holding Company Structure Waterdrop Inc. is a holding company with no material operations of its own. We conduct our operations primarily through our WFOE and the VIEs.
The first HK$2 million of profits earned by HK entity will be taxed at 8.25%, while the remaining profits will continue to be taxed at the existing 16.5% tax rate. In addition, to avoid abuse of the two-tiered tax regime, each group of connected entities can nominate only one entity to benefit from the two-tiered tax rate.
The first HK$2 million of profits earned by HK entity is be taxed at 8.25%, while the remaining profits continue to be subject to the existing 16.5% tax rate. In addition, to avoid abuse of the two-tiered tax regime, each group of connected entities can nominate only one entity to benefit from the two-tiered tax rate.
According to the arrangement between the mainland China and Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion in August 2006, dividends paid by an FIE in China to its immediate holding company in Hong Kong will be subject to withholding tax at a rate of no more than 5% (if the foreign investor owns directly at least 25% of the shares of the FIE).
According to the arrangement between the mainland China and Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion in August 2006, dividends paid by a foreign-invested enterprise in China to its immediate holding company in Hong Kong will be subject to withholding tax at a rate of no more than 5% (if the foreign investor owns directly at least 25% of the shares of the foreign-invested enterprise).
Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior SAFE approval as long as certain routine procedural requirements are fulfilled.
Under existing foreign exchange regulations in mainland China, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior SAFE approval as long as certain routine procedural requirements are fulfilled.
As a result, the ability of Waterdrop Inc. to pay dividends depends upon dividends paid by our WFOE. If our WFOE or any newly formed PRC subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us.
As a result, the ability of Waterdrop Inc. to pay dividends depends upon dividends paid by our WFOE. If our WFOE or any newly formed subsidiaries in mainland China incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us.
We may also be asked to refund some commission to insurance companies if the retention rate for a certain period falls below a predetermined percentage. The bonus or the refund is contingent on the occurrence (or non-occurrence) of a future event. Technical service income.
We may also be asked to refund some commission to insurance companies if the retention rate for a certain period falls below a predetermined percentage. The bonus or the refund is contingent on the occurrence (or non-occurrence) of a future event.
In addition, our WFOE may allocate a portion of its after-tax profits based on PRC accounting standards to enterprise expansion funds and staff bonus and welfare funds at its discretion, and the VIEs may allocate a portion of their after-tax profits based on PRC accounting standards to a discretionary surplus fund at its discretion.
In addition, our WFOE may allocate a portion of its after-tax profits based on the accounting standards in mainland China to enterprise expansion funds and staff bonus and welfare funds at its discretion, and the VIEs may allocate a portion of their after-tax profits based on the accounting standards in mainland China to a discretionary surplus fund at its discretion.
Our significant estimates include estimating commissions that we are entitled over the premium collection term, policyholder behavior and market conditions. They require subjective management judgment and any changes in those estimates may cause us to realize different amount of revenues in the future periods.
Our significant estimates include estimating commissions to which we are entitled over the premium collection term, policyholder behavior and market conditions. They require subjective management judgment and any changes in those estimates may cause us to realize different amounts of revenues in the future periods.
Risk Factors—Risks Related to Doing Business in China—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders and ADS holders.” The EIT Law also imposes a withholding income tax of 10% on dividends distributed by a FIE to its immediate holding company outside of China, if such immediate holding company is considered as a non-resident enterprise without any establishment or place within China or if the received dividends have no connection with the establishment or place of such immediate holding company within China, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement.
Risk Factors—Risks Related to Doing Business in China—If we are classified as a mainland China resident enterprise for mainland China income tax purposes, such classification could result in unfavorable tax consequences to us and our non-mainland China shareholders and ADS holders.” 115 Table of Contents The PRC Enterprise Income Tax Law also imposes a withholding income tax of 10% on dividends distributed by a foreign-invested enterprise to its immediate holding company outside of China, if such immediate holding company is considered as a non-resident enterprise without any establishment or place within China or if the received dividends have no connection with the establishment or place of such immediate holding company within China, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement.
You should read the following description of critical accounting policies, judgments and estimates in conjunction with our consolidated financial statements and other disclosures included in this annual report. 110 Table of Contents Revenue Recognition For insurance brokerage service, our performance obligation to the insurance carrier is satisfied and commission revenue is recognized at the point in time when an insurance policy becomes effective.
You should read the following description of critical accounting estimates in conjunction with our consolidated financial statements and other disclosures included in this annual report. Revenue Recognition For insurance brokerage service, our performance obligation to the insurance carrier is satisfied and commission revenue is recognized at the point in time when an insurance policy becomes effective.
Critical Accounting Estimates For our critical accounting estimates, see “Item 5. Operating and Financial Review and Prospects—Critical Accounting Policies, Judgments and Estimates.” F. Safe Harbor See “Forward-Looking Information” on page 2 of this annual report.
E. Critical Accounting Estimates For our critical accounting estimates, see “Item 5. Operating and Financial Review and Prospects—Critical Accounting Estimates.” F. Safe Harbor See “Forward-Looking Information” on page 2 of this annual report.
We see the internal source of consumer traffic as an important consumer acquisition resource to us, and in addition we consider this cohort of consumers with stronger awareness of insurance protection and stronger interest in the content and product offerings on our platforms, and more loyal to our services.
We see the internal source of traffic as an important user acquisition resource to us, and in addition we consider this cohort of users with stronger awareness of insurance protection and stronger interest in the content and product offerings on our platforms, and more loyal to our services.
Under PRC law, each of our WFOE and the VIEs is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital.
Under the law in mainland China, each of our WFOE and the VIEs is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital.
If the PRC tax authorities subsequently determine that our Company and our subsidiaries registered outside the PRC should be deemed resident enterprises, our Company and our subsidiaries registered outside the PRC will be subject to the PRC income tax, at a rate of 25%. See “Item 3. Key Information—D.
If the tax authorities in mainland China subsequently determine that our company and our subsidiaries registered outside mainland China should be deemed resident enterprises, our company and our subsidiaries registered outside mainland China will be subject to the mainland China income tax, at a rate of 25%. See “Item 3. Key Information—D.
In accordance with accounting guidance, all undistributed earnings are presumed to be transferred to the parent company thereby resulting in deferred tax liabilities to account for future withholding taxes. All FIEs are subject to the withholding tax from January 1, 2008.
In accordance with accounting guidance, all undistributed earnings are presumed to be transferred to the parent company thereby resulting in deferred tax liabilities to account for future withholding taxes. All foreign-invested enterprises are subject to the withholding tax from January 1, 2008.
Despite the present uncertainties resulting from the limited PRC tax guidance on the issue, we do not believe that our entities organized outside of the PRC should be treated as resident enterprises for the PRC income tax purposes.
Despite the present uncertainties resulting from the limited tax guidance on the issue in mainland China, we do not believe that our entities organized outside of the mainland China should be treated as resident enterprises for the mainland China income tax purposes.
Our accrued expenses and other current liabilities were RMB595.6 million, RMB498.8 million and RMB584.1 million (US$84.7 million) as of December 31, 2020, 2021 and 2022, respectively. Although we consolidate the results of the VIEs, we only have access to the assets or earnings of the VIEs through our contractual arrangements with the VIEs and their shareholders. See “Item 4.
Our accrued expenses and other current liabilities were RMB498.8 million, RMB584.1 million and RMB597.7 million (US$84.2 million) as of December 31, 2021, 2022 and 2023, respectively. Although we consolidate the results of the VIEs, we only have access to the assets or earnings of the VIEs through our contractual arrangements with the VIEs and their shareholders. See “Item 4.
In addition, our WFOE is permitted to pay dividends to us only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations.
In addition, our WFOE is permitted to pay dividends to us only out of its retained earnings, if any, as determined in accordance with the accounting standards and regulations in mainland China.
As of December 31, 2020, 2021 and 2022, our prepaid expense and other assets were RMB651.1 million, RMB369.8 million and RMB342.5 million (US$49.7 million), respectively. Insurance premium payables represent insurance premiums we collected on behalf of insurance carriers from the insurance consumers but have not yet been remitted to insurance carriers as of the balance sheet dates.
As of December 31, 2021, 2022 and 2023, our prepaid expense and other assets were RMB369.8 million, RMB342.5 million and RMB189.8 million (US$26.7 million), respectively. Insurance premium payables represent insurance premiums we collected on behalf of insurance carriers from the insurance consumers but have not yet been remitted to insurance carriers as of the balance sheet dates.
Our PRC subsidiary 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.
While our business is influenced by general factors affecting our industry, our results of operations are more directly affected by company-specific factors, including the following major ones: Expansion and retention of consumer base Brokerage income earned from insurance carriers through our Waterdrop Insurance Marketplace is the main source of our revenue, which is significantly affected by the number of insurance consumers on the Waterdrop Insurance Marketplace. 101 Table of Contents Our insurance consumers come from both internal and external sources.
While our business is influenced by general factors affecting our industry, our results of operations are more directly affected by company-specific factors, including the following major ones: 110 Table of Contents Expansion and retention of consumer base Brokerage income earned from insurance carriers through our insurance marketplace is the main source of our revenue, which is significantly affected by the number of insurance consumers on the Waterdrop Insurance Marketplace and Shenlanbao Insurance Marketplace.
The implementation rules to the EIT Law provide that non-resident legal entities will be considered as PRC resident enterprises if substantial and overall management and control over the manufacturing and business operations, personnel, accounting, properties, etc., occurs within the PRC.
The implementation rules to the PRC Enterprise Income Tax Law provide that non-resident legal entities will be considered as mainland China resident enterprises if substantial and overall management and control over the manufacturing and business operations, personnel, accounting, properties, etc., occurs within mainland China.
This may delay us from using the proceeds from financing activities to make loans or capital contributions to our PRC subsidiaries. We expect to invest substantially all of the proceeds from financing activities into our PRC operations for general corporate purposes within the business scopes of our PRC subsidiaries and the VIEs. See “Item 3. Key Information—D.
This may delay us from using the proceeds from financing activities to make loans or capital contributions to our subsidiaries in mainland China. We expect to invest substantially all of the proceeds from financing activities into our operations in China for general corporate purposes within the business scopes of our subsidiaries in mainland China and the VIEs. See “Item 3.
Information on the Company—C. Organizational Structure.” For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see “—Holding Company Structure.” Substantially all of our operating revenue have been, and we expect they are likely to continue to be, in the form of Renminbi.
Information on the Company—C. Organizational Structure.” For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see “—Holding Company Structure.” Substantially all of our operating revenue has been, and we expect that it is likely to continue to be, in the form of Renminbi.
Our research and development expenses mainly consist of (i) payroll and related expenses for employees involved in platform and new function development and significant improvement, and (ii) charges for the usage of the server and cloud service incurred to support research, design, and development activities by research and development personnel, as well as the associated expenses of facilities and equipment, such as depreciation expenses, rental and others. 105 Table of Contents Taxation Cayman Islands The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or estate duty.
