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FinVolution Group

FinVolution GroupFINV決算レポート

NYSE

Volution Group plc is a manufacturer of ventilation equipment for commercial and residential customers. Based in Crawley, West Sussex, the company is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.

What changed in FinVolution Group's 20-F — 2022 vs 2023

Top changes in FinVolution Group's 2023 20-F

1239 paragraphs added · 1447 removed · 1014 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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For such a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy).
For such a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and may not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy).
(iv) The PRC Enterprise Income Tax Law imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise to its immediate holding company outside of China.
(iv) The Enterprise Income Tax Law of the PRC imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise to its immediate holding company outside of China.
(4) Represents the elimination of intercompany balances among FinVolution Group, equity subsidiaries, primary beneficiary of consolidated variable interest entities, consolidated variable interest entities and consolidated variable interest entities’ subsidiaries. (5) Represents the cash received and cash paid for intercompany services, including technical development services and technical support services. (6) Capital contribution at intercompany level.
(4) Represents the elimination of intercompany balances among FinVolution Group, equity subsidiaries, primary beneficiary of consolidated variable interest entities, consolidated variable interest entities and consolidated variable interest entities’ subsidiaries. (5) Represents the cash received and cash paid for intercompany services, including technical development services and technical support services. (6) Represents the capital contribution at intercompany level.
For more details, see “Item 3. Key Information—D.
For more details, see “Item 3. Key Information—D.
Risk Factors—Risks Related to Doing Business in China—The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections” and “—Our ADSs may be prohibited from trading in the United States under the HFCA Act 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—The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections” and “—Our ADSs may be prohibited from trading in the United States under the HFCA Act in the future if the PCAOB is unable to inspect or investigate completely auditors located in China.
On January 14, 2022, the Shanghai Financial Stability Coordinating Joint Conference Office, the Shanghai Online Lending Risk Rectification Office and other regulatory authorities jointly announced that Shanghai PPDai, among others, had declared the termination of its business operation as an online lending information intermediary and fully settled all related legacy loan products funded by individual investors.
On January 14, 2022, Shanghai Financial Stability Coordinating Joint Conference Office, Shanghai Online Lending Risk Rectification Office and other regulatory authorities jointly announced that Shanghai PPDai, among others, had declared the termination of its business operation as an online lending information intermediary and fully settled all related legacy loan products funded by individual investors.
Normally the borrowers find us by downloading our mobile applications from application stores or through Weixin official account.
Normally the borrowers find us by downloading our mobile applications from application stores or through our Weixin official account.
For the purpose of credit assessment, we obtain from prospective borrowers and third parties certain information of the prospective borrowers, which may not be complete, accurate or reliable. A credit score assigned to a borrower may not reflect that particular borrower’s actual creditworthiness because the credit score may be based on outdated, incomplete or inaccurate borrower information.
We obtain certain information from prospective borrowers and third parties for the purpose of credit assessment, which may not be complete, accurate, or reliable. A credit score assigned to a borrower may not reflect that particular borrower’s actual creditworthiness because the credit score may be based on outdated, incomplete or inaccurate borrower information.
They may ultimately prove more successful or more adaptable to new regulatory, technological and other developments. Some of our current and potential competitors have significantly more financial, technical, marketing and other resources than we do and may be able to devote greater resources to the development, promotion, sale and support of their platforms.
Ultimately, they may prove more successful or adaptable to new regulatory, technological, and other developments. Some of our current and potential competitors have significantly more financial, technical, marketing, and other resources than we do and may be able to devote greater resources to the development, promotion, sale, and support of their platforms.
When new competitors seek to enter our target market, or when existing market participants seek to increase their market share, they sometimes undercut the pricing and/or terms prevalent in that market, which could adversely affect our market share or ability to exploit new market opportunities.
When new competitors seek to enter our target market or existing market participants seek to increase their market share, they sometimes undercut the pricing and/or terms prevalent in that market, which could adversely affect our market share or ability to exploit new market opportunities.
In addition, negative publicity about our partners, outsourced service providers or other counterparties, such as negative publicity about their loan collection practices and any failure by them to adequately protect the information of our borrowers, to comply with applicable laws and regulations or to otherwise meet required quality and service standards could harm our reputation.
In addition, negative publicity about our partners, outsourced service providers, or other counterparties, such as negative publicity about their loan collection practices and any failure by them to adequately protect the information of our borrowers, comply with applicable laws and regulations, or otherwise meet required quality and service standards, could harm our reputation.
As a result of increasing consolidation and interdependence of technology systems, a technology failure, cyber-attack or other information or security breach that significantly compromises the systems of one entity could have a material impact on its counterparties.
As a result of increasing consolidation and interdependence of technology systems, a technology failure, cyber-attack or other information or security breach that significantly compromises the systems of one entity could have a material impact on its counterparties.
Although our agreements with third-party payment service providers provide that each party is responsible for the cybersecurity of its own systems, any cyber-attack, computer viruses, physical or electronic break-ins or similar disruptions of such third-party payment service providers could, among other things, adversely affect our ability to serve our users, and could even result in misappropriation of funds of our borrowers and institutional funding partners.
Although our agreements with third-party payment service providers provide that each party is responsible for the cybersecurity of its own systems, any cyber-attack, computer viruses, physical or electronic break-ins or similar disruptions of such third-party payment service providers could, among other things, adversely affect our ability to serve our users, and could even result in misappropriation of funds of our borrowers and institutional funding partners.
Our headquarters are located in Shanghai, where most of our directors and management and a large majority of our employees currently reside. In addition, most of our system hardware and back-up systems are hosted in leased facilities located in Shanghai. Consequently, we are highly susceptible to factors adversely affecting Shanghai.
In addition, our headquarters are located in Shanghai, where most of our directors and management and a large majority of our employees currently reside. Most of our system hardware and back-up systems are hosted in leased facilities located in Shanghai. Consequently, we are highly susceptible to factors adversely affecting Shanghai.
Holders of our ADSs hold equity interest in FinVolution Group, our Cayman Islands holding company, and do not have direct or indirect equity interest in the consolidated variable interest entities and their subsidiaries.
Holders of our ADSs hold equity interest in FinVolution Group, our Cayman Islands holding company, and do not have direct or indirect equity interest in the consolidated variable interest entities and their subsidiaries.
If the PRC government deems that our contractual arrangements with the consolidated variable interest entities do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.
If the PRC government deems that our contractual arrangements with the consolidated variable interest entities do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.
We rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.
We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.
We are a holding company, and we rely on dividends and other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur.
We are a holding company, and we may rely on dividends and other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur.
Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with a “de facto management body” within the PRC 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 Enterprise Income Tax Law of the PRC and its implementation rules, an enterprise established outside of the PRC with a “de facto management body” within the PRC is considered a resident enterprise and will be subject to the enterprise income tax on its global income at the rate of 25%.
Pursuant to the PRC Enterprise Income Tax Law, a withholding tax rate of 10% currently applies to dividends paid by a PRC “resident enterprise” to a foreign enterprise investor, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for preferential tax treatment.
Pursuant to the Enterprise Income Tax Law of the PRC, a withholding tax rate of 10% currently applies to dividends paid by a PRC “resident enterprise” to a foreign enterprise investor, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for preferential tax treatment.
The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections.
The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections.
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.
As a result, it may be difficult or impossible for you to effect service of process within the United States upon these individuals, or to bring an action against us or against these individuals in the United States in the event that you believe your rights have been infringed under the U.S. federal securities laws or otherwise.
As a result, it may be difficult or impossible for you to effect service of process within the United States upon these individuals, or to bring an action against us or against these individuals in the United States in the event that you believe your rights have been infringed under the U.S. federal securities laws or otherwise.
PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions.
PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions.
In such case, if we are not able to comply with the cybersecurity and network data security requirements in a timely manner, or at all, we may be subject to government enforcement actions and investigations, fines, penalties, suspension of our non-compliant operations, or removal of our app from the relevant application stores, among other sanctions, which could materially and adversely affect our business and results of operations.
In such case, if we are not able to comply with the cybersecurity and network data security requirements in a timely manner, or at all, we may be subject to government enforcement actions and investigations, fines, penalties, suspension of our non-compliant operations, or removal of our app from the application stores, among other sanctions, which could materially and adversely affect our business and results of operations.
Risk Factors—Risks Related to Doing Business in China—Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to us” and “—We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet-related businesses and companies, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations.” 7 Table of Contents The Holding Foreign Companies Accountable Act Pursuant to the Holding Foreign Companies Accountable Act, or the HFCA Act, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the Public Company Accounting Oversight Board, or the PCAOB, for two consecutive years, the SEC will prohibit our shares or the ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.
Risk Factors—Risks Related to Doing Business in China—Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to us” and “—We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet-related businesses and companies, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations.” 5 Table of Contents The Holding Foreign Companies Accountable Act Pursuant to the Holding Foreign Companies Accountable Act, or the HFCA Act, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the Public Company Accounting Oversight Board, or the PCAOB, for two consecutive years, the SEC will prohibit our shares or the ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.
It remains unclear as to whether the credit reference agency we cooperate with can efficiently and accurately aggregate data from all different types of online databases. As a result, we cannot determine whether borrowers have outstanding loans through other consumer finance marketplaces not participating in this sharing system at the time they obtain a loan from us.
However, it remains unclear as to whether the credit reference agency we cooperate with can efficiently and accurately aggregate data from all different types of online databases. As a result, we cannot determine whether borrowers have outstanding loans through other consumer finance marketplaces not participating in this sharing system at the time they obtain a loan from us.
Our holding company, our PRC subsidiaries, the consolidated variable interest entities and their respective subsidiaries, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the consolidated variable interest entities and, consequently, significantly affect the financial performance of the consolidated variable interest entities and our company as a whole. • If the PRC government deems that the contractual arrangements in relation to the consolidated variable interest entities do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. • We rely on contractual arrangements with the consolidated variable interest entities for a significant portion of our business operations, and such contractual arrangements may not be as effective as equity ownership in providing operational control. • Any failure by the consolidated variable interest entities, shareholders of the consolidated variable interest entities or other parties to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business. • The shareholders of the consolidated variable interest entities may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.
Our holding company, our PRC subsidiaries, the consolidated variable interest entities and their respective subsidiaries, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the consolidated variable interest entities and, consequently, significantly affect the financial performance of the consolidated variable interest entities and our company as a whole. • If the PRC government deems that the contractual arrangements regarding the consolidated variable interest entities do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. • We rely on contractual arrangements with the consolidated variable interest entities for a significant portion of our business operations, and such contractual arrangements may not be as effective as equity ownership in providing operational control. • Any failure by the consolidated variable interest entities, shareholders of the consolidated variable interest entities or other parties to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business. • The shareholders of the consolidated variable interest entities may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.
Pursuant to these agreements between each of the consolidated variable interest entities and its corresponding PRC subsidiary, each of the consolidated variable interest entities agrees to pay the relevant PRC subsidiary for technology consulting and service at an amount as determined on a case-by-case basis based on the content of technology consulting and service, level of difficulty and complexity, time spend by the relevant PRC subsidiary and its employees, the commercial value of the technology consulting and service to be provided by the relevant PRC subsidiary, and the revenue the consolidated variable interest entity generates due to the technology consulting and service provided by the relevant PRC subsidiary.
Pursuant to these agreements between each of the consolidated variable interest entities and its corresponding PRC subsidiary, each of the consolidated variable interest entities agrees to pay the corresponding PRC subsidiary for technology consulting and service at an amount as determined on a case-by-case basis based on the content of technology consulting and service, level of difficulty and complexity, time spend by the corresponding PRC subsidiary and its employees, the commercial value of the technology consulting and service to be provided by the corresponding PRC subsidiary, and the revenue the consolidated variable interest entity generates due to the technology consulting and service provided by the corresponding PRC subsidiary.
Fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks or similar events may give rise to server interruptions, breakdowns, system failures, technology platform failures or internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our ability to provide products and services on our platform.
Fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks or similar events may give rise to server interruptions, breakdowns, system failures, technology platform failures or internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our ability to provide products and services on our platforms.
If any data provided by borrowers or third parties are incorrect or stale or our preliminary credit assessment service is not effective, our cooperation with institutional funding partners could be negatively affected. In addition, we bear credit risks for a substantial majority of the loans funded by institutional funding partners to borrowers introduced by us.
If any data provided by borrowers or third parties are incorrect or stale or our preliminary credit assessment service is not effective, our cooperation with institutional funding partners could be negatively affected. In addition, we bear credit risks for a substantial majority of the loans funded by institutional funding partners to borrowers we introduced.
Furthermore, any negative development in, or negative perception of, the online consumer finance industry as a whole, even if factually incorrect or based on isolated incidents, could compromise our image, undermine the trust and credibility we have established and impose a negative impact on our ability to attract new borrowers and institutional funding partners.
Any negative development in, or negative perception of, the online consumer finance industry as a whole, even if factually incorrect or based on isolated incidents, could compromise our image, undermine the trust and credibility we have established, and impose a negative impact on our ability to attract new borrowers and institutional funding partners.
In addition, we bear credit risks for a substantial majority of the loans funded by our institutional funding partners to borrowers introduced by us. If our ability to collect delinquent loans is not as effective or efficient as expected, our liquidity, financial conditions and results of operations could be materially and adversely affected.
In addition, we bear credit risks for a substantial majority of the loans funded by our institutional funding partners to borrowers we introduced. If our ability to collect delinquent loans is not as effective or efficient as expected, our liquidity, financial conditions and results of operations could be materially and adversely affected.
If we or any of the consolidated variable interest entities is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. See “Item 3.
If we or any of the consolidated variable interest entities is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. See “Item 3.
The Draft Data Security 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 Data Security Regulations, if any, at this stage, and we will closely monitor and assess any development in the rule-making process.
The Draft Data Security 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 the Draft Data Security Regulations, if any, at this stage, and we will closely monitor and assess any development in the rule-making process.
Therefore, if we fail to provide material information to institutional funding partners and are found to be at fault, for failure or deemed failure to exercise proper care, to conduct adequate information verification or supervision, we could be subject to liabilities as an intermediary under the Civil Code of the PRC.
Therefore, if we fail to provide any material information to institutional funding partners and are found to be at fault, for failure or deemed failure to exercise proper care, to conduct adequate information verification or supervision, we could be subject to liabilities as an intermediary under the Civil Code of the PRC.
These shareholders may breach, or cause the consolidated variable interest entities to breach, the existing contractual arrangements we have with them and our consolidated variable interest entity, which would have a material adverse effect on our ability to direct the activities of operation of the consolidated variable interest entities and their subsidiaries and receive economic benefits from them.
These shareholders may breach, or cause the consolidated variable interest entities to breach, the existing contractual arrangements we have with them and the consolidated variable interest entities, which would have a material adverse effect on our ability to direct the activities of operation of the consolidated variable interest entities and their subsidiaries and receive economic benefits from them.
Risk Factors—Risks Related to Our Corporate Structure—We rely on contractual arrangements with the consolidated variable interest entities for a significant portion of our business operations, and such contractual arrangements may not be as effective as equity ownership in providing operational control” and “—The shareholders of the consolidated variable interest entities may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.” 6 Table of Contents There are also substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with the consolidated variable interest entities and their shareholders.
Risk Factors—Risks Related to Our Corporate Structure—We rely on contractual arrangements with the consolidated variable interest entities for a significant portion of our business operations, and such contractual arrangements may not be as effective as equity ownership in providing operational control” and “—The shareholders of the consolidated variable interest entities may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.” 4 Table of Contents There are also substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with the consolidated variable interest entities and their shareholders.
Risk Factors—Risks Related to Doing Business in China—We rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business” and “—Governmental control of currency conversion may limit our ability to utilize our net revenues effectively and affect the price of our ADSs.” For the years ended December 31, 2020, 2021 and 2022, no dividends or distributions were made to FinVolution Group, the parent company, by our subsidiaries.
Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business” and “—Governmental control of currency conversion may limit our ability to utilize our net revenues effectively and affect the price of our ADSs.” For the years ended December 31, 2021, 2022 and 2023, no dividends or distributions were made to FinVolution Group, the parent company, by our subsidiaries.
For loans funded by our institutional funding partners, the institutional funding partners will review borrowers’ applications and may rely on our preliminary credit assessment we provide to them and then decide if to provide loans to such borrower as well as the credit limit after their independent credit review.
For loans funded by our institutional funding partners, they will review borrowers’ applications and may rely on our preliminary credit assessment we provide to them and then decide if to provide loans to such borrower as well as the credit limit after their independent credit review.
Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers. 74 Table of Contents There is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands is not a party to any treaties for the reciprocal enforcement or recognition of such judgments), a judgment obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment is final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy).
Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers. 65 Table of Contents There is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands is not a party to any treaties for the reciprocal enforcement or recognition of such judgments), a judgment obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment is final and conclusive and for a liquidated sum, and may not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy).
As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. 75 Table of Contents Our dual-class share 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.
As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. 66 Table of Contents Our dual-class share 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.
Risk Factors—Risks Related to Our Business—Any failure to comply with existing or future laws and regulations related to data protection, data security, cybersecurity or personal information protection could lead to liabilities, administrative penalties or other regulatory actions, which could negatively affect our operating results and business.” However, the PRC government has recently promulgated certain regulations and rules to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers.
Risk Factors—Risks Related to Our Business—Any failure to comply with existing or future laws and regulations related to data protection, data security, cybersecurity or personal information protection could lead to liabilities, administrative penalties or other regulatory actions, which could negatively affect our operating results and business.” The PRC government has promulgated certain regulations and rules to exert more oversight and control over offerings that are conducted overseas or foreign investment in China-based issuers.
While we strive to comply with all applicable laws and regulations and work closely with the regulatory authorities in the regions that we operate, we have limited experience in these markets and differences in interpretation of relevant laws, regulations, and/or policies.
While we strive to comply with all applicable laws and regulations and work closely with the regulatory authorities in the regions that we operate, we have limited experience in these markets and differences in interpretation of applicable laws, regulations, and/or policies.
In the event of a platform outage and physical data loss, our ability to perform our servicing obligations, process loan applications or make funds available on our platform would be materially and adversely affected.
In the event of a platform outage and physical data loss, our ability to perform our servicing obligations, process loan applications or make funds available on our platforms would be materially and adversely affected.
If any dispute arises between our current or former officers and us, we may have to incur substantial costs and expenses in order to enforce such agreements in China or we may be unable to enforce them at all.
If any dispute arises between our current or former officers and us, we may have to incur substantial costs and expenses in order to enforce such agreements or we may be unable to enforce them at all.
Our PRC subsidiaries have obligations to file documents related to employee stock options or restricted shares with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options.
Our PRC subsidiaries have obligations to file documents related to employee stock options or restricted shares with tax authorities and to withhold individual income taxes of those employees who exercise their share options.
However, if the relevant PRC governmental authorities determine that our business may affect national security, they may initiate cybersecurity review against us. For more detailed information, see “Item 3. Key Information—D.
However, if the PRC governmental authorities determine that our business may affect national security, they may initiate cybersecurity review against us. For more detailed information, see “Item 3. Key Information—D.
If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of our ADSs.
If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currency to our shareholders, including holders of our ADSs.
Although the law in this regard is unclear, we intend to treat our consolidated variable interest entities (including their respective subsidiaries, if any) as being owned by us for United States federal income tax purposes, not only because we are able to direct the activities of operation of such entities but also because we are entitled to substantially all of their economic benefits, and, as a result, we consolidate their results of operations in our consolidated financial statements.
Although the law in this regard is unclear, we intend to treat the consolidated variable interest entities (including their respective subsidiaries) as being owned by us for United States federal income tax purposes, not only because we are able to direct the activities of operation of such entities but also because we are entitled to substantially all of their economic benefits, and, as a result, we consolidate their results of operations in our consolidated financial statements.
Any funds we transfer to our PRC subsidiaries, either as a shareholder loan or as an increase in registered capital, are subject to approval by or registration with relevant governmental authorities in China.
Any funds we transfer to our PRC subsidiaries, either as a shareholder loan or as an increase in registered capital, are subject to approval by or registration with governmental authorities in China.
Strategic investments or acquisitions will involve risks commonly encountered in business relationships, including: • difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, rights, platforms, products and services of the acquired business; • inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits; • difficulties in retaining, training, motivating and integrating key personnel; • diversion of management’s time and resources from our daily operations; • difficulties in maintaining uniform standards, controls, procedures and policies within the combined organizations; • difficulties in retaining relationships with customers, employees and suppliers of the acquired business; • risks of entering markets in which we have limited or no prior experience; • regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing approvals, as well as being subject to new regulators with oversight over an acquired business; • assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase our risk for liability; • failure to successfully further develop the acquired technology; 52 Table of Contents • liability for activities of the acquired business before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; • potential disruptions to our ongoing businesses; and • unexpected costs and unknown risks and liabilities associated with strategic investments or acquisitions.
Strategic investments or acquisitions will involve risks commonly encountered in business relationships, including: • regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing approvals, as well as being subject to new regulators with oversight over an acquired business; • difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, rights, platforms, products and services of the acquired business; • inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits; • difficulties in retaining, training, motivating and integrating key personnel; • diversion of management’s time and resources from our daily operations; • difficulties in maintaining uniform standards, controls, procedures and policies within the combined organizations; • difficulties in retaining relationships with customers, employees and business partners of the acquired business; • risks of entering markets in which we have limited or no prior experience; • assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase our risk for liability; • failure to successfully further develop the acquired technology; • liability for activities of the acquired business before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; • potential disruptions to our ongoing businesses; and • unexpected costs and unknown risks and liabilities associated with strategic investments or acquisitions.
Risk Factors—Risks Related to Our Corporate Structure—If the PRC government deems that the contractual arrangements in relation to the consolidated variable interest entities do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.” Our corporate structure is subject to risks associated with our contractual arrangements with the consolidated variable interest entities.
Risk Factors—Risks Related to Our Corporate Structure—If the PRC government deems that the contractual arrangements regarding the consolidated variable interest entities do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.” Our corporate structure is subject to risks associated with our contractual arrangements with the consolidated variable interest entities.
Risk Factors—Risks Related to Doing Business in China—The approval of and filing with the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.” Enforceability of Civil Liabilities We are incorporated in the Cayman Islands to take advantage of certain benefits associated with being a Cayman Islands exempted company, such as: • political and economic stability; • an effective judicial system; • a favorable tax system; • the absence of exchange control or currency restrictions; and • the availability of professional and support services.
Risk Factors—Risks Related to Doing Business in China—The approval of and filing with the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.” Enforceability of Civil Liabilities We are incorporated in the Cayman Islands to take advantage of certain benefits associated with being a Cayman Islands exempted company, such as: • political and economic stability; • an effective judicial system; • a favorable tax system; • the absence of exchange control or currency restrictions; and 7 Table of Contents • the availability of professional and support services.
We continuously refine the algorithms, data processing and machine learning used by the Magic Mirror Model, but if any of these decision-making and scoring systems contain programming or other errors, are ineffective or the data provided by borrowers or third parties are incorrect or stale, our loan pricing and approval process could be negatively affected, resulting in mispriced or misclassified loans or incorrect approvals or denials of loans.
We consistently refine the algorithms, data processing and machine learning used by the Magic Mirror Model, but if any of these decision-making and scoring systems contain programming or other errors, are ineffective or the data provided by borrowers or third parties are incorrect or stale, our loan pricing and approval process could be negatively affected, resulting in mispriced or misclassified loans or incorrect approvals or denials of loans.
Business Overview—Regulation—Regulations Relating to Foreign Exchange—Regulations on employee stock incentive plans of overseas publicly-listed company.” The State Administration of Taxation, or SAT, has issued certain circulars concerning employee stock options and restricted shares. Under these circulars, our employees working in China who exercise stock options or are granted restricted shares will be subject to PRC individual income tax.
Business Overview—Regulations in the PRC—Regulations Relating to Foreign Exchange—Regulations on employee stock incentive plans of overseas publicly-listed company.” The State Administration of Taxation has issued certain circulars concerning employee stock options and restricted shares. Under these circulars, our employees working in China who exercise stock options or are granted restricted shares will be subject to PRC individual income tax.
If the PRC government considers that we were operating without the proper approvals, licenses or permits or promulgates new laws and regulations that require additional approvals or licenses or imposes additional restrictions on the operation of any part of our business, 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 or impose restrictions on the affected portion of our business.
If the PRC government considers that we were operating without the proper approvals, licenses or permits or promulgates new laws and regulations that require additional approvals or licenses or imposes additional restrictions on the operation of any part of our business, it has the power, among other things, to levy fines, confiscate our income, revoke our business licenses, and require us to discontinue the related business or impose restrictions on the affected portion of our business.
See “—Any failure by the consolidated variable interest entities, shareholders of the consolidated variable interest entities or other parties to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business.” Therefore, our contractual arrangements with the consolidated variable interest entities and shareholders of the consolidated variable interest entities may not be as effective in ensuring our control over the relevant portion of our business operations as equity ownership would be.
See “—Any failure by the consolidated variable interest entities, shareholders of the consolidated variable interest entities or other parties to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business.” Therefore, our contractual arrangements with the consolidated variable interest entities and shareholders of the consolidated variable interest entities may not be as effective in ensuring our control over our business operations as equity ownership would be.
For example, a decrease in interest rates may cause potential borrowers to seek lower-priced loans from other channels. A high interest rate environment will likely increase the funding costs for our institutional funding partners, which may lead to a higher rate of return required by such institutional funding partners and thereby dampen their desire to fund borrowers on our platform.
For example, a decrease in interest rates may cause potential borrowers to seek lower-priced loans from other channels. A high-interest-rate environment will likely increase the funding costs for our institutional funding partners, which may lead to a higher rate of return required by such institutional funding partners and thereby dampen their desire to fund borrowers on our platforms.
Business Overview—Regulation—Regulations Relating to Foreign Exchange—Regulations on employee stock incentive plans of overseas publicly-listed company.” 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 or ADS holders.
Business Overview—Regulations in the PRC—Regulations Relating to Foreign Exchange—Regulations on employee stock incentive plans of overseas publicly-listed company.” 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 or ADS holders.
There are also other conditions for enjoying the reduced withholding tax rate according to other relevant tax rules and regulations. See “Item 10. Additional Information—E.
There are also other conditions for enjoying the reduced withholding tax rate according to other tax rules and regulations. See “Item 10. Additional Information—E.