Our research and development expenses mainly consist of (i) payroll and related expenses for employees involved in platform and new function development and significant improvement, and (ii) charges for the usage of the server and cloud service incurred to support research, design, and development activities by research and development personnel, as well as (iii) expenses of facilities and equipment, such as depreciation expenses, rental and others. 114 Table of Contents Taxation Cayman Islands The Cayman Islands currently levies no taxes on corporations based upon profits, income, gains or appreciations.
Our restricted cash was RMB261.4 million, RMB667.7 million and RMB517.4 million (US$75.0 million) as of December 31, 2020, 2021 and 2022, respectively. Our restricted cash primarily consists of premiums collected by us from the insurance consumers in a fiduciary capacity until disbursed to the insurance carriers. Restricted cash also includes guarantee deposits.
Our restricted cash was RMB667.7 million, RMB517.4 million and RMB577.1 million (US$81.3 million) as of December 31, 2021, 2022 and 2023, respectively. Our restricted cash primarily consists of premiums collected by us from the insurance consumers in a fiduciary capacity until disbursed to the insurance carriers. Restricted cash also includes guarantee deposits.
General and administrative expenses Our general and administrative expenses decreased by 26.7% from RMB530.5 million in 2021 to RMB388.7 million (US$56.4 million) in 2022, which was mainly due to (i) a decrease of RMB109.8 million in share-based compensation expenses, (ii) a RMB21.2 million decrease in personnel cost, both of which were as a result of our cost control measures, and (iii) a decrease of RMB39.0 million impairment loss over prepayment for the year of 2021, and partially offset by an increase of RMB23.5 million allowance for doubtful accounts for the year of 2022. 108 Table of Contents Research and development expenses Our research and development expenses decreased by 23.1% from RMB379.0 million in 2021 to RMB291.3 million (US$42.2 million) in 2022.
General and administrative expenses Our general and administrative expenses decreased by 26.7% from RMB530.5 million in 2021 to RMB388.7 million in 2022, which was mainly due to (i) a decrease of RMB109.8 million in share-based compensation expenses, (ii) a RMB21.2 million decrease in personnel cost, both of which were as a result of our cost control measures, and (iii) a decrease of RMB39.0 million impairment loss over prepayment for the year of 2021, and partially offset by an increase of RMB23.5 million allowance for doubtful accounts for the year of 2022.
We pay guarantee deposit required by China Banking and Insurance Regulatory Commission in order to protect insurance premium appropriation by insurance broker and agency. Furthermore, guarantee deposit for foreign exchange settlement was paid in 2020 to a commercial bank in order to carry out foreign exchange settlement.
We pay guarantee deposits required by National Financial Regulatory Administration in order to protect insurance premium appropriation by insurance broker and agency. Furthermore, a guarantee deposit for foreign exchange settlement was paid in 2020 to a commercial bank in order to carry out foreign exchange settlement.
In terms of internal source, our medical crowdfunding operation direct substantial traffic to our insurance marketplace. Historically, our mutual aid operation also directed traffic to our insurance marketplace. Moreover, existing consumers attracted to our Waterdrop Insurance Marketplace also constituted an internal source of consumers and contributed to our business growth.
Our insurance consumers come from both internal and external sources. In terms of internal source, our medical crowdfunding operation direct substantial traffic to our insurance marketplace. Historically, our mutual aid operation also directed traffic to our insurance marketplace. Moreover, existing consumers also constituted an internal source of consumers and contributed to our business growth.
We derive technical service income primarily from providing technical services to certain insurance brokerage or agency companies through our CRM system. We also provide marketing services to certain companies on our various website channels and apps. In addition, we provide risk management services to certain insurance companies.
In addition, in terms of the technical support service, we primarily provide technical services to certain insurance brokerage or agency companies through our CRM system. We also provide marketing services to certain companies on our various website channels and apps. In addition, we provide risk management services to certain insurance companies.
As of December 31, 2020, 2021 and 2022, our contract assets were RMB848.6 million, RMB593.5 million and RMB553.7 million (US$80.3 million), respectively.
As of December 31, 2021, 2022 and 2023, our contract assets were RMB593.5 million, RMB553.7 million and RMB707.3 million (US$99.6 million), respectively.
There are no other taxes likely to be material to the Company levied by the Government of the Cayman Islands save certain stamp duties which may be applicable, from time to time, on certain instruments executed in or brought within the jurisdiction of the Cayman Islands. In addition, the Cayman Islands does not impose withholding tax on dividend payments.
There are no other taxes likely to be material to us levied by the Government of the Cayman Islands save certain stamp duties which may be applicable, from time to time, on certain instruments executed in or brought within the jurisdiction of the Cayman Islands.
First year premium per consumer As the consumers’ awareness for health protection and insurance products in China were still substantially lower than in developed countries, many insurance consumers on our platform start with purchases of short-term products.
First year premium per consumer As the consumers’ awareness for health protection and insurance products in China were still substantially lower than in developed countries, many insurance consumers on our platform start with purchases of short-term products. The FYP per policy of short-term health insurance products generated through us grew from RMB528 in 2022 to RMB572 in 2023.
We began to offer long-term health and life insurance products at the end of 2018, and we have been endeavoring to raise consumer awareness, and demonstrate the value and importance of long-term health and life insurance through our interactions with them.
We began to offer long-term health and life insurance products at the end of 2018, and we have been endeavoring to raise consumer awareness, and demonstrate the value and importance of long-term health and life insurance through our interactions with them. The acquisition of Shenlanbao in 2023 also significantly expanded our product offerings and service capabilities.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2022 that are reasonably likely to have a material and adverse 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 results of operations or financial conditions. 115 Table of Contents E.
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 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.
Our accounts receivable represents primarily brokerage commission fee receivable from insurance carriers and technical service fees receivable from insurance carriers. As of December 31, 2020, 2021 and 2022, our accounts receivable were RMB539.8 million, RMB643.8 million and RMB675.8 million (US$98.0 million), respectively.
Our accounts receivable represents primarily brokerage commission fee receivable from insurance carriers and technical service fees receivable from insurance carriers. As of December 31, 2021, 2022 and 2023, our accounts receivable was RMB643.8 million, RMB675.8 million and RMB693.1 million (US$97.6 million), respectively.
The decrease was primarily due to RMB66.0 million decrease in research and development personnel costs. Interest income Our interest income increased substantially from RMB48.7 million in 2021 to RMB81.7 million (US$11.8 million) in 2022.
Research and development expenses Our research and development expenses decreased by 23.1% from RMB379.0 million in 2021 to RMB291.3 million in 2022. The decrease was primarily due to RMB66.0 million decrease in research and development personnel costs. Interest income Our interest income increased substantially from RMB48.7 million in 2021 to RMB81.7 million in 2022.
We derive brokerage income primarily from commission fees generated from distributing insurance products underwritten by insurance carriers through our Waterdrop Insurance Marketplace. The commission fees we are entitled to receive are based on a percentage of the premiums our insurance consumers pay insurance carriers. Commission fee rates generally depend on the type of insurance products and the particular insurance carriers.
Insurance. We derive insurance income primarily from commission fees generated from distributing insurance products underwritten by insurance carriers through our Waterdrop Insurance Marketplace and Shenlanbao Insurance Marketplace, and the technical support service we provide. On one hand, the commission fees we are entitled to receive are based on a percentage of the premiums our insurance consumers pay insurance carriers.
The long-term health and life insurance products accounted for 16.2% and 28.8% of the FYP generated through us in 2021 and 2022, respectively. The FYP per policy of long-term health and life insurance products increased from RMB4,181 in 2021 to RMB5,004 in 2022.
The FYP from long-term insurance products accounted for approximately 16.2% and 28.8% of the total FYP generated through us in 2021 and 2022. The FYP per policy of long-term insurance products increased from RMB4,181 in 2021 to RMB5,004 in 2022. The net operating revenue from crowdfunding business amounted to RMB155.8 million in 2022.
The changes in working capital accounts mainly include (i) RMB255.1 million decrease in contract assets, (ii) RMB254.8million decrease in prepaid expense and other asset, partially offset by (i) RMB213.1 million decrease in deferred tax liabilities, (ii) RMB104.1 million increase in accounts receivable, and (iii) RMB52.0 million decrease in accrued expenses and other current liabilities. 113 Table of Contents Specifically, the decrease in contract assets was primarily due to the downsize in the FYP generated through our platform in the fourth quarter of 2021.
The changes in working capital accounts mainly include (i) RMB255.1 million decrease in contract assets, (ii) RMB254.8million decrease in prepaid expense and other asset, partially offset by (i) RMB213.1 million decrease in deferred tax liabilities, (ii) RMB104.1 million increase in accounts receivable, and (iii) RMB52.0 million decrease in accrued expenses and other current liabilities.
Risk Factors—Risks Related to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies may delay us from using the proceeds of financing activities to make loans or additional capital contributions to our PRC subsidiaries and to make loans to the VIEs, which could materially and adversely affect our liquidity and our ability to fund and expand our business.” The following table sets forth the movements of our cash flows for the periods presented: For the Year Ended December 31, 2020 2021 2022 RMB RMB RMB US$ (in thousands) Selected Consolidated Cash Flow Data: Net cash (used in)/provided by operating activities (777,108 ) (1,096,652 ) 765,705 111,017 Net cash used in investing activities (1,217,701 ) (846,898 ) (139,819 ) (20,272 ) Net cash provided by/(used in) financing activities 2,050,890 2,119,670 (57,457 ) (8,330 ) Effect of exchange rate changes on cash and cash equivalents (26,884 ) (14,086 ) 37,723 5,469 Net increase in cash and cash equivalents and restricted cash 29,197 162,034 606,152 87,884 Total cash and cash equivalents and restricted cash at beginning of year 1,294,152 1,323,349 1,485,383 215,360 Total cash and cash equivalents and restricted cash at end of year 1,323,349 1,485,383 2,091,535 303,244 Operating activities Net cash provided by operating activities in 2022 was RMB765.7 million (US$111.0 million).
Risk Factors—Risks Related to Doing Business in China—Regulation in mainland China of loans to and direct investment in the entities in mainland China by offshore holding companies may delay us from using the proceeds of financing activities to make loans or additional capital contributions to our subsidiaries in mainland China and to make loans to the VIEs, which could materially and adversely affect our liquidity and our ability to fund and expand our business.” The following table sets forth the movements of our cash flows for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ ​ RMB ​ RMB ​ RMB ​ US$ ​ ​ (in thousands) Selected Consolidated Cash Flow Data: Net cash (used in)/provided by operating activities ​ (1,096,652) 765,705 406,516 57,258 Net cash used in investing activities ​ (846,898) (139,819) (1,172,960) (165,208) Net cash provided by/(used in) financing activities ​ 2,119,670 (57,457) (377,238) (53,133) Effect of exchange rate changes on cash and cash equivalents ​ (14,086) 37,723 26,173 3,685 Net increase/(decrease) in cash and cash equivalents and restricted cash ​ 162,034 606,152 (1,117,509) (157,398) Total cash and cash equivalents and restricted cash at beginning of year ​ 1,323,349 1,485,383 2,091,535 294,587 Total cash and cash equivalents and restricted cash at end of year ​ 1,485,383 2,091,535 974,026 137,189 ​ 122 Table of Contents Operating activities Net cash provided by operating activities in 2023 was RMB406.5 million (US$57.3 million).