If any of our current marketing channels become less effective, if we are unable to continue to use any of these channels, if the cost of using these channels were to significantly increase or if we are not successful in generating new channels, we may not be able to attract new borrowers and institutional funding partners in a cost-effective manner or convert potential borrowers and institutional funding partners into active borrowers and institutional funding partners on our platform.
If any of our current marketing channels become less effective, if we are unable to continue to use any of these channels, if the cost of using these channels were to significantly increase or if we are not successful in generating new channels, we may not be able to attract new borrowers and institutional funding partners in a cost-effective manner or convert potential borrowers and institutional funding partners into active borrowers and institutional funding partners on our platforms.
Based upon that evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, 2022. Our independent registered public accounting firm, PricewaterhouseCoopers Zhong Tian LLP, also attested and reported our internal control over financial reporting. See the attestation report on page F-2 issued by our independent registered public accounting firm for further details.
Based upon that evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, 2023. Our independent registered public accounting firm, PricewaterhouseCoopers Zhong Tian LLP, also attested and reported our internal control over financial reporting. See the attestation report on page F-2 issued by our independent registered public accounting firm for further details.
If we cannot obtain the regulatory approval or complete the filing in a timely manner, we may be deemed as violating the applicable laws and regulations of credit reference services and subject to regulatory penalties, including cessation of business operations, confiscation of illegal gains, fines from RMB50,000 to RMB500,000, and even criminal liability.
If we cannot obtain the regulatory approval or complete the filing in a timely manner, we may be deemed as violating the laws and regulations relating to credit reference services and subject to regulatory penalties, including cessation of business operations, confiscation of illegal gains, fines from RMB50,000 to RMB500,000, and even criminal liability.
If any of our institutional funding partners fails to comply with applicable anti-money laundering laws and regulations, it could become subject to regulatory intervention or sanction and its business may be adversely effected, which could further have a material adverse effect on our reputation, business financial condition and results of operations.
If any of our institutional funding partners fails to comply with applicable anti-money laundering laws and regulations, it could become subject to regulatory intervention or sanction and its business may be adversely affected, which could further have a material adverse effect on our reputation, business financial condition and results of operations.
If our business practices are deemed to violate any existing and future applicable laws, regulations or requirements of local regulatory authorities, our business, financial condition and results of operations would be materially and adversely affected.” 8 Table of Contents Furthermore, as advised by Hui Ye Law Firm, our PRC counsel, in connection with our historical issuance of securities to foreign investors, under current PRC laws, regulations and regulatory rules, as of the date of this annual report, we, our PRC subsidiaries and the consolidated variable interest entities, (i) are not required to obtain permissions from the China Securities Regulatory Commission, or the CSRC, (ii) are not required to go through cybersecurity review by the Cyberspace Administration of China, or the CAC, and (iii) have not received or were denied such requisite permissions by any PRC authority.
If our business practices are deemed to violate any existing and future applicable laws, regulations or requirements of local regulatory authorities, our business, financial condition and results of operations would be materially and adversely affected.” Furthermore, as advised by Hui Ye Law Firm, our PRC counsel, in connection with our historical issuance of securities to foreign investors, under current PRC laws, regulations and regulatory rules, as of the date of this annual report, we, our PRC subsidiaries and the consolidated variable interest entities, (i) are not required to obtain permissions from the China Securities Regulatory Commission, or the CSRC, (ii) are not required to go through cybersecurity review by the Cyberspace Administration of China, and (iii) have not received or were denied such requisite permissions by any PRC authority.
If we cannot successfully enter into and maintain effective strategic relationships with strategic partners, our business will be harmed. 38 Table of Contents In addition, if any of our partners fails to perform properly, we cannot assure you that we will be able to find an alternative in a timely and cost-efficient manner or at all.
If we cannot successfully enter into and maintain effective strategic relationships with strategic partners, our business will be harmed. 32 Table of Contents In addition, if any of our partners fails to perform properly, we cannot assure you that we will be able to find an alternative in a timely and cost-efficient manner or at all.
The satisfactory performance, reliability and availability of our platform and our underlying network infrastructure are critical to our operations, customer service, reputation and our ability to retain existing and attract new borrowers and institutional funding partners. Much of our system hardware is hosted in a leased facility located in Shanghai that is operated by our IT staff.
The satisfactory performance, reliability and availability of our platforms and our underlying network infrastructure are critical to our operations, customer service, reputation and our ability to retain existing and attract new borrowers and institutional funding partners. Much of our system hardware is hosted in a leased facility located in Shanghai that is operated by our IT staff.
We have limited access to alternative networks or services in the event of disruptions, failures or other problems with China’s internet infrastructure or the fixed telecommunications networks provided by telecommunication service providers. With the expansion of our business, we may be required to upgrade our technology and infrastructure to keep up with the increasing traffic on our platform.
We have limited access to alternative networks or services in the event of disruptions, failures or other problems with China’s internet infrastructure or the fixed telecommunications networks provided by telecommunication service providers. With the expansion of our business, we may be required to upgrade our technology and infrastructure to keep up with the increasing traffic on our platforms.
In addition, if the CSRC or other regulatory authorities later promulgate new rules or explanations requiring that we obtain their approvals or accomplish the required filing or other regulatory procedures for our prior offshore offerings, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver.
In addition, if the CSRC or other regulatory authorities subsequently promulgate new rules or explanations requiring that we obtain their approvals or accomplish the required filing or other regulatory procedures for our prior offshore offerings, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver.
Errors or other design defects within the software on which we rely may result in a negative experience for borrowers and institutional funding partners using our platform, delay introductions of new features or enhancements, result in errors or compromise our ability to protect borrower or investor data or our intellectual property.
Errors or other design defects within the software on which we rely may result in a negative experience for borrowers and institutional funding partners using our platforms, delay introductions of new features or enhancements, result in errors or compromise our ability to protect borrower or investor data or our intellectual property.
As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the NYSE corporate governance listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the NYSE corporate governance listing standards.
As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices for corporate governance matters that differ significantly from the NYSE corporate governance listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the NYSE corporate governance listing standards.
Our existing and new products and services could fail to attain sufficient market acceptance for many reasons, including: • borrowers may not find terms of our products, such as costs and credit limit, competitive or appealing; • our failure to predict market demand accurately and provide products and services that meet this demand in a timely fashion; • borrowers and institutional funding partners using our platform may not like, find useful or agree with, any changes; • defects, errors or failures on our platform; • negative publicity about our loan products or our platform’s performance or effectiveness; • views taken by regulatory authorities that the new products, services or platform changes do not comply with PRC laws, regulations or rules applicable to us; and • the introduction or anticipated introduction of competing products by our competitors.
Our existing and new products and services could fail to attain sufficient market acceptance for many reasons, including: • borrowers may not find terms of our products, such as costs and credit limit, competitive or appealing; • our failure to predict market demand accurately and provide products and services that meet this demand in a timely fashion; • borrowers and institutional funding partners using our platforms may not like, find useful or agree with, any changes; • defects, errors or failures on our platforms; • negative publicity about our loan products or our platforms’ performance or effectiveness; • views taken by regulatory authorities that the new products, services or platform changes do not comply with laws, regulations or rules applicable to us; and • the introduction or anticipated introduction of competing products by our competitors.
As used in this annual report, “we,” “us,” “our company” and “our” refer to FinVolution Group, its subsidiaries, and, in the context of describing our operations in China and consolidated financial information, the consolidated variable interest entities and their respective subsidiaries in China, including but not limited to (i) Beijing Paipairongxin Investment Consulting Co., Ltd., or Beijing Paipairongxin, which was established in June 2012; (ii) Shanghai PPDai Financial Information Service Co., Ltd., or Shanghai PPDai, a subsidiary of Beijing Paipairongxin, which was established in January 2011 and operates our ppdai.com website and PPDai mobile application and used to engage in our historical business of online lending information intermediary; (iii) Hefei PPDai Information Technology Co., Ltd., or Hefei PPDai, a subsidiary of Shanghai PPDai, which was established in December 2016 and holds the value-added telecommunication business operation license, or the VATS License, for operation of call center services; (iv) Shanghai Erxu Information Technology Co., Ltd., or Shanghai Erxu, a subsidiary of Shanghai Zihe, which was established in April 2018 and primarily engages in the business of introducing borrowers to institutional funding partners to match transactions; and (v) Shanghai Ledao Technology Co., Ltd., or Shanghai Ledao, which was established in January 2019 and currently does not engage in any business operations.
As used in this annual report, “we,” “us,” “our company” and “our” refer to FinVolution Group, its subsidiaries, and, in the context of describing our operations in China and consolidated financial information, the consolidated variable interest entities and their respective subsidiaries in China, including but not limited to (i) Beijing Paipairongxin Investment Consulting Co., Ltd., or Beijing Paipairongxin, which was established in June 2012; (ii) Shanghai PPDai Financial Information Service Co., Ltd., or Shanghai PPDai, a subsidiary of Beijing Paipairongxin, which was established in January 2011 and operates our ppdai.com website and PPDai mobile application; (iii) Hefei PPDai Information Technology Co., Ltd., or Hefei PPDai, a subsidiary of Shanghai PPDai, which was established in December 2016 and holds the value-added telecommunication business operation license for operation of call center services; (iv) Shanghai Erxu Information Technology Co., Ltd., or Shanghai Erxu, a subsidiary of Shanghai Zihe, which was established in April 2018 and primarily engages in the business of introducing borrowers to institutional funding partners to match transactions; and (v) Shanghai Ledao Technology Co., Ltd., or Shanghai Ledao, which was established in January 2019 and currently does not engage in any business operations.
Risk Factors—Risks Related to Doing Business in China—Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and results of operations” and “—A severe or prolonged downturn in the Chinese or global economy could reduce the demand for consumer loans and investments, which could materially and adversely affect our business and financial condition.” • We face risks arising from uncertainties with respect to the PRC legal system.
Risk Factors—Risks Related to Doing Business in China—Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and results of operations” and “—A severe or prolonged downturn in the Chinese or global economy could reduce the demand for consumer loans and investments, which could materially and adversely affect our business and financial condition.” 19 Table of Contents • We face risks arising from uncertainties with respect to the PRC legal system.
These factors could prevent us from processing or posting payments on loans, damage our brand and reputation, divert our employees’ attention, subject us to liability and cause borrowers and institutional funding partners to abandon our platform, any of which could adversely affect our business, financial condition and results of operations.
These factors could prevent us from processing or posting payments on loans, damage our brand and reputation, divert our employees’ attention, subject us to liability and cause borrowers and institutional funding partners to abandon our platforms, any of which could adversely affect our business, financial condition and results of operations.
If the market for our platform does not develop as we expect, if we fail to educate potential borrowers and institutional funding partners about the value of our platform and services, or if we fail to address the needs of our target customers, our reputation, business and results of operations will be materially and adversely affected.
If the market for our platforms does not develop as we expect, if we fail to educate potential borrowers and institutional funding partners about the value of our platforms and services, or if we fail to address the needs of our target customers, our reputation, business and results of operations will be materially and adversely affected.
If our credit-scoring model is flawed or ineffective, or if we otherwise fail or are perceived to fail to manage the default risks of loans facilitated through our platform, our reputation and market share would be materially and adversely affected, which would severely impact our business and results of operations.
If our credit-scoring model is flawed or ineffective, or if we otherwise fail or are perceived to fail to manage the default risks of loans facilitated through our platforms, our reputation and market share would be materially and adversely affected, which would severely impact our business and results of operations.
See “—Cyber-attacks, computer viruses, physical or electronic break-ins or similar disruptions of us or of a third party could result in disclosure or misuse of confidential information and misappropriation of funds of our borrowers and institutional funding partners, subject us to liabilities, cause reputational harm and adversely impact our results of operations and financial condition.” If our ability to collect delinquent loans is impaired, our business and results of operations might be materially and adversely affected.
See “—Cyber-attacks, computer viruses, physical or electronic break-ins or similar disruptions of us or of a third party could result in disclosure or misuse of confidential information and misappropriation of funds of our borrowers and institutional funding partners, subject us to liabilities, cause reputational harm and adversely impact our results of operations and financial condition.” 38 Table of Contents If our ability to collect delinquent loans is impaired, our business and results of operations might be materially and adversely affected.
In addition, an overseas listed company must also submit the filing with respect to its follow-on offerings, issuance of convertible corporate bonds and exchangeable bonds, and other equivalent offering activities, within a specific time frame requested under the Trial Measures.
In addition, an overseas listed company must also submit the filing with respect to its follow-on offerings, issuance of convertible corporate bonds and exchangeable bonds, and other equivalent offering activities, within a specific time frame requested under the CSRC Filing Measures.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Our Magic Mirror Model leverages a huge database that we have built up gradually through our years of operations. Such a vast amount of data lays a strong foundation for our use of machine learning to optimize the Magic Mirror Model on a continuing basis. Following data aggregation and fraud detection, prospective borrowers enter into credit assessment phase.
Our Magic Mirror Model leverages a huge database that we have built up gradually through our years of operations. Such a vast amount of data lays a strong foundation for our use of machine learning to optimize the Magic Mirror Model on a continuing basis. Following data aggregation and fraud detection, prospective borrowers enter into the credit assessment phase.
If the lending occurred before August 20, 2019, the upper limit of the protected interest rate can be determined by referring to four times of the one-year Loan Prime Rate at the time of the plaintiff’s filing of lawsuit.
If the lending occurred before August 20, 2019, the upper limit of the protected interest rate can be determined by referring to four times the one-year Loan Prime Rate at the time of the plaintiff’s filing of the lawsuit.
In accordance with the Draft Data Security 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) listing 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 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) listing in Hong Kong which affects or may affect national security; or (iv) other data processing activities that affect or may affect national security.
Risk Factors—Risks Related to Doing Business in China—Failure to make adequate contributions to various employee benefit plans and withhold individual income tax on employees’ salaries as required by PRC regulations may subject us to penalties.” Regulations Relating to Tax Dividend withholding tax Pursuant to the Enterprise Income Tax Law and its implementation rules, if a non-resident enterprise has not set up an organization or establishment in the PRC, or has set up an organization or establishment but the income derived has no actual connection with such organization or establishment, it will be subject to a withholding tax on its PRC-sourced income at a rate of 10%.
Risk Factors—Risks Related to Doing Business in China—Failure to make adequate contributions to various employee benefit plans and withhold individual income tax on employees’ salaries as required by PRC regulations may subject us to penalties.” Regulations Relating to Tax Dividend withholding tax Pursuant to the Enterprise Income Tax Law of the PRC and its implementation rules, if a non-resident enterprise has not set up an organization or establishment in the PRC, or has set up an organization or establishment but the income derived has no actual connection with such organization or establishment, it will be subject to a withholding tax on its PRC-sourced income at a rate of 10%.
Contractual Arrangements with Beijing Paipairongxin The following is a summary of the currently effective contractual arrangements by and among our wholly-owned subsidiary, Shanghai Guangjian and its wholly-owned subsidiary, Shanghai Shanghu (with respect to the business operation agreement and the exclusive technology consulting and service agreement only), our consolidated variable interest entity, Beijing Paipairongxin, the shareholders of Beijing Paipairongxin, and Shanghai PPDai (with respect to the exclusive technology consulting and service agreement only).
Contractual Arrangements with Beijing Paipairongxin and Its Shareholders The following is a summary of the currently effective contractual arrangements by and among our wholly-owned subsidiary, Shanghai Guangjian and its wholly-owned subsidiary, Shanghai Shanghu (with respect to the business operation agreement and the exclusive technology consulting and service agreement only), the consolidated variable interest entity, Beijing Paipairongxin, the shareholders of Beijing Paipairongxin, and Shanghai PPDai (with respect to the exclusive technology consulting and service agreement only).
Pursuant to this agreement, Shanghai Zihe and its shareholders agree that to the extent permitted by law, they will accept and strictly execute instructions from Shanghai Manyin on business operations, such as appointment of directors and senior management.
Pursuant to this agreement, Shanghai Zihe and its shareholders agree that to the extent permitted by law, they will accept and strictly execute instructions from Shanghai Manyin on business operations, such as the appointment of directors and senior management.
This agreement also requires each of Shanghai Zihe’s shareholders to issue an irrevocable power of attorney authorizing Shanghai Manyin or any person(s) designated by Shanghai Manyin to execute shareholders’ rights on behalf of such shareholder. Unless terminated in advance pursuant this agreement, this agreement will remain effective for 30 years, renewable upon advance written notice by Shanghai Manyin.
This agreement also requires each of Shanghai Zihe’s shareholders to issue an irrevocable power of attorney authorizing Shanghai Manyin or any person(s) designated by Shanghai Manyin to execute shareholders’ rights on behalf of such shareholder. Unless terminated in advance pursuant to this agreement, this agreement will remain effective for 30 years, renewable upon advance written notice by Shanghai Manyin.
Pursuant to this agreement, Shanghai Ledao and its shareholders agree that to the extent permitted by law, they will accept and strictly execute instructions from Shanghai Manyin on business operations, such as appointment of directors and senior management.
Pursuant to this agreement, Shanghai Ledao and its shareholders agree that to the extent permitted by law, they will accept and strictly execute instructions from Shanghai Manyin on business operations, such as the appointment of directors and senior management.
This agreement also requires each of Shanghai Ledao’s shareholders to issue an irrevocable power of attorney authorizing Shanghai Manyin or any person(s) designated by Shanghai Manyin to execute shareholders’ rights on behalf of such shareholder. Unless terminated in advance pursuant this agreement, this agreement will remain effective for 30 years, renewable upon advance written notice by Shanghai Manyin.
This agreement also requires each of Shanghai Ledao’s shareholders to issue an irrevocable power of attorney authorizing Shanghai Manyin or any person(s) designated by Shanghai Manyin to execute shareholders’ rights on behalf of such shareholder. Unless terminated in advance pursuant to this agreement, this agreement will remain effective for 30 years, renewable upon advance written notice by Shanghai Manyin.
Through a power of attorney dated January 14, 2019, each shareholder of Shanghai Ledao irrevocably authorizes Shanghai Manyin or any person(s) designated by Shanghai Manyin to act as his or her attorney-in-fact to exercise all of such shareholder’s voting and other rights associated with the shareholder’s equity interest in Shanghai Ledao, such as the right to call a shareholders’ meeting, join a shareholders’ meeting and sign any shareholders resolutions; the right to nominate and appoint legal representative, directors, supervisors, general manager, chief financial officer and other officers, as well as all rights a shareholder may have as a shareholder under laws and constitutional documents.
Through a power of attorney dated January 14, 2019, each shareholder of Shanghai Ledao irrevocably authorizes Shanghai Manyin or any person(s) designated by Shanghai Manyin to act as his or her attorney-in-fact to exercise all of such shareholder’s voting and other rights associated with the shareholder’s equity interest in Shanghai Ledao, such as the right to call a shareholders’ meeting, join a shareholders’ meeting and sign any shareholders resolutions; the right to nominate and appoint the legal representative, directors, supervisors, general manager, chief financial officer and other officers, as well as all rights a shareholder may have as a shareholder under laws and constitutional documents.
Shanghai Manyin shall own the intellectual property rights arising out of the provisions of services under this agreement. Unless Shanghai Manyin terminates this agreement in advance, this agreement will remain effective for 30 years, renewable upon Shanghai Manyin’s advance written notice.
Shanghai Manyin shall own the intellectual property rights arising out of the provisions of services under this agreement. Unless Shanghai Manyin terminates this agreement in advance, this agreement will remain effective for 30 years, renewable upon Shanghai Manyin’s advance written notice.
The Cross-border Data Security Regulations stipulates that if the cross-border data transfer to be conducted by a “data processor” has any of the following circumstances, the “data processor” shall apply to the national cyberspace administration authority for security assessment via the provincial cyberspace administration authority in the place where the said “data processor” is located: (i) any data processor transfers important data to overseas recipients; (ii) any “critical information infrastructure operator,” or any “data processor” processing the personal information of more than one million individuals transfers personal information to overseas recipients; (iii) the personal information of more than 100,000 individuals or the sensitive personal information of more than 10,000 individuals has been provided overseas since January 1 of the previous year on a cumulative basis; and (iv) other circumstances where the security assessment is required as prescribed by the national cyberspace administration authority.
These regulations stipulates that if the cross-border data transfer to be conducted by a “data processor” has any of the following circumstances, the “data processor” shall apply to the national cyberspace administration authority for security assessment via the provincial cyberspace administration authority in the place where the said “data processor” is located: (i) any data processor transfers important data to overseas recipients; (ii) any “critical information infrastructure operator,” or any “data processor” processing the personal information of more than one million individuals transfers personal information to overseas recipients; (iii) the personal information of more than 100,000 individuals or the sensitive personal information of more than 10,000 individuals has been provided overseas since January 1 of the previous year on a cumulative basis; and (iv) other circumstances where the security assessment is required as prescribed by the national cyberspace administration authority.
Specifically, the examination and determination of an indirect offering and listing will be conducted on a substance-over-form basis, and an offering and listing shall be considered as an indirect overseas offering and listing by a domestic company if the issuer meets the following conditions: (i) the operating income, gross profit, total assets, or net assets of the domestic enterprise in the most recent fiscal year was more than 50% of the relevant line item in the issuer’s audited consolidated financial statement for that year; and (ii) senior management personnel responsible for business operations and management are mostly PRC citizens or are ordinarily resident in the PRC, and the main place of business operations is in the PRC or carried out in the PRC.
Specifically, the examination and determination of an indirect offering and listing will be conducted on a substance-over-form basis, and an offering and listing shall be considered as an indirect overseas offering and listing by a domestic company if the issuer meets the following conditions: (i) the operating income, gross profit, total assets, or net assets of the domestic enterprise in the most recent fiscal year was more than 50% of the line item in the issuer’s audited consolidated financial statement for that year; and (ii) senior management personnel responsible for business operations and management are mostly PRC citizens or are ordinarily resident in the PRC, and the main place of business operations is in the PRC or carried out in the PRC.
Through a power of attorney dated March 21, 2018, each shareholder of Shanghai Zihe irrevocably authorizes Shanghai Manyin or any person(s) designated by Shanghai Manyin to act as his or her attorney-in-fact to exercise all of such shareholder’s voting and other rights associated with the shareholder’s equity interest in Shanghai Zihe, such as the right to call a shareholders’ meeting, join a shareholders’ meeting and sign any shareholders resolutions; the right to nominate and appoint legal representative, directors, supervisors, general manager, chief financial officer and other officers, as well as all rights a shareholder may have as a shareholder under laws and constitutional documents.
Through a power of attorney dated March 21, 2018, each shareholder of Shanghai Zihe irrevocably authorizes Shanghai Manyin or any person(s) designated by Shanghai Manyin to act as his or her attorney-in-fact to exercise all of such shareholder’s voting and other rights associated with the shareholder’s equity interest in Shanghai Zihe, such as the right to call a shareholders’ meeting, join a shareholders’ meeting, and sign any shareholders’ resolutions; the right to nominate and appoint the legal representative, directors, supervisors, general manager, chief financial officer, and other officers, as well as all rights a shareholder may have as a shareholder under laws and constitutional documents.
Where archives or copies of archives that have important conservation value to the nation and the society need to be transferred or transmitted to outside mainland China, relevant approval procedures stipulated by national regulations shall be followed; and (v) overseas securities regulators and competent overseas authorities may request to investigate, including to collect evidence for investigation purpose, or inspect a domestic company that has been listed or offered securities in an overseas market or securities companies and securities service providers that undertake securities business for such domestic companies.
Where archives or copies of archives that have important conservation value to the nation and the society need to be transferred or transmitted to outside mainland China, approval procedures stipulated by national regulations shall be followed; and (v) overseas securities regulators and competent overseas authorities may request to investigate, including to collect evidence for investigation purpose, or inspect a domestic company that has been listed or offered securities in an overseas market or securities companies and securities service providers that undertake securities business for such domestic companies.
On August 20, 2021, the Standing Committee of the National People’s Congress of China promulgated the Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect on November 1, 2021. requires, among others, that (i) the processing of personal information should have a clear and reasonable purpose which should be directly related to the processing purpose and should be conducted in a method that has the minimum impact on personal rights and interests, and (ii) the collection of personal information should be limited to the minimum scope as necessary to achieve the processing purpose and avoid the excessive collection of personal information.
On August 20, 2021, the Standing Committee of the National People’s Congress promulgated the Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect on November 1, 2021, requires, among others, that (i) the processing of personal information should have a clear and reasonable purpose which should be directly related to the processing purpose and should be conducted in a method that has the minimum impact on personal rights and interests, and (ii) the collection of personal information should be limited to the minimum scope as necessary to achieve the processing purpose and avoid the excessive collection of personal information.
Pursuant to the Regulations, critical information infrastructure shall mean the important network facilities or information systems of key industries or fields such as public communication and information service, energy, transportation, water conservation, finance, public services, e-government affairs and national defense science, and important network facilities or information systems which may endanger national security, people’s livelihood and public interest once there occur damage, malfunctioning or data leakage to them.
Pursuant to these regulations, critical information infrastructure shall mean the important network facilities or information systems of key industries or fields such as public communication and information service, energy, transportation, water conservation, finance, public services, e-government affairs and national defense science, and important network facilities or information systems which may endanger national security, people’s livelihood and public interest once there occur damage, malfunctioning or data leakage to them.
Each of the shareholders of Shanghai Zihe agrees that before his obligations under the contractual arrangements are discharged, he will not dispose of the pledged equity interests, create or allow any encumbrance on the pledged equity interests, or take any action which may result in the change of the pledged equity that may have material adverse effects on the pledgee’s rights under this agreement without the prior written consent of Shanghai Manyin.
Each of the shareholders of Shanghai Zihe agrees that before his obligations under the contractual arrangements are discharged, he will not dispose of the pledged equity interests, create or allow any encumbrance on the pledged equity interests, or take any action that may result in the change of the pledged equity that may have material adverse effects on the pledgee’s rights under this agreement without the prior written consent of Shanghai Manyin.
Each of the shareholders of Shanghai Ledao agrees that before his obligations under the contractual arrangements are discharged, he will not dispose of the pledged equity interests, create or allow any encumbrance on the pledged equity interests, or take any action which may result in the change of the pledged equity that may have material adverse effects on the pledgee’s rights under this agreement without the prior written consent of Shanghai Manyin.
Each of the shareholders of Shanghai Ledao agrees that before his obligations under the contractual arrangements are discharged, he will not dispose of the pledged equity interests, create or allow any encumbrance on the pledged equity interests, or take any action that may result in the change of the pledged equity that may have material adverse effects on the pledgee’s rights under this agreement without the prior written consent of Shanghai Manyin.