Key Components of Results of Operations Operating revenue, net We generate net operating revenue primarily from (i) providing insurance brokerage services to insurance carriers, (ii) providing technical services to insurance carriers and other insurance brokerage or agency companies through our platforms, (iii) crowdfunding service fees from operating Waterdrop Medical Crowdfunding, and (iv) digital clinical trial solution income, mainly deriving from matching qualified and suitable patients for enrollment in clinical trials for biopharmaceutical companies and leading biotechnology companies, and (v) membership fees and management fees from operating the mutual aid plans prior to our discontinuation of the mutual aid business in March 2021.
Our research and development expenses as a percentage of net operating revenue increased from 10.4% in 2022 to 11.4% in 2023. ​ 112 Table of Contents Key Components of Results of Operations Operating revenue, net We generate net operating revenue primarily from (i) providing insurance brokerage services to insurance carriers, (ii) providing technical services to insurance carriers and other insurance brokerage or agency companies through our platforms, (iii) crowdfunding service fees from operating Waterdrop Medical Crowdfunding, and (iv) digital clinical trial solution income, mainly deriving from matching qualified and suitable patients for enrollment in clinical trials for biopharmaceutical companies and leading biotechnology companies.
Crowdfunding services primarily consist of providing technical and internet support, managing and reviewing the crowdfunding campaigns, and facilitating the collection and transfer of funds to the patients.
We are exploring to broaden our technical service offerings and diversify our technical service income sources. Crowdfunding. Crowdfunding services primarily consist of providing technical and internet support, managing and reviewing the crowdfunding campaigns, and facilitating the collection and transfer of funds to the patients.
The increase in deferred tax liabilities was primarily due to the increase in contract assets. Investing activities Net cash used in investing activities in 2022 was RMB139.8 million (US$20.3 million), consisting primarily of net cash prepaid for investments, and net cash used in purchase of short-term investment products.
Net cash used in investing activities in 2022 was RMB139.8 million, consisting primarily of net cash prepaid for investments, and net cash used in purchase of short-term investment products.
The following table sets forth the breakdown of our total operating costs and expenses, in amounts and as percentages of net operating revenue for each of the years presented: For the Year Ended December 31, 2020 2021 2022 RMB % RMB % RMB US$ % (in thousands, except for percentage data) Operating costs and expenses: Operating costs. 742,258 24.5 1,054,475 32.9 1,019,362 147,794 36.4 Sales and marketing expenses 2,130,535 70.4 3,104,769 96.8 624,478 90,541 22.3 General and administrative expenses 407,171 13.4 530,522 16.5 388,651 56,349 13.9 Research and development expenses 244,230 8.1 378,990 11.8 291,290 42,233 10.3 Total operating costs and expenses: 3,524,194 116.4 5,068,756 158.0 2,323,781 336,917 82.9 Operating costs.
The following table sets forth the breakdown of our total operating costs and expenses, in amounts and as percentages of net operating revenue for each of the years presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ RMB (%) RMB (%) RMB US$ (%) ​ ​ (in thousands, except for percentage data) Operating costs and expenses: Operating costs 1,054,475 32.9 1,019,362 36.4 1,195,544 168,389 45.5 Sales and marketing expenses 3,104,769 96.8 624,478 22.3 740,451 104,290 28.1 General and administrative expenses 530,522 16.5 388,651 13.9 402,395 56,676 15.3 Research and development expenses 378,990 11.8 291,290 10.3 299,060 42,122 11.4 Total operating costs and expenses: 5,068,756 158.0 2,323,781 82.9 2,637,450 371,477 100.3 ​ Operating costs.
Income Taxes Current income taxes are provided for in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the financial statements.
Income Taxes Current income taxes are provided for in accordance with the laws of the tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the financial statements. Net operating loss carry forwards and credits are applied using enacted statutory tax rates applicable to future years.
These efforts have helped diversify our consumer acquisition channels and expand consumer reach. Our consumer base experienced continued growth and diversification in the past three years. As of December 31, 2020, 2021 and 2022, the cumulative number of paying insurance consumers was approximately 19.2 million, 28.2 million and 30.1 million.
As a result, our consumer base experienced continued growth and diversification in the past three years. As of December 31, 2021, 2022 and 2023, the cumulative number of paying insurance consumers was approximately 28.2 million, 30.1 million and 32.3 million, respectively.
Net operating loss carry forwards and credits are applied using enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that a portion of or all of the deferred tax assets will not be realized.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that a portion of or all of the deferred tax assets will not be realized.
Our accrued expenses and other current liabilities represent primarily (i) accrued marketing and selling expenses, (ii) payroll and welfare payable, and (iii) payable related to medical crowdfunding business, which mainly represents the funds we collected through the third-party payment platforms that has not been transferred to custodian bank.
As of December 31, 2021, 2022 and 2023, our insurance premium payables were RMB685.0 million, RMB516.7 million and RMB592.0 million (US$83.4 million), respectively. 121 Table of Contents Our accrued expenses and other current liabilities represent primarily (i) accrued marketing and selling expenses, (ii) payroll and welfare payable, and (iii) payable related to medical crowdfunding business, which mainly represents the funds we collected through the third-party payment platforms that has not been transferred to custodian bank.
We derive digital clinical trial solution income primarily from matching qualified and suitable patients for enrollment in clinical trials for our customers that mainly include biopharmaceutical companies and leading biotechnology companies. We enter into patient recruitment contracts with these customers to match qualified patients with optimal suitability for enrollment in clinical trials.
Other revenues mainly include income generated from digital clinical trial solution and other new initiatives. We derive digital clinical trial solution income primarily from matching qualified and suitable patients for enrollment in clinical trials for our customers that mainly include biopharmaceutical companies and leading biotechnology companies.
The increase was mainly due to the increase in our bank balance and short-term investments as a result of the positive cash flow generated from our business operations.
The increase was mainly due to the increase in our bank balance and short-term investments as a result of the positive cash flow generated from our business operations. Net (loss)/profit As a result of the foregoing, our net profit for the year of 2022 was RMB607.7 million, compared to a net loss of RMB1,574.1 million for the year of 2021.
The increases in accounts receivable and contract assets were primarily due to the increase in our brokerage income as a result of the growth of our business scale.
Specifically, the decrease in contract assets was primarily due to the downsize in the FYP generated through our platform in the fourth quarter of 2021. The increases in accounts receivable was primarily due to the increase in our brokerage income as a result of the growth of our business scale in 2021.
Certain enterprises are qualified as “small enterprises with low profits” and thus enjoyed a preferential income tax rate of 20% for 2022. The EIT Law includes a provision specifying that legal entities organized outside of the PRC will be considered resident enterprises for the PRC income tax purposes if the place of effective management or control is within the PRC.
The PRC Enterprise Income Tax Law includes a provision specifying that legal entities organized outside of mainland China will be considered resident enterprises for the mainland China income tax purposes if the place of effective management or control is within mainland China.
We recorded net operating revenue from crowdfunding service fees of RMB155.8 million (US$22.6 million) in 2022. Since April 7, 2022, our crowdfunding platform has ceased to fully subsidize the related cost and started to charge a service fee of 3% of the funds raised, up to a maximum amount of RMB5,000 for a single campaign.
Since April 2022, our crowdfunding platform has ceased to fully subsidize the related cost and commenced charging a service fee of 3% of the funds raised, up to a maximum amount of RMB5,000 for a single campaign.
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 Operating revenue, net Our net operating revenue increased by 5.9% from RMB3,027.9 million for 2020 to RMB3,205.9 million in 2021, which was primarily due to the increase in net operating revenue from brokerage income and technical service income, partially offset by the decrease in net operating revenue from management fee income.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Operating revenue, net Our net operating revenue decreased by 12.6% from RMB3,205.9 million for 2021 to RMB2,801.8 million in 2022, which was primarily due to the decrease in net operating revenue from insurance income, partially offset by the increase in net operating revenue from crowdfunding income and other income.
The increases in accounts receivable was primarily due to the increase in our brokerage income as a result of the growth of our business scale in 2021. The decrease in prepaid expense and other assets was primarily due to the decrease in fund receivable from external payment service providers through which we collect various fund in our operation.
The decrease in prepaid expense and other assets was primarily due to the decrease in fund receivable from external payment service providers through which we collect various fund in our operation. The decrease in deferred tax liabilities was primarily due to the decrease in contract assets.
The net operating revenue from brokerage income decreased by 17.1% from RMB2,827.5 million in 2021 to RMB2,343.3 million (US$339.8 million) in 2022, which was mainly due to the decrease in the FYP generated through our platform from RMB16,363 million in 2021 to RMB6,890 million in 2022 as we have proactively adjusted our consumer acquisition strategy to reduce reliance on third-party consumer acquisition channels which led to the decrease in the number of new consumers, partially offset by optimized product mix with more long-term insurance products, the FYP from which accounted for approximately 16.2% and 28.8% of the total FYP generated through us in 2021 and 2022, and the FYP per policy of long-term insurance products increased from RMB4,181 in 2021 to RMB5,004 in 2022.
The FYP generated through our platform decreased from RMB16,363 million in 2021 to RMB6,890 million in 2022 as we have proactively adjusted our consumer acquisition strategy to reduce reliance on third-party consumer acquisition channels, which led to the decrease in the number of new consumers, partially offset by optimized product mix with more long-term insurance products.
Liquidity and Capital Resources We had net cash used in operating activities of RMB777.1 million in 2020, RMB1,096.7 million in 2021, and net cash provided by operating activities of RMB765.7 million (US$111.0 million) in 2022, respectively. Our primary sources of liquidity have been proceeds from preferred share issuances in 2019 and 2020, and our IPO in May 2021.
B. Liquidity and Capital Resources We had net cash used in operating activities of RMB1,096.7 million in 2021, and net cash provided by operating activities of RMB765.7 million in 2022 and RMB406.5 million (US$57.3 million) in 2023. Our primary sources of liquidity have been proceeds from operating activities and equity and debt financing.
In addition, we have built up our CRM system to increase sales operating efficiency and better manage the sales personnel to reduce cost.
In addition, we have implemented our proprietary insurance-focused LLM and our own CRM system to increase overall operating efficiency and better manage the sales and customer service personnel to reduce costs.
Income tax benefit/(expense) Income tax expense in 2022 was RMB23.0 million (US$3.3 million), compared with income tax benefit of RMB221.0 million in 2021, which was primarily due to the net operating profit generated in 2022.
Income tax benefit/(expense) Income tax expense in 2022 was RMB23.0 million, compared with income tax benefit of RMB221.0 million in 2021. The difference was primarily due to the net operating profit generated in 2022. 119 Table of Contents Critical Accounting Estimates We prepare our financial statements in accordance with U.S.