Instead, non-resident enterprises and their withholding agents may, by self-assessment and on confirmation that the prescribed criteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate, and file necessary forms and supporting documents when performing tax filings, which will be subject to post-tax filing examinations by the relevant tax authorities.
Instead, non-resident enterprises and their withholding agents may, by self-assessment and on confirmation that the prescribed criteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate, and file necessary forms and supporting documents when performing tax filings, which will be subject to post-tax filing examinations by the tax authorities.
However, as the tax residency status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body” as applicable to our offshore entities, we may be treated as a resident enterprise for PRC tax purposes under the EIT Law, and we may therefore be subject to PRC income tax on our global income.
However, as the tax residency status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body” as applicable to our offshore entities, we may be treated as a resident enterprise for PRC tax purposes under the Enterprise Income Tax Law of the PRC, and we may therefore be subject to PRC income tax on our global income.
Upon the data aggregation, our system converts the originally unstructured data and structured data into credit scores using machine learning techniques. Fraud Detection We have been working closely with multiple partners in a joint effort to identify emerging fraudulent schemes, scams, trends, threats, and criminal organizations and have accumulated data as related to fraud.
Upon the data aggregation, our system converts the originally unstructured data and structured data into credit scores using machine learning techniques. Fraud Detection We have been working closely with multiple partners in a joint effort to identify emerging fraudulent schemes, scams, trends, threats, and criminal organizations and have accumulated data related to fraud.
If our employees fail to pay or we fail to withhold their income taxes according to relevant laws and regulations, we may face sanctions imposed by the tax authorities or other PRC governmental authorities. Regulations on Intellectual Property Rights The PRC has adopted comprehensive legislation governing intellectual property rights, including copyrights, patents, trademarks and domain names. Copyright.
If our employees fail to pay or we fail to withhold their income taxes according to laws and regulations, we may face sanctions imposed by the tax authorities or other PRC governmental authorities. Regulations on Intellectual Property Rights The PRC has adopted comprehensive legislation governing intellectual property rights, including copyrights, patents, trademarks and domain names. Copyright .
In addition, the definition contains a catch-all provision which includes investments made by foreign investors through means stipulated in laws or administrative regulations or other methods prescribed by the State Council. On December 26, 2019, the State Council promulgated the Implementation Regulations on the Foreign Investment Law, which came into effect on January 1, 2020.
In addition, the definition contains a catch-all provision that includes investments made by foreign investors through means stipulated in laws or administrative regulations or other methods prescribed by the State Council. On December 26, 2019, the State Council promulgated the Implementation Regulations on the Foreign Investment Law, which came into effect on January 1, 2020.
However, we have not made any accruals for the interest on underpayment and penalties that may be imposed by the relevant PRC government authorities in the financial statements as we believe it would be unlikely that the relevant PRC government authorities will impose any significant interests or penalties. See “Item 3. Key Information—D.
However, we have not made any accruals for the interest on underpayment and penalties that may be imposed by the PRC government authorities in the financial statements as we believe it would be unlikely that the PRC government authorities will impose any significant interests or penalties. See “Item 3. Key Information—D.
Moreover, if the lender and the borrower agree on both the overdue interest rate and the liquidated damages or other fees, the lender may choose to claim any or all of them, but the portion in total exceeding the Quadruple LPR Limit shall not be supported by the people’s court.
Moreover, if the lender and the borrower agree on both the overdue interest rate and the liquidated damages or other fees, the lender may choose to claim any or all of them, but the portion in total exceeding the Quadruple LPR Limit may not be supported by the people’s court.
Under Circular 19, the foreign exchange capital in the capital account of foreign-invested enterprises upon the confirmation of rights and interests of monetary contribution by the local foreign exchange bureau (or the book-entry registration of monetary contribution by the banks) can be settled at the banks based on the actual operation needs of the enterprises.
Under SAFE Circular 19, the foreign exchange capital in the capital account of foreign-invested enterprises upon the confirmation of rights and interests of monetary contribution by the local foreign exchange bureau (or the book-entry registration of monetary contribution by the banks) can be settled at the banks based on the actual operation needs of the enterprises.
Under these circulars, our employees working in China who exercise share options will be subject to PRC individual income tax. Our PRC subsidiaries have obligations to file documents related to employee share options with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options.
Under these circulars, our employees working in China who exercise share options will be subject to PRC individual income tax. Our PRC subsidiaries have obligations to file documents related to employee share options with tax authorities and to withhold individual income taxes of those employees who exercise their share options.
According to the Anti-Terrorism Law, telecommunication service operators or internet service providers shall (i) carry out pertinent anti-terrorism publicity and education to society; (ii) provide technical interfaces, decryption and other technical support and assistance for the competent departments to prevent and investigate terrorist activities; (iii) implement network security and information monitoring systems as well as safety and technical prevention measures to avoid the dissemination of terrorism information, delete the terrorism information, immediately halt its dissemination, keep relevant records and report to the competent departments once the terrorism information is discovered; and (iv) examine customer identities before providing services.
According to the Anti-Terrorism Law of the PRC, telecommunication service operators or internet service providers shall (i) carry out pertinent anti-terrorism publicity and education to society; (ii) provide technical interfaces, decryption and other technical support and assistance for the competent departments to prevent and investigate terrorist activities; (iii) implement network security and information monitoring systems as well as safety and technical prevention measures to avoid the dissemination of terrorism information, delete the terrorism information, immediately halt its dissemination, keep records and report to the competent departments once the terrorism information is discovered; and (iv) examine customer identities before providing services.
If there is ambiguity or dispute over the identification of a state secret, a request shall be submitted to the competent secrecy administrative department for determination; if there is ambiguity or dispute over the identification of a government work secret, a request shall be submitted to the competent government authority for determination; (iii) a domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant entities or individuals including securities companies, securities service providers, and overseas regulators, other documents and materials that, if divulged, will jeopardize national security or public interest, shall strictly obey the relevant procedures stipulated by applicable national regulations; (iv) archives, including working papers, that have been produced in mainland China by securities companies and securities service providers for overseas securities offering and listing by domestic companies shall be retained in mainland China, and, without prior approval by competent authorities, must not be brought, mailed or otherwise transferred to outside mainland China, or transmitted to any institutions or individuals outside mainland China through any methods including via the use of information technologies.
If there is ambiguity or dispute over the identification of a state secret, a request shall be submitted to the competent secrecy administrative department for determination; if there is ambiguity or dispute over the identification of a government work secret, a request shall be submitted to the competent government authority for determination; (iii) a domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to entities or individuals including securities companies, securities service providers, and overseas regulators, other documents and materials that, if divulged, will jeopardize national security or public interest, shall strictly obey the procedures stipulated by applicable national regulations; (iv) archives, including working papers, that have been produced in mainland China by securities companies and securities service providers for overseas securities offering and listing by domestic companies shall be retained in mainland China, and, without prior approval by competent authorities, may not be brought, mailed or otherwise transferred to outside mainland China, or transmitted to any institutions or individuals outside mainland China through any methods including via the use of information technologies.
Shanghai Zihe and its shareholders further agree that, without prior written consent of Shanghai Manyin, Shanghai Zihe will not take any action that may have material effects on its assets, businesses, human resources, rights, obligations, or business operations.
Shanghai Zihe and its shareholders further agree that, without the prior written consent of Shanghai Manyin, Shanghai Zihe will not take any action that may have material effects on its assets, businesses, human resources, rights, obligations, or business operations.
Shanghai Ledao and its shareholders further agree that, without prior written consent of Shanghai Manyin, Shanghai Ledao will not take any action that may have material effects on its assets, businesses, human resources, rights, obligations, or business operations.
Shanghai Ledao and its shareholders further agree that, without the prior written consent of Shanghai Manyin, Shanghai Ledao will not take any action that may have material effects on its assets, businesses, human resources, rights, obligations, or business operations.
On May 8, 2017, the Supreme People’s Court and the Supreme People’s Procuratorate released the Interpretations of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning the Application of Law in the Handling of Criminal Cases Involving Infringement of Citizens’ Personal Information, or the Interpretations, which became effective on June 1, 2017.
On May 8, 2017, the Supreme People’s Court and the Supreme People’s Procuratorate released the Interpretations of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning the Application of Law in the Handling of Criminal Cases Involving Infringement of Citizens’ Personal Information, which became effective on June 1, 2017.
The Trial Measures proposes to establish a new filing-based regime to regulate overseas offerings and listings by domestic companies. According to the Trial Measures, an overseas offering and listing by a domestic company, whether directly or indirectly, shall be filed with the CSRC.
The CSRC Filing Measures proposes to establish a new filing-based regime to regulate overseas offerings and listings by domestic companies. According to the CSRC Filing Measures, an overseas offering and listing by a domestic company, whether directly or indirectly, shall be filed with the CSRC.
Different algorithms are applied to prospective borrowers with different features in assessing the potential risks associated with them and based on the assessment results, our credit scoring model generates Magic Mirror scores for each of the prospective borrowers.
Different algorithms are applied to prospective borrowers with different features in assessing the potential risks associated with them. Based on the assessment results, our credit scoring model generates Magic Mirror scores for each of the prospective borrowers.
The Regulations also require that critical information infrastructure operators shall establish a cybersecurity protection system and accountability system, and that the main responsible person of a critical information infrastructure operator shall take full responsibility for the security protection of the critical information infrastructures operated by it.
These regulations also require that critical information infrastructure operators shall establish a cybersecurity protection system and accountability system, and that the main responsible person of a critical information infrastructure operator shall take full responsibility for the security protection of the critical information infrastructures operated by it.
The Rules specifies the scope of necessary personal information to be collected each for a variety of common mobile internet applications, such as maps and navigation apps, online ride-hailing apps, instant messaging apps, online community apps.
These rules specifies the scope of necessary personal information to be collected each for a variety of common mobile internet applications, such as maps and navigation apps, online ride-hailing apps, instant messaging apps, online community apps.
They shall not divulge any state secret or harm national security and public interest; (ii) a domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant entities or individuals including securities companies, securities service providers, and overseas regulators, documents and materials that contain state secrets or government work secrets, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level.
They may not divulge any state secret or harm national security and public interest; (ii) a domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to entities or individuals including securities companies, securities service providers, and overseas regulators, documents and materials that contain state secrets or government work secrets, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level.
Regulation This section sets forth a summary of the most significant laws, rules and regulations that affect our business activities in the PRC and our shareholders’ rights to receive dividends and other distributions from us.
Regulations in the PRC This section sets forth a summary of the most significant laws, rules and regulations that affect our business activities in the PRC and our shareholders’ rights to receive dividends and other distributions from us.
The Confidentiality and Archives Administration Provisions, among others, provides that: (i) a domestic company that seeks to offer and list its securities in an overseas market, either via direct offering or indirect offering, and the securities companies and securities service providers that undertake relevant securities business, shall strictly abide by applicable laws and regulations of the PRC, enhance legal awareness of keeping state secrets and strengthening archives administration, institute a sound confidentiality and archives administration system, and take necessary measures to fulfill confidentiality and archives administration obligations.
These provisions, among others, provides that: (i) a domestic company that seeks to offer and list its securities in an overseas market, either via direct offering or indirect offering, and the securities companies and securities service providers that undertake securities business, shall strictly abide by applicable laws and regulations of the PRC, enhance legal awareness of keeping state secrets and strengthening archives administration, institute a sound confidentiality and archives administration system, and take necessary measures to fulfill confidentiality and archives administration obligations.
According to the Financing Guarantee Regulations, the establishment of financing guarantee companies should be subject to the approval of the competent government authority, and unless otherwise stipulated, no entity is allowed to operate the financing guarantee business without such approval.
According to these regulations, the establishment of financing guarantee companies should be subject to the approval of the competent government authority, and unless otherwise stipulated, no entity is allowed to operate the financing guarantee business without such approval.
In addition, relevant administration departments of each important industry and sector shall be responsible for formulating the rule of critical information infrastructure determination applicable to their respective industry or sector, and determine the critical information infrastructure operators in their industry or sector.
In addition, administration departments of each important industry and sector shall be responsible for formulating the rule of critical information infrastructure determination applicable to their respective industry or sector, and determine the critical information infrastructure operators in their industry or sector.
Without prior written consent from Shanghai Guangjian or its designated third party, Beijing Paipairongxin shall not, among other things, amend its articles of association, increase or decrease the registered capital, sell, dispose of or set any encumbrance on its assets, business or revenue outside the ordinary course of business, enter into any material contract, merge with any other persons or make any investments, distribute dividends, or enter into any transactions which have material adverse effects on its business.
Without prior written consent from Shanghai Guangjian or its designated third party, Beijing Paipairongxin may not, among other things, amend its articles of association, increase or decrease the registered capital, sell, dispose of or set any encumbrance on its assets, business, or revenue outside the ordinary course of business, enter into any material contract, merge with any other persons, make any investments, distribute dividends, or enter into any transactions which have material adverse effects on its business.
In June 2017, Shanghai Guangjian Information Technology Co., Ltd., or Shanghai Guangjian was incorporated as a wholly-owned PRC subsidiary of FinVolution HK. Shortly after its incorporation, Shanghai Guangjian established a wholly-owned subsidiary, Shanghai Shanghu Information Technology Co., Ltd., or Shanghai Shanghu.
In June 2017, Shanghai Guangjian Information Technology Co., Ltd., or Shanghai Guangjian was incorporated as a wholly-owned PRC subsidiary of FinVolution (HK) Limited. Shortly after its incorporation, Shanghai Guangjian established a wholly-owned subsidiary, Shanghai Shanghu Information Technology Co., Ltd., or Shanghai Shanghu.
Without prior written consent from Shanghai Manyin or its designated third party, Shanghai Zihe shall not, among other things, amend its articles of association, increase or decrease the registered capital, sell, dispose of or set any encumbrance on its assets, business or revenue outside the ordinary course of business, enter into any material contract, merge with any other persons or make any investments, distribute dividends, or enter into any transactions which have material adverse effects on its business.
Without prior written consent from Shanghai Manyin or its designated third party, Shanghai Zihe may not, among other things, amend its articles of association, increase or decrease the registered capital, sell, dispose of or set any encumbrance on its assets, business, or revenue outside the ordinary course of business, enter into any material contract, merge with any other persons, or make any investments, distribute dividends, or enter into any transactions which have material adverse effects on its business.
Without prior written consent from Shanghai Manyin or its designated third party, Shanghai Ledao shall not, among other things, amend its articles of association, increase or decrease the registered capital, sell, dispose of or set any encumbrance on its assets, business or revenue outside the ordinary course of business, enter into any material contract, merge with any other persons or make any investments, distribute dividends, or enter into any transactions which have material adverse effects on its business.
Without prior written consent from Shanghai Manyin or its designated third party, Shanghai Ledao may not, among other things, amend its articles of association, increase or decrease the registered capital, sell, dispose of or set any encumbrance on its assets, business or revenue outside the ordinary course of business, enter into any material contract, merge with any other persons or make any investments, distribute dividends, or enter into any transactions which have material adverse effects on its business.
Risk Factors—Risks Related to Our Corporate Structure—If the PRC government deems that the contractual arrangements in relation to the consolidated variable interest entities do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations,” “Item 3.
Risk Factors—Risks Related to Our Corporate Structure—If the PRC government deems that the contractual arrangements regarding the consolidated variable interest entities do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations,” “Item 3.
According to the PRC Guarantee Law, an action of guarantee means that the guarantor agrees to repay the outstanding debts to the creditor or assume any other relevant responsibilities when the debtor fails to repay the outstanding debts or fulfill the responsibilities.
According to the PRC Guarantee Law, an action of guarantee means that the guarantor agrees to repay the outstanding debts to the creditor or assume any other responsibilities when the debtor fails to repay the outstanding debts or fulfill the responsibilities.
On February 17, 2023, the CSRC published the Trial Administrative Measures on the Overseas Issuance and Listing of Securities by Domestic Companies, or the Trial Measures, and five supporting guidelines, effective on March 31, 2023.
On February 17, 2023, the CSRC published the Trial Administrative Measures on the Overseas Issuance and Listing of Securities by Domestic Companies, or the CSRC Filing Measures, and five supporting guidelines, effective on March 31, 2023.
The Regulations provide that no individual or organization may carry out any illegal activity of intruding into, interfering with, or sabotaging any critical information infrastructures, or endanger the security of any critical information infrastructures.
These regulations provide that no individual or organization may carry out any illegal activity of intruding into, interfering with, or sabotaging any critical information infrastructures, or endanger the security of any critical information infrastructures.
For example, we generally experience lower transaction volume on our online consumer finance platform during national holidays in China, particularly during the Chinese New Year holiday season in the first quarter of each year. As we cooperate with institutional funding partners, such as commercial banks, our business may also be affected by liquidity seasonality in the banking system.
For example, we generally experience lower transaction volume on our online consumer finance platform during public holidays in China, particularly during the Chinese New Year holiday season in the first quarter of each year. As we cooperate with institutional funding partners, such as commercial banks, our business may also be affected by liquidity seasonality in the banking system.
We have established systematic risk management procedures which have proven to be effective in various macro-economic environments. Our proprietary and big-databased credit scoring model, the Magic Mirror Model, has been continually testing and refining its credit decision-making rules as we continue to study the increasing amount of data accumulated through our loan facilitation.
We have established systematic risk management procedures which have proven to be effective in various macro-economic environments. Our proprietary and big-data-based credit scoring model, the Magic Mirror Model, has been continually testing and refining its credit decision-making rules as we continue to study the increasing amount of data accumulated through our loan facilitation.
This makes our platform both highly reliable and scalable. • Scalabilit y. With modular architecture, our platform can be easily expanded as data storage requirements and user visits increase. In addition, load balancing technology helps us improve distribution of workloads across multiple computing components, optimizing resource utilization and minimizing response time. • Automatio n.
This makes our platforms both highly reliable and scalable. • Scalabilit y. With modular architecture, our platforms can be easily expanded as data storage requirements and user visits increase. In addition, load balancing technology helps us improve distribution of workloads across multiple computing components, optimizing resource utilization and minimizing response time. • Automatio n.
We employ data slicing and distribute the storage of a user’s data points across several servers. We also maintain redundancy through a real-time multi-layer data backup system to prevent loss of data resulting from unforeseen circumstances. We conduct periodic reviews of our technology platform, identifying and correcting problems that may undermine our system security. • Stabilit y.
We employ data slicing and distribute the storage of a user’s data points across several servers. We also maintain redundancy through a real-time multi-layer data backup system to prevent loss of data resulting from unforeseen circumstances. We conduct periodic reviews of our technology platforms, identifying and correcting problems that may undermine our system security. • Stabilit y.
Under the loan agreements, Shanghai Manyin has granted an interest-free loan of RMB100.0 million to the shareholders of Shanghai Zihe solely for the capital contributions to Shanghai Zihe.
Under the loan agreements, Shanghai Manyin has granted an interest-free loan of RMB100.0 million to the shareholders of Shanghai Zihe solely for their capital contributions to Shanghai Zihe.
Under the loan agreements, Shanghai Manyin has granted an interest-free loan of RMB50.0 million to the shareholders of Shanghai Ledao solely for the capital contributions to Shanghai Ledao.
Under the loan agreements, Shanghai Manyin has granted an interest-free loan of RMB50.0 million to the shareholders of Shanghai Ledao solely for their capital contributions to Shanghai Ledao.
If services provided by one data provider are suspended, our system will shift to the backup sources automatically to ensure no interruption to our operation. 88 Table of Contents Intellectual Property We rely on a combination of patent, copyright, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights.
If services provided by one data provider are suspended, our system will shift to the backup sources automatically to ensure no interruption to our operation. 77 Table of Contents Intellectual Property We rely on a combination of patent, copyright, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights.
If any entity operates the financing guarantee business without such approval, the entity may be subject to penalties, including termination or suspension of business, fines of RMB500,000 to RMB1,000,000, confiscation of illegal gains if any, and if the violation constitutes a criminal offense, criminal liability shall be imposed in accordance with the applicable laws and regulations.
If any entity operates the financing guarantee business without such approval, the entity may face penalties, including termination or suspension of business, fines of RMB500,000 to RMB1,000,000, confiscation of illegal gains if any, and if the violation constitutes a criminal offense, criminal liability shall be imposed in accordance with the applicable laws and regulations.
Failure to complete the record-filing under the Trial Measures may subject a PRC domestic company to a warning or a fine ranging from RMB1 million to RMB10 million, and its controlling shareholders, actual controllers, the persons directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines.
Failure to complete the record-filing under the CSRC Filing Measures may subject a PRC domestic company to a warning or a fine ranging from RMB1 million to RMB10 million, and its controlling shareholders, actual controllers, the persons directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines.
Concurrently with our initial public offering, we also raised approximately US$49.5 million in net proceeds through issuing 19,230,769 Class A ordinary shares to a wholly-owned subsidiary of Sun Hung Kai & Co. Limited. In January 2018, we incorporated Bluebottle Limited in Hong Kong.
Concurrently with our initial public offering, we also raised approximately US$49.5 million in net proceeds through issuing 19,230,769 Class A ordinary shares to a wholly-owned subsidiary of Sun Hung Kai & Co. Limited. In January 2018, we established Bluebottle Limited in Hong Kong.
For example, pursuant to the Civil Code of the PRC, usurious loans are explicitly banned, but a clear definition or interpretation of “usurious loans” is not provided. We cannot rule out the possibility that certain of our operation activities would be deemed to violate or not fully comply with the Civil Code of the PRC.
For example, pursuant to the Civil Code of the PRC, usurious loans are explicitly banned, but a clear definition or interpretation of “usurious loans” is not provided. We cannot rule out the possibility that certain of our operational activities would be deemed to violate or not fully comply with the Civil Code of the PRC.
It embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. However, since it is relatively new, uncertainties still exist in relation to its interpretation and implementation.
It embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. However, since it is relatively new, uncertainties still exist regarding its interpretation and implementation.
If available information is insufficient for our system to draw a conclusion, the relevant loan applications will be forwarded to our anti-fraud team for offline verification, which involves members of our anti-fraud team speaking with applicants to inquire after any inconsistencies in a loan application. 86 Table of Contents Proprietary Credit Scoring and Risk Pricing Models In August 2014, we developed and launched a proprietary credit scoring model, known as Magic Mirror Model, which we believe represents one of our key competitive advantages.
If available information is insufficient for our system to draw a conclusion, the loan applications will be forwarded to our anti-fraud team for offline verification, which involves members of our anti-fraud team speaking with applicants to inquire after any inconsistencies in a loan application. 75 Table of Contents Proprietary Credit Scoring and Risk Pricing Models In August 2014, we developed and launched a proprietary credit scoring model, known as the Magic Mirror Model, which we believe represents one of our key competitive advantages.
Pursuant to the Trial Measures, PRC domestic companies that directly or indirectly offer or list their securities in an overseas market, which include (i) any PRC company limited by shares, and (ii) any offshore company that conducts its business operations primarily in China and contemplates to offer or list its securities in an overseas market based on its onshore equities, assets or similar interests, are required to file with the CSRC within three business days after submitting their listing application documents to the relevant regulator in the place of intended listing.
Pursuant to the CSRC Filing Measures, PRC domestic companies that directly or indirectly offer or list their securities in an overseas market, which include (i) any PRC company limited by shares, and (ii) any offshore company that conducts its business operations primarily in China and contemplates to offer or list its securities in an overseas market based on its onshore equities, assets or similar interests, are required to file with the CSRC within three business days after submitting their listing application documents to the regulator in the place of intended listing.
For any transmission of user information, we use data encryption to ensure confidentiality. Within our organization, we have adopted a series of policies on internal control over information system, including physical security measures, such as entry and equipment control, and network access management, such as identification, authentication and remote access control.
For any transmission of user information, we use data encryption to ensure confidentiality. Within our organization, we have adopted a series of policies on internal control over information systems, including physical security measures, such as entry and equipment control, and network access management, such as identification, authentication and remote access control.
On July 6, 2021, the relevant PRC government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law.
On July 6, 2021, the PRC government authorities issued the Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law.
However, as the regulatory authorities have wide discretion in administration, interpretation and enforcement of the laws and regulations, we cannot rule out the possibility that the regulatory authorities may hold different opinions on whether Quadruple LPR Limit applies to the loans funded by financial institutions on our platform.
However, as the regulatory authorities have wide discretion in the administration, interpretation, and enforcement of the laws and regulations, we cannot rule out the possibility that the regulatory authorities may hold different opinions on whether the Quadruple LPR Limit applies to the loans funded by financial institutions on our platforms.
Mobile app operators shall not deny users’ access to basic functions and services of the app in the event that the users disagree with collection of unnecessary personal information, and (iii) to establish information content management mechanism, and take against any information content in violation of laws or regulations depending on circumstances.
Mobile app operators may not deny users’ access to basic functions and services of the app in the event that the users disagree with collection of unnecessary personal information, and (iii) to establish information content management mechanism, and take against any information content in violation of laws or regulations depending on circumstances.
For example, according to the Notice on Regulating and Rectifying “Cash Loan” Business, or Circular 141, promulgated by the Internet Finance Rectification Office and the Online Lending Rectification Office in December 2017, in the context of “cash loan” business operated by various types of institutions, the aggregated borrowing costs of borrower charged in forms of interests and all kinds of fees should be annualized and subject to the upper limit on interest rate of private lending set forth in the judicial interpretations issued by the Supreme People’s Court.
For example, according to the Notice on Regulating and Rectifying “Cash Loan” Business, promulgated by the Internet Finance Rectification Office and the Online Lending Rectification Office in December 2017, in the context of “cash loan” business operated by various types of institutions, the aggregated borrowing costs of the borrower charged in the forms of interests and all kinds of fees should be annualized and subject to the upper limit on interest rate of private lending set forth in the judicial interpretations issued by the Supreme People’s Court.
On February 13, 2015, the SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment, or SAFE Notice 13.
On February 13, 2015, SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment.
Agreements that enable us to direct the activities of operation of Shanghai Zihe Loan Agreement . Shanghai Manyin entered into a loan agreement with each of the shareholders of Shanghai Zihe, namely Mr. Jun Zhang, Mr. Tiezheng Li, Mr. Honghui Hu and Mr. Shaofeng Gu, our co-founders and shareholders in March 2018.
Agreements that enable us to direct the activities of operation of Shanghai Zihe Loan Agreement . Shanghai Manyin entered into a loan agreement with each of the shareholders of Shanghai Zihe, namely Mr. Jun Zhang, Mr. Tiezheng Li, Mr. Honghui Hu, and Mr. Shaofeng Gu, who are our co-founders and shareholders, in March 2018.