Specifically, the increase in prepaid expense and other assets was primarily due to (i) the increase in fund receivable from external payment service providers through which we collect various fund in our operation, and (ii) the increase in advances to suppliers as a result of increase in the prepayments to third-party traffic channels.
Specifically, the decrease in prepaid expense and other assets was primarily due to the decrease in the advances to suppliers as a result of decrease in the prepayments to third-party traffic channels.
We need to keep the growth of our business, brand influence, value-added technology service capabilities and risk management capabilities so as to strengthen and deepen the cooperation with our existing insurance carriers. We also plan to expand our claim review service to cover the long-term insurance products and deepen the cooperation with long-term insurance product suppliers.
Our large consumer base and strong business development capabilities allow us to negotiate favorable terms in our business cooperation with insurance carriers. We need to keep the growth of our business, brand influence, value-added technology service capabilities and risk management capabilities so as to strengthen and deepen the cooperation with our existing insurance carriers.
Net cash used in investing activities in 2021 was RMB846.9 million, consisting primarily of net cash used in purchase of short-term investment products, and cash paid for purchase of property, equipment and software.
Investing activities Net cash used in investing activities in 2023 was RMB1,173.0 million (US$165.2 million), consisting primarily of net cash paid for acquisitions of subsidiaries, and net cash used in purchase of short-term and long-term investment products.
Net loss/profit As a result of the foregoing, our net profit for the year of 2022 was RMB607.7 million (US$88.1 million), compared to a net loss of RMB1,574.1 million for the year of 2021.
Net profit As a result of the foregoing, our net profit for the year of 2023 was RMB163.7 million (US$23.1 million), compared to RMB607.7 million for the year of 2022. Income tax expense Income tax expense in 2023 was RMB0.6 million (US$0.1 million), compared with RMB23.0 million in 2022.
Furthermore, capital account transactions, which include foreign direct investment and loans, must be approved by and/or registered with SAFE, its local branches and certain local banks. 112 Table of Contents As a Cayman Islands exempted company and offshore holding company, we are permitted under PRC laws and regulations to provide funding to our PRC subsidiaries only through loans or capital contributions, subject to the approval of government authorities and limits on the amount of capital contributions and loans.
As a Cayman Islands exempted company and offshore holding company, we are permitted under laws and regulations in mainland China to provide funding to our subsidiaries in mainland China only through loans or capital contributions, subject to the approval of governmental authorities and limits on the amount of capital contributions and loans.
Commission fees for each insurance policy, taking into account the estimated premium retention rate data, are recognized as our revenue upon policy effective dates. We believe FYP is a strong indicator of brokerage income because it better demonstrates the brokerage income potential we may generate for an insurance policy.
We believe FYP is a strong indicator of brokerage income because it better demonstrates the brokerage income potential we may generate for an insurance policy.
Operating costs and expenses Our total operating costs and expenses decreased by RMB2,745.0 million, or 54.2%, from RMB5,068.8 million in 2021 to RMB2,323.8 million (US$336.9 million) in 2022, which was mainly due to the effective cost control measures taken since the third quarter of 2021.
The net operating revenue from other business decreased by 35.7% from RMB134.9 million in 2021 to RMB86.8 million in 2022, which was mainly due to a decrease of RMB107.0 million in revenue from other new initiatives, partially offset by an increase of RMB58.9 million in digital clinical trial solution income mainly due to the increase in the number of patients successfully enrolled from 129 in 2021 to 2,846 in 2022. 118 Table of Contents Operating costs and expenses Our total operating costs and expenses decreased by RMB2,745.0 million, or 54.2%, from RMB5,068.8 million in 2021 to RMB2,323.8 million in 2022, which was mainly due to the effective cost control measures taken since the third quarter of 2021.
Therefore, our PRC subsidiary is allowed to pay dividends in foreign currencies to us without prior SAFE approval by following certain routine procedural requirements. However, current PRC regulations permit our PRC subsidiary to pay dividends to us only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations.
However, current regulations permit in mainland China 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 in mainland China.
If it is determined that we are unable to realize a deferred tax asset, we would adjust the valuation allowance in the period in which such a determination is made, with a corresponding decrease to earnings.
If it is determined that we are unable to realize a deferred tax asset, we would adjust the valuation allowance in the period in which such a determination is made, with a corresponding decrease to earnings. 120 Table of Contents Recent Accounting Pronouncements A list of recently issued accounting pronouncements that are relevant to us is included in Note 2 “Recent accounting pronouncements” to our audited consolidated financial statements included elsewhere in this annual report.
As of December 31, 2022, as our WFOE, almost all other PRC subsidiaries, the VIEs and the subsidiaries of the VIEs are all in an accumulated loss position, no statutory reserve was appropriated. Our WFOE has not paid dividends and will not be able to pay dividends until it generates accumulated profits and meets the requirements for statutory reserve fund.
As of December 31, 2023, as our WFOE, almost all other subsidiaries in mainland China, the VIEs and the subsidiaries of the VIEs are in an accumulated loss position, no statutory reserve was appropriated.
PRC Our subsidiaries, the consolidated VIEs and subsidiaries of the VIEs established in the PRC are mainly subject to statutory income tax at a rate of 25%. Certain enterprises benefit from a preferential tax rate of 15% under the Enterprise Income Tax Law (“EIT Law”) if they qualify as high and new technology enterprises (“HNTE”).
Certain enterprises benefit from a preferential tax rate of 15% under the PRC Enterprise Income Tax Law if they qualify as high and new technology enterprises, or engaged in encouraged industries and located in specific tax-advantaged areas.
We provide comprehensive insurance protection plans that cover the life cycle of our consumers and their family members. By analyzing our consumer profiles and lifecycle, our online operation scenarios empower our online consultants team to provide our consumers with flexible, dynamic and comprehensive protection solutions, thereby maximizing the life time value of users.
By analyzing our consumer profiles and lifecycle, our online operation scenarios empower our online consultant team to provide our consumers with flexible, dynamic and comprehensive protection solutions, thereby maximizing the life time value of users. 111 Table of Contents As a result of the above, the FYP per consumer increased from RMB1,229 in 2022 to RMB1,324 in 2023.
In 2020, 2021 and 2022, this cohort of consumers contributed approximately 55.1%, 50.4% and 95.2% of the FYP generated through Waterdrop Insurance Marketplace. Since the second half of 2021, we have taken proactive measures to upgrade and optimize the online consumer acquisition model to better comply with the new regulatory development and keep up with the evolving industry trends.
Since the second half of 2021, we have taken proactive measures to upgrade and optimize the online consumer acquisition model to better comply with the new regulatory development and keep up with the evolving industry trends. We ceased to offer products with lower payment in the first month and invested more resources in engaging and retaining existing consumers.

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Item 6. [Reserved]

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

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Huang currently serves as an executive director of Boyu Capital. Prior to joining Boyu Capital in June 2011, Mr. Huang worked as a senior accountant at Ernst & Young Consulting (China) from September 2010 to June 2011, and an accountant at Ernst & Young Huaming Accounting Firm from September 2008 to September 2010. Mr.
Mr. Huang currently serves as an executive director of Boyu Capital. Prior to joining Boyu Capital in June 2011, Mr. Huang worked as a senior accountant at Ernst & Young Consulting (China) from September 2010 to June 2011, and an accountant at Ernst & Young Huaming Accounting Firm from September 2008 to September 2010. Mr.
The plan administrator determines the exercise price for each award, which is stated in the award agreement Term of the Awards. Options that are vested and exercisable will terminate if they are not exercised prior to the time as the plan administrator determines at the time of grant.
The plan administrator determines the exercise price for each award, which is stated in the award agreement. Term of the Awards. Options that are vested and exercisable will terminate if they are not exercised prior to the time as the plan administrator determines at the time of grant.
However, the maximum exercisable term is ten years from the date of a grant. Transfer Restrictions.
However, the maximum exercisable term is ten years from the date of a grant. Transfer Restrictions.
Compensation Committee. Our compensation committee consists of Chenyang Wei, Peng Shen and Heping Feng. Chenyang Wei is the chairman of our compensation committee. We have determined that Chenyang Wei and Heping Feng satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange.
Our compensation committee consists of Chenyang Wei, Peng Shen and Heping Feng. Chenyang Wei is the chairman of our compensation committee. We have determined that Chenyang Wei and Heping Feng satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange.
Subject to the New York Stock Exchange rules and disqualification by the chairman of the relevant board meeting, a director may vote in respect of any contract or transaction or proposed contract or transaction notwithstanding that he may be interested therein, and if he does so his vote shall be counted and he shall be counted in the quorum at any meeting of our directors at which any such contract or transaction or proposed contract or transaction is considered, provided (i) such director, if his or her interest in such contract or arrangement is material, has declared the nature of his or her interest at the earliest meeting of the board at which it is practicable for him or her to do so, either specifically or by way of a general notice and (ii) if such contract or arrangement is a transaction with a related party, such transaction has been approved by the audit committee.
Subject to the New York Stock Exchange rules and disqualification by the chairman of the board meeting, a director may vote in respect of any contract or transaction or proposed contract or transaction notwithstanding that he may be interested therein, and if he does so his vote shall be counted and he shall be counted in the quorum at any meeting of our directors at which any such contract or transaction or proposed contract or transaction is considered, provided (i) such director, if his or her interest in such contract or arrangement is material, has declared the nature of his or her interest at the earliest meeting of the board at which it is practicable for him or her to do so, either specifically or by way of a general notice and (ii) if such contract or arrangement is a transaction with a related party, such transaction has been approved by the audit committee.
Yu worked as a senior associate at WI Harper Group from March 2010 to August 2011. Prior to that, Mr. Yu worked as an associate at China Growth Capital from April 2007 to February 2010. Mr. Yu obtained a bachelor’s degree in civil engineering from Tsinghua University. Mr. Kai Huang has served as our director since March 2019. Mr.
Yu worked as a senior associate at WI Harper Group from March 2010 to August 2011. Prior to that, Mr. Yu worked as an associate at China Growth Capital from April 2007 to February 2010. Mr. Yu obtained a bachelor’s degree in civil engineering from Tsinghua University in 2005. Mr. Kai Huang has served as our director since March 2019.
We may grant awards to our directors, employees and consultants of our company. However, we may grant options that are intended to qualify as incentive share options only to our employees and employees of our parent companies or subsidiaries. Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is specified in the relevant award agreement. Exercise Price.
We may grant awards to our directors, employees and consultants of our company. However, we may grant options that are intended to qualify as incentive share options only to our employees and employees of our parent companies or subsidiaries. Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is specified in the award agreement. Exercise Price.
We may grant awards to our employees, directors and consultants of our company. However, we may grant options that are intended to qualify as incentive share options only to our employees and employees of our subsidiaries. Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is specified in the relevant award agreement. Exercise Price.
We may grant awards to our employees, directors and consultants of our company. However, we may grant options that are intended to qualify as incentive share options only to our employees and employees of our subsidiaries. Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is specified in the award agreement. Exercise Price.