Risk Factors—Risks Related to Our Business—We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.” Sales and Marketing Our market position benefits significantly from our large user base and our strong brand recognition throughout China.
Risk Factors—Risks Related to Our Business—We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.” Sales and Marketing Our market position benefits significantly from our large user base and our strong brand recognition throughout China and overseas markets.
Risk Factors—Risks Related to Doing Business in China—We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet-related businesses and companies, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations” and “—Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to us.” D.
Risk Factors—Risks Related to Doing Business in China—We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet-related businesses and companies, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations” and “—Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to us.” 105 Table of Contents D.
Our business practice of connecting our institutional funding partners with individual borrowers may constitute intermediary service, and our service agreements with borrowers and institutional funding partners may be deemed as intermediation contracts under the Civil Code of the PRC. Pursuant to the Civil Code of the PRC, an intermediary must provide true information relating to the proposed contract.
Our business practice of connecting our institutional funding partners with individual borrowers may constitute intermediary services, and our service agreements with borrowers and institutional funding partners may be deemed intermediation contracts under the Civil Code of the PRC. Pursuant to the Civil Code of the PRC, an intermediary must provide true information relating to the proposed contract.
Under the APP Provisions, mobile application information service providers are required to obtain relevant qualifications prescribed by laws and regulations and shall be responsible for the supervision and administration of mobile application information required by laws and regulations and implement the information security management responsibilities strictly, including but not limited to: (i) to authenticate the identity information of the registered users, (ii) to protect user information, and obtaining the consent of users while collecting and using users’ personal information in a lawful and proper manner.
Under these provisions, mobile application information service providers are required to obtain qualifications prescribed by laws and regulations and shall be responsible for the supervision and administration of mobile application information required by laws and regulations and implement the information security management responsibilities strictly, including but not limited to: (i) to authenticate the identity information of the registered users, (ii) to protect user information, and obtaining the consent of users while collecting and using users’ personal information in a lawful and proper manner.
Pursuant to the Notice of the State Administration of Taxation on the Issues concerning the Application of the Dividend Clauses of Tax Agreements, or Circular 81, a Hong Kong resident enterprise must meet the following conditions, among others, in order to enjoy the reduced withholding tax: (i) it must directly own the required percentage of equity interests and voting rights in the PRC resident enterprise; and (ii) it must have directly owned such percentage in the PRC resident enterprise throughout the 12 months prior to receiving the dividends.
Pursuant to the Notice of the State Administration of Taxation on the Issues Concerning the Application of the Dividend Clauses of Tax Agreements, a Hong Kong resident enterprise must meet the following conditions, among others, in order to enjoy the reduced withholding tax: (i) it must directly own the required percentage of equity interests and voting rights in the PRC resident enterprise; and (ii) it must have directly owned such percentage in the PRC resident enterprise throughout the 12 months prior to receiving the dividends.
On September 12, 2022, the CAC issued a draft to amend the Cyber Security Law and proposed to, among others, increase the maximum fines for entities from RMB1 million to RMB 50 million or five percent of an entity’s previous year’s turnover, and from RMB100,000 to RMB1 million for directly responsible individuals for the following violation: (i) severe violations of cybersecurity protection obligations or severe harm to the security of network operation; (ii) failure to protect cyber information security, to take measures to suspend transfer of or delete information that is prohibited from distribution, or to take measures against relatively major security risks or security incidents; and (iii) distribution of transfer of prohibited information.
On September 12, 2022, the Cyberspace Administration of China issued a draft to amend the Cyber Security Law and proposed to, among others, increase the maximum fines for entities from RMB1 million to RMB 50 million or five percent of an entity’s previous year’s turnover, and from RMB100,000 to RMB1 million for directly responsible individuals for the following violation: (i) severe violations of cybersecurity protection obligations or severe harm to the security of network operation; (ii) failure to protect cyber information security, to take measures to suspend transfer of or delete information that is prohibited from distribution, or to take measures against relatively major security risks or security incidents; and (iii) distribution of transfer of prohibited information.
Subject to credit assessment result for each loan application, a borrower is allowed to take out multiple loans on our platform if the aggregate outstanding principal amount does not exceed such borrower’s credit limit for the type of loans the borrower applies for.
Subject to the credit assessment result for each loan application, a borrower is allowed to take out multiple loans on our platforms if the aggregate outstanding principal amount does not exceed such borrower’s credit limit for the type of loans the borrower applies for.
Our systems infrastructure is hosted in data centers at two separate locations in Shanghai. We maintain redundancy through a real-time multi-layer data backup system to ensure the reliability of our network. Our platform adopts modular architecture that consists of multiple connected components, each of which can be separately upgraded and replaced without compromising the functioning of other components.
Our systems infrastructure is primarily hosted in data centers at two separate locations in Shanghai. We maintain redundancy through a real-time multi-layer data backup system to ensure the reliability of our network. Our platforms adopts modular architecture that consists of multiple connected components, each of which can be separately upgraded and replaced without compromising the functioning of other components.
The banks may not accept credit enhancements, in a direct or a disguised form, provided by a third-party partner without financing guarantee license or credit security insurance license. The banks shall adopt appropriate measures to monitor the use of loan proceeds.
Banks may not accept credit enhancements, in direct or disguised forms, provided by a third-party partner without a financing guarantee license or credit security insurance license. Banks shall adopt appropriate measures to monitor the use of loan proceeds.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Operating Results Overview We are a leading fintech platform with strong brand recognition in China and the overseas markets. Launched in 2007, we have been a pioneer in China’s online consumer finance industry. In 2018, we began our business operations in overseas markets, and currently we are serving borrowers in Indonesia and the Philippines.
Operating Results Overview We are a leading fintech platform with strong brand recognition in China, Indonesia and the Philippines. Launched in 2007, we have been a pioneer in China’s online consumer finance industry. In 2018, we began our business operations in overseas markets, and we are currently serving borrowers in Indonesia and the Philippines.
The increase in the loan origination volume was primarily driven by the increase in loan origination volume generated from the repeat borrowers.
The increase in the loan origination volume was primarily driven by the increase in loan origination volume generated from repeat borrowers.
Dividends paid by our wholly foreign-owned subsidiary in China to our intermediary holding company in Hong Kong will be subject to a withholding tax rate of 10%, unless the relevant Hong Kong entity satisfies all the requirements under the Arrangement between the PRC and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Capital and receives approval from the relevant tax authority.
Dividends paid by our wholly foreign-owned subsidiary in China to our intermediary holding company in Hong Kong will be subject to a withholding tax rate of 10%, unless the Hong Kong entity satisfies all the requirements under the Arrangement between the PRC and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Capital and receives approval from the tax authority.
Besides, a company qualified as a “software enterprise” is entitled to an exemption of income tax for the first two fiscal years and a favorable tax rate of 12.5% from the third to the fifth year. Such qualification is reassessed by relevant governmental authorities annually.
Besides, a company qualified as a “software enterprise” is entitled to an exemption of income tax for the first two fiscal years and a favorable tax rate of 12.5% from the third to the fifth year. Such qualification is reassessed by governmental authorities annually.
If our Hong Kong subsidiary satisfies all the requirements under the tax arrangement and receives approval from the relevant tax authority, then the dividends paid to the Hong Kong subsidiary would be subject to withholding tax at the standard rate of 5%. See “Item 3. Key Information—D.
If our Hong Kong subsidiary satisfies all the requirements under the tax arrangement and receives approval from the tax authority, then the dividends paid to the Hong Kong subsidiary would be subject to withholding tax at the standard rate of 5%. See “Item 3. Key Information—D.
We define vintage delinquency rate as (i) the total amount of principal for all loans in a vintage that become delinquent, less (ii) the total amount of recovered past due principal for all loans in the same vintage, and divided by (iii) the total amount of initial principal for all loans in such vintage.
We define vintage delinquency rate as (i) the total amount of principal for all the loans in a vintage that become delinquent, less (ii) the total amount of recovered past due principal for all loans in the same vintage, and then divided by (iii) the total amount of initial principal for all loans in such vintage.
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 or ADS holders.” Discussion of Certain Balance Sheet Items The following table sets forth selected information from our consolidated balance sheet as of December 31, 2020, 2021 and 2022.
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 or ADS holders.” Discussion of Certain Balance Sheet Items The following table sets forth selected information from our consolidated balance sheet as of December 31, 2021, 2022 and 2023.
A “high and new technology enterprise” is entitled to a favorable statutory tax rate of 15% and such qualification is reassessed by relevant governmental authorities every three years.
A “high and new technology enterprise” is entitled to a favorable statutory tax rate of 15% and such qualification is reassessed by governmental authorities every three years.
Risk Factors—Risks Related to Doing Business in China—We rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.” If our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%.
Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.” 116 Table of Contents If our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a “resident enterprise” under the Enterprise Income Tax Law of the PRC, it would be subject to enterprise income tax on its worldwide income at a rate of 25%.
In addition, our success to date is largely attributable to our ability to seamlessly integrate the use of technologies into provision of financial services. We have been focusing on leveraging our big-data analytics and machine learning capabilities to increase the automation level of our platform and optimize our operational efficiency in various aspects.
In addition, our success to date is largely attributable to our ability to seamlessly integrate the use of technologies into provision of financial services. We have been focusing on leveraging our big-data analytics and machine learning capabilities to increase the automation level of our platforms and optimize our operational efficiency in various aspects.
Ability to Compete Effectively We compete for both borrowers and institutional funding partners with a variety of players in the consumer finance industry, ranging from traditional financial institutions to emerging online finance providers and marketplaces. We must compete effectively in order to grow our platform and increase our revenues.
Ability to Compete Effectively We compete for both borrowers and institutional funding partners with a variety of players in the consumer finance industry, ranging from traditional financial institutions to emerging online finance providers and marketplaces. We must compete effectively in order to grow our platforms and increase our revenues.
Risk Factors—Risks Related to Our Business—Regulatory restrictions on institutional funding partners’ acceptance of credit enhancement may adversely affect our business and access to funding.” Ability to Price Accurately Our profitability largely depends on our ability to reasonably price the loans facilitated through our platform.
Risk Factors—Risks Related to Our Business—Regulatory restrictions on institutional funding partners’ acceptance of credit enhancement may adversely affect our business and access to funding.” Ability to Price Accurately Our profitability largely depends on our ability to reasonably price the loans facilitated through our platforms.
This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The following selected consolidated balance sheet as of December 31, 2020 are derived from our audited consolidated balance sheet as of December 31, 2020 not included in this annual report.
This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The following selected consolidated balance sheet as of December 31, 2021 are derived from our audited consolidated balance sheet as of December 31, 2021 not included in this annual report.
We do not have obligations that arise or could arise from variable interests held in an unconsolidated entity, or obligations related to derivative instruments that are both indexed to and classified in our own equity, or not reflected in the statement of financial position. Holding Company Structure FinVolution Group is a holding company with no material operations of its own.
We do not have obligations that arise or could arise from variable interests held in an unconsolidated entity, or obligations related to derivative instruments that are both indexed to and classified in our own equity, or not reflected in the statement of financial position. 122 Table of Contents Holding Company Structure FinVolution Group is a holding company with no material operations of its own.
Origination, servicing expenses and other cost of revenue Origination, servicing expenses and other cost of revenue consist primarily of expenses for credit assessment, loan origination, salaries and benefits for the personnel who work on credit checking, data processing and analysis, loan origination, customer service, loan collection and other cost of revenue. 2022 Compared to 2021.
Origination, servicing expenses and other cost of revenue Origination, servicing expenses and other cost of revenue consist primarily of expenses for credit assessment, loan origination, salaries and benefits for the personnel who work on credit checking, data processing and analysis, loan origination, customer service, loan collection and other cost of revenue. 2023 Compared to 2022 .
Our short-term investments increased by 184.4% from RMB1,204.9 million as of December 31, 2021 to RMB3,427.0 million (US$496.9 million) as of December 31, 2022, primarily due to the purchase of wealth management products in 2022.
Our short-term investments increased by 184.4% from RMB1,204.9 million as of December 31, 2021 to RMB3,427.0 million as of December 31, 2022, primarily due to the purchase of wealth management products in 2022.
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 PRC subsidiaries 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.
Loan facilitation service fees increased by 16.8% to RMB4,430.8 million (US$642.4 million) in 2022 from RMB3,794.2 million in 2021, primarily due to the increase in loan origination volume, partially offset by the decrease in the average rate of transaction service fees. The loan origination volume increased from approximately RMB137.4 billion in 2021 to RMB175.4 billion (US$25.4 billion) in 2022.
Loan facilitation service fees increased by 16.8% from RMB3,794.2 million in 2021 to RMB4,430.8 million in 2022, primarily due to the increase in loan origination volume, partially offset by the decrease in the average rate of transaction service fees. The loan origination volume increased from approximately RMB137.4 billion in 2021 to RMB175.4 billion in 2022.
See “Forward-Looking Statements” on page 3 of this annual report. In evaluating our business, you should carefully consider the information provided under the caption “Item 3. Key Information—D. Risk Factors” in this annual report on Form 20-F. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties. 122 Table of Contents A.
See “Forward-Looking Statements” on page 2 of this annual report. In evaluating our business, you should carefully consider the information provided under the caption “Item 3. Key Information—D. Risk Factors” in this annual report on Form 20-F. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties. A.
Our guarantee income increased by 18.2% to RMB3,064.4 million (US$444.3 million) in 2022 from RMB2,593.5 million in 2021, primarily due to the increased outstanding loan balance of the off-balance sheet loans, partially offset by the improvement of asset quality.