Awards may not be transferred in any manner by the participant other than in accordance with the exceptions provided in the 2018 Plan or the relevant award agreement or otherwise determined by the plan administrator, such as transfers by will or the laws of descent and distribution. Termination and Amendment.
Awards may not be transferred in any manner by the participant other than in accordance with the exceptions provided in the 2018 Plan or the award agreement or otherwise determined by the plan administrator, such as transfers by will or the laws of descent and distribution. Termination and Amendment.
Awards may not be transferred in any manner by the participant other than in accordance with the exceptions provided in the 2021 Plan or the relevant award agreement or otherwise determined by the plan administrator, such as transfers by will or the laws of descent and distribution. Termination and Amendment.
Awards may not be transferred in any manner by the participant other than in accordance with the exceptions provided in the 2021 Plan or the award agreement or otherwise determined by the plan administrator, such as transfers by will or the laws of descent and distribution. Termination and Amendment.
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; 122 Table of Contents • 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.
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. 132 Table of Contents Compensation Committee.
Shen was awarded Zhongguancun High-end Leading Entrepreneurial Talent Certificate by Beijing Municipal Science and Technology Commission in 2019, named to Fortune China’s list of the “2020 40 under 40 in China” and World Economic Forum’s list of “2022 Young Global Leaders,” and awarded “Beijing Model-Rural Revitalization, Support and Cooperation Pioneer” by Beijing Municipal Government. Currently, Dr.
Shen was awarded Zhongguancun High-end Leading Entrepreneurial Talent Certificate by Beijing Municipal Science and Technology Commission in 2019, named to Fortune China’s list of the “2020 40 under 40 in China” and World Economic Forum’s list of “2022 Young Global Leaders,” and awarded “Beijing Model-Rural Revitalization, Support and Cooperation Pioneer” by Beijing Municipal Government. Currently, Mr.
Share Ownership Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares on an as-converted basis as of March 31, 2023 by: • each of our directors and executive officers; and • each of our principal shareholders who beneficially own more than 5% of our total issued and outstanding shares.
Share Ownership Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares on an as-converted basis as of March 31, 2024 by: ● each of our directors and executive officers; and ● each of our principal shareholders who beneficially own more than 5% of our total issued and outstanding shares.
Peng Shen is our founder, and has served as the chairman of our board of directors and chief executive officer since our inception, and is responsible for the overall strategy and business operations of Waterdrop. Dr. Shen has extensive experience and expertise in the technology and internet sectors in China. Prior to founding Waterdrop in 2016, in January 2010, Dr.
Peng Shen is our founder, and has served as the chairman of our board of directors and chief executive officer since our inception, and is responsible for the overall strategy and business operations of Waterdrop. Mr. Shen has extensive experience and expertise in the technology and internet sectors in China. Prior to founding Waterdrop in 2016, in January 2010, Mr.
We enter into standard employment agreements, as well as confidentiality and non-compete agreements with our employees in accordance with market practice. We believe that we maintain a good working relationship with our employees, and we have not experienced any material labor disputes. None of our employees are represented by a union or collective bargaining agreements.
We enter into standard employment agreements, as well as confidentiality and non-compete agreements with our employees in accordance with market practice. We believe that we maintain a good working relationship with our employees, and we have not experienced any material labor disputes. None of our employees are represented by a collective bargaining agreements.
Liu worked at Davis Polk & Wardwell LLP from August 2009 to June 2012 and from October 2013 to January 2017 and at Wilson Sonsini Goodrich & Rosati from February 2017 to July 2017. Ms. Liu obtained her bachelor’s degree of law from Tsinghua University in July 2009 and master’s degree of law from Harvard University in May 2013. Mr.
Liu worked at Davis Polk & Wardwell LLP from August 2009 to June 2012 and from October 2013 to January 2017 and at Wilson Sonsini Goodrich & Rosati from February 2017 to July 2017. Ms. Liu obtained her bachelor’s degree of law from Tsinghua University in July 2009 and master’s degree of law from Harvard University in May 2013. B.
Shen joined Meituan (HKSE: 03690), a leading e-commerce platform in China, at its early stage, as one of its earliest management members. He was also one of the founding team members of Meituan Waimai, which provides food delivery services. Dr.
Shen joined Meituan (HKSE: 03690), a leading e-commerce platform in China, at its early stage, as one of its earliest management members. He was also one of the founding team members of Meituan Waimai, which provides food delivery services. Mr.
Ltd.(6) 206,362,384 — 206,362,384 5.4 2.0 Notes: * Less than 1% of our total ordinary shares on an as-converted basis outstanding as of March 31, 2023. ** Except as indicated otherwise below, the business address of our directors and executive officers is Block C, Wangjing Science and Technology Park, No. 2 Lize Zhonger Road, Chaoyang District, Beijing, China.
Ltd. (5) 206,362,384 — 206,362,384 5.6 2.0 Notes: * Less than 1% of our total ordinary shares on an as-converted basis outstanding as of March 31, 2024. ** Except as indicated otherwise below, the business address of our directors and executive officers is Block C, Wangjing Science and Technology Park, No. 2 Lize Zhonger Road, Chaoyang District, Beijing, China.
Peng Shen or his affiliated entities shall be automatically immediately converted into the same number of Class A ordinary shares in the event that Dr. Shen ceases to be employed by and ceases to act as a director of our company.
Peng Shen or his affiliated entities shall be automatically immediately converted into the same number of Class A ordinary shares in the event that Mr. Shen ceases to be employed by and ceases to act as a director of our company.
(1) Represents (i) 801,904,979 Class B Ordinary Share held of record by Neptune Max Holdings Limited, a British Virgin Islands company. Neptune Max Holdings Limited is 99% owned by a family trust set up by Dr. Shen and 1% owned by Dr. Shen. Dr.
(1) Represents (i) 801,904,979 Class B ordinary share held of record by Neptune Max Holdings Limited, a British Virgin Islands company. Neptune Max Holdings Limited is 99% owned by a family trust set up by Mr. Shen and 1% owned by Mr. Shen. Mr.
Ning Zhu is Room 606, 211 west Huahai Road, Shanghai, China. † 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 with respect to all outstanding shares of our Class A and Class B ordinary shares as a single class.
Ning Zhu is Room 606, 211 west Huahai Road, Shanghai, China. 135 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 with respect to all outstanding shares of our Class A and Class B ordinary shares as a single class.
The functions and powers of our board of directors include, among others: • convening shareholders’ annual and extraordinary general meetings and reporting its work to shareholders at such meetings; • declaring dividends and distributions; • appointing officers and determining the term of office of the officers; • exercising the borrowing powers of our company and mortgaging the property of our company; and • approving the transfer of shares in our company, including the registration of such shares in our share register.
The functions and powers of our board of directors include, among others: ● convening shareholders’ annual and extraordinary general meetings and reporting its work to shareholders at such meetings; ● declaring dividends and distributions; ● appointing officers and determining the term of office of the officers; 133 Table of Contents ● exercising the borrowing powers of our company and mortgaging the property of our company; and ● approving the transfer of shares in our company, including the registration of such shares in our share register.
Our Class B ordinary shares are convertible at any time by the holder into Class A ordinary shares on a one-for-one basis, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. In addition, the Class B ordinary shares held by Dr.
Our Class B ordinary shares are convertible at any time by the holder into Class A ordinary shares on a one-for-one basis, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. In addition, the Class B ordinary shares held by Mr.
She received a bachelor of arts degree and a bachelor of laws degree from Xiamen University in 2008. Mr. Xiaobo Zhou has served as the head of research and development since October 2020 and is responsible for the operation of research and development department. Prior to joining Waterdrop, Mr.
She received a bachelor of arts degree and a bachelor of laws degree from Xiamen University in 2008. 127 Table of Contents Mr. Xiaobo Zhou has served as the head of research and development since October 2020 and is responsible for the operation of research and development department. Prior to joining Waterdrop, Mr.
In certain limited exceptional circumstances, a shareholder may have the right to seek damages in our name if a duty owed by our directors is breached. 123 Table of Contents Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs.
In certain limited exceptional circumstances, a shareholder may have the right to seek damages in our name if a duty owed by our directors is breached. Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs.
Our PRC subsidiaries and the VIEs are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund. Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers.
Our subsidiaries in mainland China and the VIEs are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund. Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers.
In honor of his contributions to China’s insurtech industry, innovative pharmaceutical CRO industry and other fields, as well as the establishment and operation of Waterdrop, Dr.
In honor of his contributions to China’s insurtech industry, innovative pharmaceutical CRO industry and other fields, as well as the establishment and operation of Waterdrop, Mr.
The 2021 Plan permits the awards of options, restricted shares, restricted share units or any other type of awards approved by the plan administrator or the board of directors. 120 Table of Contents Plan Administration. Our board of directors or a committee of one or more members of the board of directors will administer the 2021 Plan.
The 2021 Plan permits the awards of options, restricted shares, restricted share units or any other type of awards approved by the plan administrator or the board of directors. Plan Administration. Our board of directors or a committee of one or more members of the board of directors will administer the 2021 Plan.
The committee or the full board of directors, as applicable, will determine the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each award. Award Agreement.
The committee or the full board of directors, as applicable, determines the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each award. Award Agreement.
We are required under PRC law to make contributions to employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the local government from time to time.
We are required under the law in mainland China to make contributions to employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the local government from time to time.
Dr. Shen received a master’s degree in retail management from NEOMA Business School in France, an EMBA from Tsinghua University School of Economics and Management, and a PhD in Hotel and Tourism Management from The Hong Kong Polytechnic University. 116 Table of Contents Mr.
Mr. Shen received a master’s degree in retail management from NEOMA Business School in France, an EMBA from Tsinghua University School of Economics and Management, and a PhD in Hotel and Tourism Management from The Hong Kong Polytechnic University. Mr.
The plan administrator will determine the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each award. Award Agreement.
The plan administrator determines the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each award. Award Agreement.
Working together, our employees build our corporate culture that cares for individuals, fosters innovation, pursues credibility and integrity, and embraces changes, and has significantly contributed to our achievements. E.
Working together, our employees build our corporate culture that cares for individuals, fosters innovation, pursues credibility and integrity, and embraces changes, and has significantly contributed to our achievements. 134 Table of Contents E.
Specifically, each executive officer has agreed not to (i) solicit from any customer doing business with us during the effective term of the employment agreement business of the same or of a similar nature to our business; (ii) solicit from any of our known potential customer business of the same or of a similar nature to that which has been the subject of our known written or oral bid, offer or proposal, or of substantial preparation with a view to making such a bid, proposal or offer; (iii) solicit the employment or services of, or hire or engage, any person who is known to be employed or engaged by us; or (iv) otherwise interfere with our business or accounts, including, but not limited to, with respect to any relationship or agreement between any vendor or supplier and us.
Specifically, each executive officer has agreed not to (i) solicit from any customer doing business with us during the effective term of the employment agreement business of the same or of a similar nature to our business; (ii) solicit from any of our known potential customer business of the same or of a similar nature to that which has been the subject of our known written or oral bid, offer or proposal, or of substantial preparation with a view to making such a bid, proposal or offer; (iii) solicit the employment or services of, or hire or engage, any person who is known to be employed or engaged by us; or (iv) otherwise interfere with our business or accounts, including, but not limited to, with respect to any relationship or agreement between any vendor or supplier and us. 128 Table of Contents We have also entered into indemnification agreements with each of our directors and executive officers.
We have also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we 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 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.
Prior to joining Swiss Re in May 2016, Ms. Guan had eight years of experience in investment banking and served at Macquarie, UBS and Jefferies. Ms. Guan received a master’s degree in Engineering with first class honors from the University of Oxford and is a CFA charterholder. Mr. Heping Feng has served as our independent director since May 2021. Mr.
Guan had eight years of experience in investment banking and served at Macquarie, UBS and Jefferies. Ms. Guan received a master’s degree in Engineering with first class honors from the University of Oxford and is a CFA charterholder. 126 Table of Contents Mr. Heping Feng has served as our independent director since May 2021. Mr.
Compensation Compensation of Directors and Executive Officers In 2022, we paid an aggregate of RMB2.8 million (US$0.4 million) in cash to our executive officers, and we paid cash compensation to our non-executive directors of RMB1.0 million (US$0.1 million).
Compensation Compensation of Directors and Executive Officers In 2023, we paid an aggregate of RMB2.9 million (US$0.4 million) in cash to our executive officers, and we paid cash compensation to our non-executive directors of RMB0.9 million (US$0.1 million).
We believe we offer our employees competitive compensation packages and an environment that encourages self-development and, as a result, have generally been able to attract and retain qualified employees. We have established comprehensive training programs covering new employee training, customized training as well as leadership training.
We believe we offer our employees competitive compensation packages and an environment that encourages self-development and, as a result, have generally been able to attract and retain qualified employees. We have established comprehensive training programs covering new employee training, customized training as well as leadership training. Depending on the position, employee reviews are conducted either quarterly or annually.
Depending on the position, employee reviews are conducted either quarterly or annually. 124 Table of Contents As required by laws and regulations in China, we participate in various employee social security plans that are organized by municipal and provincial governments including, among other things, pension, medical insurance, unemployment insurance, maternity insurance, work-related injury insurance and housing fund plans through a PRC government-mandated benefit contribution plan.
As required by laws and regulations in mainland China, we participate in various employee social security plans that are organized by municipal and provincial governments including, among other things, pension, medical insurance, unemployment insurance, maternity insurance, work-related injury insurance and housing fund plans through a benefit contribution plan mandated by the PRC government.
Our officers are appointed by and serve at the discretion of the board of directors, and may be removed by our board of directors. D. Employees We had 4,291, 2,936 and 2,719 full-time employees as of December 31, 2020, 2021 and 2022, respectively.
Our officers are appointed by and serve at the discretion of the board of directors, and may be removed by our board of directors. D. Employees We had 2,936, 2,719 and 2,960 full-time employees as of December 31, 2021, 2022 and 2023, respectively. Substantially all of our full-time employees are located in China.
The following table sets forth the number of our full-time employees as of December 31, 2022: Function Number of Employees Operating 1,310 Sales and marketing 646 General and administrative 314 Research and development 449 Total 2,719 Our success depends on our ability to attract, motivate, train and retain qualified personnel.
The following table sets forth the number of our full-time employees as of December 31, 2023: ​ ​ ​ ​ ​ Number of Function Employees Operating 1,609 Sales and marketing 712 General and administrative 321 Research and development 318 Total 2,960 ​ Our success depends on our ability to attract, motivate, train and retain qualified personnel.
The calculations in the table below are based on 3,015,115,731 Class A ordinary shares (excluding 267,140,790 Class A ordinary shares, comprising of Class A ordinary shares issued to the depositary for bulk issuance of ADSs and reserved for future issuances upon the exercise or vesting of awards granted under share incentive plans, and Class A ordinary shares in the form of ADSs held in treasury), and 801,904,979 Class B ordinary shares, issued and outstanding as of March 31, 2023.
The calculations in the table below are based on 2,887,499,581 Class A ordinary shares (excluding 394,756,940 Class A ordinary shares, comprising of Class A ordinary shares issued to the depositary for bulk issuance of ADSs and reserved for future issuances upon the exercise or vesting of awards granted under share incentive plans, and Class A ordinary shares in the form of ADSs held in treasury) and 801,904,979 Class B ordinary shares, issued and outstanding as of March 31, 2024.
The 2018 Plan permits the awards of options, restricted shares, restricted share units or any other types of awards approved by the plan administrator or the board of directors. Plan Administration. A committee appointed by the board of directors will administer the 2018 Plan.
The following paragraphs summarize the principal terms of the 2018 Plan. Type of Awards. The 2018 Plan permits the awards of options, restricted shares, restricted share units or any other types of awards approved by the plan administrator or the board of directors. Plan Administration. A committee appointed by the board of directors administers the 2018 Plan.
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 Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable.
There may be beneficial owners of our ADSs in the United States. 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 Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable. 136 Table of Contents
Wei is also an independent director of PICC Property and Casualty Company Limited (HKSE: 2328), HSBC Life Insurance Company Limited, and China Index Holdings Limited (NASDAQ: CIH). Mr.
Wei is also an independent director of PICC Property and Casualty Company Limited (HKSE: 2328), HSBC Life Insurance Company Limited, and QuantaSing Group Ltd (NASDAQ: QSG). Mr.
Information regarding beneficial ownership is reported as of December 31, 2021, based on the information contained in the Schedule 13G jointly filed by Swiss Re Ltd and others with the SEC on January 28, 2022. Swiss Re Principal Investments Company Asia Pte.
Ltd., a corporation incorporated under the laws of Singapore. Information regarding beneficial ownership is reported as of December 31, 2023, based on the information contained in the Schedule 13G/A jointly filed by Swiss Re Ltd and others with the SEC on February 9, 2024. Swiss Re Principal Investments Company Asia Pte.
Wei received a bachelor’s degree in finance from Tsinghua University in 1996, a master’s degree in economics from McCombs School of Business, University of Texas at Austin in 2000, and a Ph.D. in finance from Leonard N. Stern School of Business, New York University in 2006. 117 Table of Contents Mr.
Wei received a bachelor’s degree in finance from Tsinghua University in 1996, a master’s degree in economics from McCombs School of Business, University of Texas at Austin in 2000, and a Ph.D. in finance from Leonard N. Stern School of Business, New York University in 2006. Mr. Ning Zhu has served as our independent director since May 2022. Mr.
Directors and Executive Officers Age Position/Title Peng Shen 35 Chairman of the Board of Directors and Chief Executive Officer Guang Yang 37 Director, Vice President of Finance and General Manager of International Business Wei Ran 36 Director and General Manager of Insurance Technology Business Haiyang Yu 39 Director Kai Huang 36 Director Wenjie Guan 38 Director Heping Feng 63 Independent Director Chenyang Wei 50 Independent Director Ning Zhu 49 Independent Director Zetao Zhu 41 General Manager of Crowdfunding and Pharmatech Business Xiaolei Sun 36 Vice President of Human Resources and Organization Development Xiaobo Zhou 42 Head of Research and Development Nian Liu 35 Head of Legal Hui Teng 44 Chief Actuary Dr.
Directors and Senior Management The following table sets forth information regarding our executive officers and directors. ​ ​ ​ ​ ​ Directors and Executive Officers Age Position/Title Peng Shen 36 Chairman of the Board of Directors and Chief Executive Officer Guang Yang 38 Director, Vice President of Finance and General Manager of International Business Wei Ran 37 Director and General Manager of Insurance Technology Business Haiyang Yu 41 Director Kai Huang 37 Director Wenjie Guan 39 Director Heping Feng 64 Independent Director Chenyang Wei 51 Independent Director Ning Zhu 50 Independent Director Xiaoying Xu ​ 44 ​ Head of Finance Xiaolei Sun 37 Vice President of Human Resources and Organization Development Xiaobo Zhou ​ 43 Head of Research and Development Nian Liu 36 Head of Legal ​ 125 Table of Contents Mr.
(1) Represents restricted share units. As of March 31, 2023, our employees other than our directors and officers as a group held options to purchase 258,489,310 Class A ordinary shares, with exercise prices ranging from US$0.003 per share to US$0.08 per share, and 76,403,290 restricted share units. C.
(1) Represents restricted share units. As of March 31, 2024, our employees other than our directors and officers as a group held options to purchase 121,320,290 Class A ordinary shares, with exercise prices ranging from US$0.03 per share to US$0.08 per share, and 46,898,370 restricted share units. ​ 131 Table of Contents C.
Shen acts as the sole director of First Principles Z Holdings Limited. The registered address of Neptune Max Holdings Limited, Proton Fortune Holdings Limited, Xibo Holdings Limited, and First Principles Z Holdings Limited is Sertus Chambers, P.O. Box 905, Quastisky Building, Road Town, Tortola, British Virgin Islands. (2) See Footnote (1) above.
The registered address of Neptune Max Holdings Limited and First Principles Z Holdings Limited is Sertus Chambers, P.O. Box 905, Quastisky Building, P.O. Box 2221, Road Town, Tortola, British Virgin Islands.
Ran obtained a bachelor’s degree in Economics from Shanghai Jiaotong University in June 2009, and a master’s degree in Software Engineering from Peking University in June 2013. Mr. Haiyang Yu has served as our director since October 2019. Mr. Yu currently serves as the vice general manager of Tencent Investment. Prior to joining Tencent (HKSE: 00700) in August 2011, Mr.
Ran obtained a bachelor’s degree in Economics from Shanghai Jiaotong University in June 2009, and a master’s degree in Software Engineering from Peking University in June 2013. Mr. Haiyang Yu has served as our director since October 2019. Mr.
Yao Hu, and 1% owned by Dr. Shen. Dr. Shen owns 100% of the voting power of Xibo Holdings Limited and acts as the sole director of Xibo Holdings Limited; and (iv) 4,000 Class A Ordinary Shares directly held by First Principles Z Holdings Limited, a British Virgin Islands company. Dr.
Shen acts as the sole director of Neptune Max Holdings Limited, and possesses the sole voting power over the shares held by Neptune Max Holdings Limited; and (ii) 4,000 Class A ordinary shares directly held by First Principles Z Holdings Limited, a British Virgin Islands company. Mr. Shen acts as the sole director of First Principles Z Holdings Limited.
Name Ordinary Shares Underlying Options and Restricted Share Units Exercise Price (US$/Share) Date of Grant Date of Expiration Wei Ran * 0.003 September 1, 2018 September 1, 2028 * 0.08 March 25, 2021 March 25, 2031 *(1) N/A October 1, 2022 — Heping Feng * 0.08 June 25, 2021 June 25, 2031 Chenyang Wei * 0.08 June 25, 2021 June 25, 2031 Zetao Zhu *(1) N/A June 25, 2022 — Xiaolei Sun * 0.003 December 1, 2019 December 1, 2029 * 0.003 October 31, 2020 October 31, 2030 * 0.08 March 25, 2021 March 25, 2031 *(1) N/A October 1, 2022 — Xiaobo Zhou * 0.08 March 25, 2021 March 25, 2031 *(1) N/A March 25, 2022 — *(1) N/A October 1, 2022 — Nian Liu * 0.08 March 25, 2021 March 25, 2031 *(1) N/A October 1, 2022 — Hui Teng * 0.003 May 1, 2020 May 1, 2030 * 0.003 October 31, 2020 October 31, 2030 121 Table of Contents Name Ordinary Shares Underlying Options and Restricted Share Units Exercise Price (US$/Share) Date of Grant Date of Expiration * 0.08 March 25, 2021 March 25, 2031 *(1) N/A October 1, 2022 — All directors and executive officers as a group 26,720,000 Note: * Less than 1% of our total ordinary shares on an as-converted basis outstanding as of March 31, 2023.
However, no such action may adversely affect in any material way any awards previously granted without the written consent of the participant. 130 Table of Contents The following table summarizes, as of March 31, 2024, the number of ordinary shares underlying outstanding options that we granted to our directors and executive officers. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary ​ ​ ​ ​ ​ Shares ​ ​ ​ ​ ​ ​ ​ ​ Underlying ​ ​ ​ ​ ​ ​ ​ ​ Options and ​ ​ ​ ​ ​ ​ ​ ​ Restricted ​ Exercise Price ​ ​ ​ ​ Name ​ Share Units ​ (US$/Share) ​ Date of Grant ​ Date of Expiration Wei Ran ​ * 0.003 September 1, 2018 September 1, 2028 ​ ​ * 0.08 March 25, 2021 March 25, 2031 ​ ​ * (1) N/A October 1, 2022 — ​ ​ * (1) N/A January 1, 2023 — ​ ​ * (1) N/A June 25, 2023 — Heping Feng ​ * 0.08 June 25, 2021 June 25, 2031 ​ ​ * (1) N/A June 25, 2023 — Chenyang Wei ​ * 0.08 June 25, 2021 June 25, 2031 ​ ​ * (1) N/A June 25, 2023 — Xiaoying Xu ​ * (1) N/A March 25, 2023 — Xiaolei Sun ​ * 0.003 December 1, 2019 December 1, 2029 ​ ​ * 0.003 October 31, 2020 October 31, 2030 ​ ​ * 0.08 March 25, 2021 March 25, 2031 ​ ​ * (1) N/A October 1, 2022 — ​ ​ * (1) N/A January 1, 2023 — ​ ​ * (1) N/A June 25, 2023 — Xiaobo Zhou ​ * 0.08 March 25, 2021 March 25, 2031 ​ ​ * (1) ​ N/A ​ March 25, 2022 ​ — ​ ​ * (1) ​ N/A ​ October 1, 2022 ​ — ​ ​ * (1) ​ N/A ​ December 25, 2023 ​ — Nian Liu ​ * ​ 0.08 ​ March 25, 2021 ​ March 25, 2031 ​ ​ * (1) ​ N/A ​ October 1, 2022 ​ — ​ ​ * (1) ​ N/A ​ March 25, 2023 ​ — All directors and executive officers as a group ​ 26,996,750 ​ ​ ​ ​ ​ ​ Note * Less than 1% of our total ordinary shares on an as-converted basis outstanding as of March 31, 2024.
Shen acts as the sole director of Neptune Max Holdings Limited, and possesses the sole voting power over the shares held by Neptune Max Holdings Limited; (ii) 86,386,000 Class A Ordinary Shares held of record by Proton Fortune Holdings Limited, a British Virgin Islands company that is 98% owned by a family trust set up by Mr.
(2) Represents 86,386,000 Class A Ordinary Shares held of record by Proton Fortune Holdings Limited, a British Virgin Islands company that is 98% owned by a family trust set up by Mr. Guang Yang and 2% owned by Mr. Guang Yang. Mr.
Ordinary 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**: Peng Shen(1) 159,835,939 801,904,979 961,740,918 25.2 72.1 Guang Yang(2) — — — — — Wei Ran * — * * * Haiyang Yu — — — — — Kai Huang — — — — — Wenjie Guan — — — — — Heping Feng * — * * — Chenyang Wei * — * * — Ning Zhu — — — — — Zetao Zhu — — — — — Xiaolei Sun * — * * * Xiaobo Zhou * — * * * 125 Table of Contents Ordinary 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 Nian Liu * — * * — Hui Teng * — * * — All Directors and Executive Officers as a Group 174,061,329 801,904,979 975,966,308 25.5 72.1 Principal Shareholders: Neptune Max Holdings Limited(1) — 801,904,979 801,904,979 21.0 70.5 Entities affiliated with Tencent(3) 830,085,007 — 830,085,007 21.7 8.1 Investment funds affiliated with Boyu Capital(4) 470,735,258 — 470,735,258 12.3 4.6 Investment funds affiliated with Gaorong Capital(5) 214,065,750 — 214,065,750 5.6 2.1 Swiss Re Principal Investments Company Asia Pte.
These shares, however, are not included in the computation of the percentage ownership of any other person. ​ ​ Ordinary Shares Beneficially Owned ​ ​ ​ ​ ​ ​ Total Ordinary ​ % of Total ​ ​ ​ ​ Class A ​ Class B ​ Shares on ​ Ordinary ​ ​ ​ ​ Ordinary ​ Ordinary ​ an As-converted ​ Shares on an As- ​ % of Aggregate ​ Shares Shares Basis converted Basis Voting Power Directors and Executive Officers**: Peng Shen (1) 4,000 801,904,979 801,908,979 21.7 71.4 Guang Yang (2) 86,386,000 — 86,386,000 2.3 0.9 Wei Ran * — * * * Haiyang Yu — — — — — Kai Huang — — — — — Wenjie Guan — — — — — Heping Feng * — * * — Chenyang Wei * — * * — Ning Zhu * — * * — Xiaoying Xu ​ * ​ — ​ * ​ * ​ * Xiaolei Sun * — * * * Xiaobo Zhou * — * * * Nian Liu * — * * * All Directors and Executive Officers as a Group 107,951,050 801,904,979 909,856,029 24.7 72.5 Principal Shareholders: ​ ​ ​ ​ Neptune Max Holdings Limited (1) — 801,904,979 801,904,979 21.7 71.4 Entities affiliated with Tencent (3) 830,085,007 — 830,085,007 22.5 8.2 Investment funds affiliated with Boyu Capital (4) 470,735,258 — 470,735,258 12.8 4.7 Swiss Re Principal Investments Company Asia Pte.
Ltd. is an investment entity indirectly wholly owned by Swiss Re Ltd, a company limited by shares with its registered office in Zurich, Switzerland, with its shares listed on the SIX Swiss Exchange and trading under the symbol SREN.
Ltd. is an investment entity indirectly wholly owned by Swiss Re Ltd, a company limited by shares with its registered office in Zurich, Switzerland, with its shares listed on the SIX Swiss Exchange and trading under the symbol “SREN.” To our knowledge and with reference to the addresses in our shareholder register, as of March 31, 2024, none of our ordinary shares are held by record holders in the United States.
Unless terminated earlier, the 2021 Plan has a term of ten years from its date of effectiveness. Our board of directors has the authority to amend or terminate the plan. However, no such action may adversely affect in any material way any awards previously granted without the written consent of the participant.
Unless terminated earlier, the 2021 Plan has a term of ten years from its date of effectiveness. Our board of directors has the authority to amend or terminate the plan.
Huang received a bachelor’s degree in accounting from Shanghai Jiao Tong University. Ms. Wenjie Guan has served as our director since September 2022. Ms. Guan currently serves as Head of Principal Investments and Acquisitions North Asia at Swiss Re, one of the world’s leading providers of reinsurance, insurance and other forms of insurance-based risk transfer.
Guan currently serves as Head of Principal Investments and Acquisitions North Asia at Swiss Re, one of the world’s leading providers of reinsurance, insurance and other forms of insurance-based risk transfer, and a non-executive director of Alltrust Insurance Company. Prior to joining Swiss Re in May 2016, Ms.
Zhu is also an independent non-executive director of each of China Huarong Asset Management Co., Ltd. (HKEX: 2799) and CHINA BOHAI BANK CO., LTD. (HKEX: 9668), and an independent director of each of Molecular Data Inc. (Nasdaq: MKD), Jinke Property Group Co., Ltd. (SZSE: 000656) and China CITIC Bank International Limited. Mr.
Zhu was a tenured professor of finance at University of California (Davis) from 2003 to June 2010. Mr. Zhu is also an independent non-executive director of each of China Huarong Asset Management Co., Ltd. (HKEX: 2799) and CHINA BOHAI BANK CO., LTD. (HKEX: 9668), and an independent director of each of Molecular Data Inc.
Ning Zhu has served as our independent director since May 2022. Mr. Zhu has been a professor of finance and the deputy dean of Shanghai Advanced Institute of Finance of Shanghai Jiaotong University since July 2010. Prior to that, Mr. Zhu was a tenured professor of finance at University of California (Davis) from 2003 to June 2010. Mr.
Zhu has been a senior partner and Head of China of Brunswick Group since September 2022. He has also been a professor of finance and the deputy dean of Shanghai Advanced Institute of Finance of Shanghai Jiaotong University since July 2010. Prior to that, Mr.
The maximum aggregate number of Class A ordinary shares that may be issued under the 2018 Plan is 384,159,746 Class A ordinary shares.
The maximum aggregate number of Class A ordinary shares that may be issued under the 2018 Plan is 384,159,746 Class A ordinary shares. As of March 31, 2024, options to purchase a total of 98,832,690 Class A ordinary shares and 83,688,950 restricted share units were outstanding under the 2018 Plan.
As of March 31, 2023, no award has been granted under the 2021 Plan. The following paragraphs summarize the principal terms of the 2021 Plan. Types of Awards.
As of March 31, 2024, 6,606,040 restricted share units were outstanding under the 2021 Plan. 129 Table of Contents The following paragraphs summarize the principal terms of the 2021 Plan. Types of Awards.
Item 6. Directors, Senior Management and Employees A. Directors and Senior Management The following table sets forth information regarding our executive officers and directors.
Item 6. Directors, Senior Management and Employees A.
Zhu received his bachelor’s degree in international finance from Peking University in 1997, master’s degree in management from Cornell University in 1999, and doctorate degree in finance from Yale University in 2003. Mr. Zetao Zhu has served as general manager of crowdfunding and pharmatech business since March 2023.
(Nasdaq: MKD), Jinke Property Group Co., Ltd. (SZSE: 000656) and China CITIC Bank International Limited. Mr. Zhu received his bachelor’s degree in international finance from Peking University in 1997, master’s degree in management from Cornell University in 1999, and doctorate degree in finance from Yale University in 2003. Ms.
The registered office of Harmonious Ocean Limited is c/o Maples Corporate Services Limited, PO Box 309 Ugland House, Grand Cayman, KY1-1104, Cayman Islands. 126 Table of Contents (5) Represents (i) 98,321,593 Class A ordinary shares directly held by Gaorong Technology Consulting Limited, a company limited by shares incorporated under the laws of the British Virgin Islands, (ii) 81,823,848 Class A ordinary shares directly held by Gaorong Group Holdings Limited, a company limited by shares incorporated under the laws of the British Virgin Islands, (iii) 31,880,733 Class A ordinary shares directly held by Banyan Partners Fund III, L.P., an exempted partnership with limited liability formed under the laws of the Cayman Islands, and (iv) 2,039,576 Class A ordinary shares held by Banyan Partners Fund III-A, L.P., an exempted partnership with limited liability formed under the laws of the Cayman Islands.
Xiaomeng Tong holds 100% of the outstanding shares in XYXY Holdings Ltd. The registered office of Harmonious Ocean Limited is c/o Maples Corporate Services Limited, PO Box 309 Ugland House, Grand Cayman, KY1-1104, Cayman Islands. (5) Represents 206,362,384 Class A ordinary shares directly held by Swiss Re Principal Investments Company Asia Pte.
Removed
He joined us in April 2022 as the general manager of crowdfunding and patient service business. Prior to joining us, Mr. Zhu worked as General Manager of China Region at DiDi Global Inc. from March 2016 to April 2022, where he was responsible for the regional strategy, operation, marketing, public relationship, finance and customer services.
Added
Yu has also served as a director of DouYu International Holdings Ltd (Nasdaq: DOYU) since May 2018 and a director of Kanzhun Ltd (NASDAQ: BZ; HKSE: 2076) since July 2019. Mr. Yu currently serves as the vice general manager of Tencent Investment. Prior to joining Tencent (HKSE: 00700) in August 2011, Mr.
Removed
Prior to that, he worked as director and head of digital transformation of China region at Capgemini Consulting from April 2014 to February 2016. From July 2005 to March 2014, Mr. Zhu worked at IBM consulting with his last position as senior consultant manager, mainly focusing on application innovation. Mr.
Added
Huang received a bachelor’s degree in accounting from Shanghai Jiao Tong University. Ms. Wenjie Guan has served as our director since September 2022. Ms.
Removed
Zhu obtained a bachelor’s degree in scientific calculation and computer application from Sun Yat-Sen University in June 2003 and a master’s degree in computer science from Sun Yat-Sen University in June 2005. Ms.
Added
Xiaoying Xu has served as the head of the finance since December 2022. Prior to joining us, Ms. Xu worked at Meituan (HKSE: 3690) from January 2011 to December 2022.
Removed
Hui Teng has served as our chief actuary since November 2019. Mr. Teng has over 10 years’ experience in insurance actuary. Prior to joining us, Mr. Teng served as the chief actuary at ZhongAn Online P&C Insurance Co. Ltd. (HKSE: 06060), an online insurance company in China, from May 2013 to July 2019. Prior to that, Mr.
Added
She was in charge of the establishment of the financial department of Meituan, and participated in the development of Meituan from its early stages to the comprehensive development stages, by successively serving as the head of the finance department, the head of the finance department of the Meituan’s financial platform and the head of the finance department of the Meituan’s catering SaaS services.
Removed
Teng served as a chief actuary officer at Sompo Japan Insurance (China) Co., Ltd. from November 2008 to May 2013, and at Tianan Insurance Company Limited from June 2006 to September 2008. Mr. Teng received a bachelor’s degree in theory and applied mechanics and a master’s degree in economics from Fudan University. 118 Table of Contents B.
Added
Prior to that, she worked in a foreign-invested company and an A-share listed company. Ms. Xu received a bachelor’s degree from Renmin University of China and an EMBA from China Europe International Business School. Ms. Xu also holds ACCA and CMA certificates. Ms.
Removed
As of Mach 31, 2023, options to purchase a total of 179,687,380 Class A ordinary shares and 90,509,970 restricted share units are outstanding under the 2018 Plan. 119 Table of Contents The following paragraphs summarize the principal terms of the 2018 Plan. Type of Awards.
Added
Yang owns 100% of the voting power of Proton Fortune Holdings Limited and acts as the sole director of Proton Fortune Holdings Limited. The registered address of Proton Fortune Holdings Limited is Sertus Chambers, P.O. Box 905, Quastisky Building, Road Town, Tortola, British Virgin Islands.
Removed
The following table summarizes, as of March 31, 2023, the number of ordinary shares underlying outstanding options that we granted to our directors and executive officers.
Removed
The decrease from December 31, 2020 to December 31, 2021 was mainly due to our outsource of certain sales and marketing functions to third-parties as well as upgrade of our middle office functionality. Substantially all of our full-time employees are located in China.
Removed
These shares, however, are not included in the computation of the percentage ownership of any other person.

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Item 7. Management's Discussion & Analysis

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

8 edited+0 added−3 removed11 unchanged
However, we cannot exercise the deferral right more than once during any 12-month period for a period of not more than 60 days and cannot 197 register any other securities during such 60 day period. We are obligated to effect no more than two demand registrations that have been declared effective within any 12-month period. Expenses of Registration.
However, we cannot exercise the deferral right more than once during any 12-month period for a period of not more than 60 days and cannot register any other securities during such 60-day period. We are obligated to effect no more than two demand registrations that have been declared effective within any 12-month period. Expenses of Registration.
Our shareholders may request us in writing to file an unlimited number of registration statements on Form F-3 if we qualify for registration on Form F-3.
Form F-3 Registration Rights. Our shareholders may request us in writing to file an unlimited number of registration statements on Form F-3 if we qualify for registration on Form F-3.
The special rights other than registration rights, as well as the corporate governance provisions, automatically terminated upon the completion of our IPO. Registration Rights We have granted certain registration rights to our shareholders. Set forth below is a description of the registration rights granted under the shareholders agreement. Demand Registration Rights.
The special rights other than registration rights, as well as the corporate governance provisions, automatically terminated upon the completion of our IPO. Registration Rights We have granted certain registration rights to our shareholders. Set forth below is a description of the registration rights granted under the shareholders agreement. ​ 137 Table of Contents Demand Registration Rights.
If the managing underwriters of any underwritten offering determine that marketing factors require a limitation of the number of shares to be underwritten, and the number of shares that may be included in the registration and the underwriting shall be allocated (i) first, to us, (ii) second, to each holder requesting inclusion of its registrable securities in such registration statement on a pro rata basis based on the total number of registrable securities then held by each such holder; provided that at least 25% of the registrable securities requested by the holders to be included in the underwriting and registration shall be so included and all shares that are not registrable securities shall first be excluded from such registration and underwriting before any registrable securities are so excluded. 128 Table of Contents Form F-3 Registration Rights.
If the managing underwriters of any underwritten offering determine that marketing factors require a limitation of the number of shares to be underwritten, and the number of shares that may be included in the registration and the underwriting shall be allocated (i) first, to us, (ii) second, to each holder requesting inclusion of its registrable securities in such registration statement on a pro rata basis based on the total number of registrable securities then held by each such holder; provided that at least 25% of the registrable securities requested by the holders to be included in the underwriting and registration shall be so included and all shares that are not registrable securities shall first be excluded from such registration and underwriting before any registrable securities are so excluded.
For the years ended December 31, 2020, 2021 and 2022, we paid payment processing fee to Tencent Group of RMB34.1 million, RMB38.0 million and RMB27.8 million (US$4.0 million), respectively. Tencent Group started to provide marketing service to us since 2020, which amounted to RMB187.2 million and RMB487.1 million and RMB20.7 million (US$3.0 million) in 2020, 2021 and 2022, respectively.
For the years ended December 31, 2021, 2022 and 2023, we paid payment processing fee to Tencent Group of RMB38.0 million, RMB27.8 million and RMB23.8 million (US$3.3 million), respectively. Tencent Group started to provide marketing service to us since 2020, which amounted to RMB487.1 million, RMB20.7 million and RMB79.5 million (US$11.2 million) in 2021, 2022 and 2023, respectively.
As of December 31, 2020, 2021 and 2022, we had amount due to Tencent Group of RMB9.8 million, RMB20.4 million and RMB11.6 million (US$1.7 million), respectively. 127 Table of Contents We started to provide advertising services to Tencent Group in 2020, which amounted to RMB0.8 million, RMB2.0 million and RMB1.0 million (US$0.1 million) in 2020, 2021 and 2022, respectively.
We started to provide advertising services to Tencent Group in 2020, which amounted to RMB2.0 million, RMB1.0 million and RMB0.6 million (US$0.1 million) in 2021, 2022 and 2023, respectively. We had amount due from Tencent Group of RMB1.0 million, RMB357.8 thousand and RMB64.7 thousand (US$9.1 thousand) as of December 31, 2021, 2022 and 2023, respectively.
At any time after the earlier of (i) June 28, 2025 or (ii) six months following the closing of a qualified initial public offering, holders of at least 25% of the voting power of the then outstanding registrable securities held by all such holders may request in writing that we effect a registration of at least 20%, or any less percentage if the anticipated gross proceeds would exceed US$5,000,000, of the registrable securities.
Holders of at least 25% of the voting power of the then outstanding registrable securities held by all such holders may request in writing that we effect a registration of at least 20%, or any less percentage if the anticipated gross proceeds would exceed US$5,000,000, of the registrable securities.
In addition, Tencent Group provides cloud technology services to us, which amounted to RMB26.9 million, RMB45.3 million and RMB35.3 million (US$5.1 million) for the years ended December 31, 2020, 2021 and 2022, respectively.
In addition, Tencent Group provides cloud technology services to us, which amounted to RMB45.3 million, RMB35.3 million and RMB31.4 million (US$4.4 million) for the years ended December 31, 2021, 2022 and 2023, respectively. As of December 31, 2021, 2022 and 2023, we had amount due to Tencent Group of RMB20.4 million, RMB11.6 million and RMB9.5 million (US$1.3 million), respectively.
Removed
We had amount due from Tencent Group of RMB0.8 million, RMB1.0 million and RMB357.8 thousand (US$51.9 thousand) as of December 31, 2020, 2021 and 2022, respectively. Transactions with other related parties. We have historically extended loans to Dr. Peng Shen, our founder, chairman of the board of directors and chief executive officer, and to certain other entities controlled by Dr.
Removed
Shen. As of December 31, 2019, we recorded outstanding principal amounts of RMB1.8 million due from these related parties under such loans, primarily consisting of (i) RMB1.7 million due from Mr.
Removed
Peng Shen, (ii) RMB20.0 thousand due from Tianjin Shuidibao, (iii) RMB25.0 thousand due from Tianjin Shuidi Huzhu, (iv) RMB16.0 thousand due from Tianjin Shuidichou, and (v) RMB30.0 thousand due from Tianjin Pengchuang. All of these loans have been fully repaid in September 2020.

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