Our guarantee income increased by 18.2% from RMB2,593.5 million in 2021 to RMB3,064.4 million in 2022, primarily due to the increased outstanding loan balance of the off-balance sheet loans, partially offset by the improvement of asset quality.
Specific Factors Affecting Our Results of Operations While our business is exposed to general factors affecting the online consumer finance industry in China, we believe our results of operations are more directly affected by company specific factors, including the following major factors.
Specific Factors Affecting Our Results of Operations While our business is exposed to general factors affecting the online consumer finance industry in China and the overseas markets, we believe our results of operations are more directly affected by company specific factors, including the following major factors.
Our general and administrative expenses decreased by 22.5% to RMB401.7 million (US$58.2 million) in 2022 from RMB518.2 million in 2021, primarily due to the improved operation efficiency. General and administrative expenses in 2022 included share-based compensation of RMB34.2 million (US$5.0 million).
Our general and administrative expenses decreased by 22.5% from RMB518.2 million in 2021 to RMB401.7 million in 2022, primarily due to the improved operation efficiency. General and administrative expenses in 2022 included share-based compensation of RMB34.2 million.
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.
Therefore, our PRC subsidiaries are 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 subsidiaries to pay dividends to us only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations.
We conduct our operations primarily through our subsidiaries, three consolidated variable interest entities and their subsidiaries in China. As a result, FinVolution Group’s ability to pay dividends depends upon dividends paid by our PRC subsidiaries.
We conduct our operations primarily through our subsidiaries, three consolidated variable interest entities and their subsidiaries in China. As a result, FinVolution Group’s ability to continue paying dividends depends upon dividends paid by our PRC subsidiaries.
The quality assurance service is within the scope of ASC Topic 460 Guarantees and recorded at fair value at the inception of the loans. For loan facilitation services and post-facilitation services we provide, we charged one combined transaction service fee for its delivery of loan facilitation services and post-facilitation services, each of which are distinct performance obligations.
The quality assurance service is within the scope of Accounting Standards Codification Topic 460 Guarantees and recorded at fair value at the inception of the loans. For loan facilitation services and post-facilitation services we provide, we charged one combined transaction service fee for its delivery of loan facilitation services and post-facilitation services, each of which are distinct performance obligations.
Guarantee income Liabilities of quality assurance commitment are released as guarantee income systematically over the term of the loans subject to quality assurance commitment. 2022 Compared to 2021.
Guarantee income Liabilities of quality assurance commitment are released as guarantee income systematically over the term of the loans subject to quality assurance commitment. 2023 Compared to 2022 .
Our sales and marketing expenses increased by 6.4% to RMB1,685.0 million (US$244.3 million) in 2022 from RMB1,584.2 million in 2021, primarily due to the increase in online customer acquisition expenses from RMB1,377.8 million in 2021 to RMB1,605.5 million (US$232.8 million) in 2022.
Our sales and marketing expenses increased by 6.4% from RMB1,584.2 million in 2021 to RMB1,685.0 million in 2022, primarily due to the increase in online customer acquisition expenses from RMB1,377.8 million in 2021 to RMB1,605.5 million in 2022.
Our results of operations and ability to sustain and increase loan origination volume will depend, in part, on the effectiveness of our sales and marketing efforts. Our sales and marketing expenses were 6.4%, 16.7% and 15.1% of our total operating revenues in 2020, 2021 and 2022, respectively.
Our results of operations and ability to sustain and increase loan origination volume will depend, in part, on the effectiveness of our sales and marketing efforts. Our sales and marketing expenses were 16.7%, 15.1% and 15.0% of our total operating revenues in 2021, 2022 and 2023, respectively.
Our ability to accurately estimate loan delinquency rates and our ability to collect delinquent loans have an impact on the amount we need to pay to third-party financing guarantee companies and our own financial condition, which have an impact on our consolidated statements of comprehensive income/(loss). See “—E. Critical Accounting Estimates—Allowance for Credit Losses,” and “Item 3. Key Information—D.
Our ability to accurately estimate loan delinquency rates and our ability to collect delinquent loans have an impact on the amount we need to pay to third-party financing guarantee companies and our institutional funding partners, which have an impact on our consolidated statements of comprehensive income. See “—E. Critical Accounting Estimates—Allowance for Credit Losses,” and “Item 3. Key Information—D.
Our sales and marketing expenses as a percentage of our total operating revenues decreased from 16.7% to 15.1% during the same period, primarily attributable to the increase in the revenue generated from the repeat borrowers. Sales and marketing expenses for the period included share-based compensation of RMB1.6 million (US$0.2 million). 2021 Compared to 2020.
Our sales and marketing expenses as a percentage of our total operating revenues decreased from 16.7% to 15.1% during the same period, primarily attributable to the increase in the revenue generated from repeat borrowers. Sales and marketing expenses for the period included share-based compensation of RMB1.6 million.
(3) As of December 31, 2022, our vintage delinquency rate for loans facilitated during the first three quarters was 1.32%, calculated as the volume weighted average of the quarterly vintage delinquency rates as of December 31, 2022.
(3) As of December 31, 2023, our vintage delinquency rate for loans facilitated during the first three quarters was 1.56%, calculated as the volume weighted average of the quarterly vintage delinquency rates as of December 31, 2023.
(2) Our vintage delinquency rate for loans facilitated during 2021 was 2.34%, calculated as the volume weighted average of the quarterly vintage delinquency rates at the end of the 12th month following the inception of each loan in an applicable vintage.
Notes: (1) Our vintage delinquency rate for loans facilitated during 2021 was 2.34%, calculated as the volume weighted average of the quarterly vintage delinquency rates at the end of the 12 th month following the inception of each loan in an applicable vintage.
When change in one of our estimates or a combined effect of changes of multiple estimates, which results in a 1% increase/decrease in our default rate while holding all other estimates constant, there would be approximately RMB1,537 million pre-tax impact to our consolidated results of operations.
When change in one of our estimates or a combined effect of changes of multiple estimates, which results in a 100 basis points increase/decrease in our default rate while holding all other estimates constant, there would be approximately RMB1,947 million pre-tax impact to our consolidated results of operations.
Our income tax expenses increased to RMB454.8 million (US$65.9 million) in 2022 from RMB240.8 million in 2021, primarily due to the tax credit derived from the change in preferential tax rate for certain qualified subsidiaries in the same period of 2021. 2021 Compared to 2020.
Our income tax expenses increased from RMB240.8 million in 2021 to RMB454.8 million in 2022, primarily due to the tax credit derived from the change in preferential tax rate for certain qualified subsidiaries in the same period of 2021.
Financing Activities Net cash used in financing activities was RMB795.9 million (US$115.4 million) in 2022, which was mainly attributable to cash paid to our institutional funding partners that invested in our consolidated trusts in an amount of RMB1.4 billion (US$208.2 million), dividends payout in amount of RMB372.5 million (US$54.0 million), and repurchase of our ADSs in an amount of RMB340.8 million (US$49.4 million), partially offset by cash received from our institutional funding partners that invested in our consolidated trusts in an amount of RMB1.3 billion (US$194.2 million).
Net cash used in financing activities was RMB795.9 million in 2022, which was mainly attributable to cash paid to our institutional funding partners that invested in our consolidated trusts in an amount of RMB1.4 billion, dividends payout in amount of RMB372.5 million, and repurchase of our ADSs in an amount of RMB340.8 million, partially offset by cash received from our institutional funding partners that invested in our consolidated trusts in an amount of RMB1.3 billion.
The loan origination volume generated from repeat borrowers, who had at least one drawdown before, as a percentage of the total loan origination volume facilitated on our platform in China increased from 80.0% in 2021 to 86.8% in 2022. 2021 Compared to 2020.
The loan origination volume generated from repeat borrowers, who had at least one drawdown before, as a percentage of the total loan origination volume facilitated on our platform in China increased from 86.8% in 2022 to 87.2% in 2023. 2022 Compared to 2021.
In 2020, 2021 and 2022, the average principal amount of loans originated on our platform in China was RMB3,983, RMB4,982 and RMB7,249 (US$1,051), respectively, with an average term of 8.3 months, 8.4 months and 8.7 months, respectively. Borrowers come to our platform for convenient, simple and fast loan transaction process. We generally have a high level of borrower stickiness.
In 2021, 2022 and 2023, the average principal amount of loans originated on our platform in China was RMB4,982, RMB7,249 and RMB8,318 (US$1,172), respectively, with an average term of 8.4 months, 8.7 months and 8.3 months, respectively. Borrowers come to our platforms for convenient, simple and fast loan transaction process. We generally have a high level of borrower stickiness.
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 future revenues are likely to continue to be in the form of RMB.
Organizational Structure.” For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see “—Holding Company Structure.” The overwhelming majority of our future revenues are likely to continue to be in the form of RMB.
The decrease in our sales and marketing expenses as a percentage of our total operating revenues in 2022 was attributable to the increase in the revenue generated from the repeat borrowers. We intend to continuously dedicate significant resources to borrower acquisition and improve the effectiveness of these efforts.
The decreases in our sales and marketing expenses as a percentage of our total operating revenues in 2022 and 2023 were attributable to the increase in the revenue generated from repeat borrowers. We intend to consistently dedicate significant resources to borrower acquisition and improve the effectiveness of these efforts.
Loan facilitation service fees are the portion of transaction service fees collected in relation to the work we perform through our platform in connecting borrowers with institutional funding partners and facilitating the origination of loan transactions. 2022 Compared to 2021.
Loan facilitation service fees are the portion of transaction service fees collected for the work we perform through our platforms in connecting borrowers with institutional funding partners and facilitating the origination of loan transactions. 2023 Compared to 2022.
Post-facilitation service fees Post-facilitation service fees are the portion of transaction service fees collected in relation to services we provide after loan origination, such as repayment facilitation and loan collection. 2022 Compared to 2021.
Post-facilitation service fees Post-facilitation service fees are the portion of transaction service fees collected for services we provide after loan origination, such as repayment facilitation and loan collection. 2023 Compared to 2022.
Our general and administrative expenses as a percentage of our total operating revenues decreased from 5.5% to 3.6% during the same period, primarily because of the improved operation efficiency. 2021 Compared to 2020.
Our general and administrative expenses as a percentage of our total operating revenues decreased from 5.5% to 3.6% during the same period, primarily because of the improved operation efficiency. Research and development expenses 2023 Compared to 2022 .
In 2022, the difference between our net cash provided by operating activities and our net profit of RMB2.3 billion (US$330.8 million) resulted mainly from a net gain from investment in loans of RMB1.2 billion (US$170.2 million), an increase in prepaid expenses and other assets of RMB1.2 billion (US$167.1 million), an increase in quality assurance receivable of RMB914.4 million (US$132.6 million), an increase in deferred guarantee income of RMB715.7 million (US$103.8 million), an increase in accounts receivable and contract assets of RMB717.5 million (US$104.0 million), and a provision for loans receivable of RMB415.9 million (US$60.3 million).
In 2022, the difference between our net cash provided by operating activities and our net profit of RMB2.3 billion resulted mainly from a net gain from investment in loans of RMB1.2 billion, an increase in prepaid expenses and other assets of RMB1.2 billion, an increase in quality assurance receivable of RMB914.4 million, an increase in deferred guarantee income of RMB715.7 million, an increase in accounts receivable and contract assets of RMB717.5 million, and a provision for loans receivable of RMB415.9 million.
Ability to Maintain and Expand Our Cooperation with Institutional Funding Partners Our revenues are also dependent on the maintenance and growth of our cooperation with institutional funding partner. As of December 31, 2022, we had cumulatively cooperated with 75 institutional funding partners in China.
Ability to Maintain and Expand Our Cooperation with Institutional Funding Partners Our revenues are also dependent on the maintenance and growth of our cooperation with institutional funding partner. As of December 31, 2023, we had cumulatively cooperated with 94 institutional funding partners in China and 7 institutional funding partners in the overseas markets.
Post-facilitation service fees increased by 47.4% to RMB1,929.9 million (US$279.8 million) in 2022 from RMB1,309.6 million in 2021, primarily due to primarily due to the increase in the outstanding loans facilitated by the company and the rolling impact of deferred transaction fees. 128 Table of Contents 2021 Compared to 2020.
Post-facilitation service fees increased by 47.4% from RMB1,309.6 million in 2021 to RMB1,929.9 million in 2022, primarily due to primarily due to the increase in the outstanding loans facilitated by the company and the rolling impact of deferred transaction fees.
Our research and development expenses in 2021 included the share-based compensation expenses of RMB40.4 million. Our research and development expenses as a percentage of our total operating revenues decreased from 4.9% to 4.6%.
Our research and development expenses in 2022 included the share-based compensation expenses of RMB26.5 million. Our research and development expenses as a percentage of our total operating revenues decreased from 4.6% to 4.4%.
Credit losses for quality assurance commitment increased by 62.7% to RMB3,195.2 million (US$463.3 million) in 2022 from RMB1,963.6 million in 2021, primarily due to the increases in the loan origination volume and the outstanding loan balance.
Credit losses for quality assurance commitment increased by 62.7% from RMB1,963.6 million in 2021 to RMB3,195.2 million in 2022, primarily due to the increases in the loan origination volume and the outstanding loan balance. Provision for loans receivable 2023 Compared to 2022 .
Material Cash Requirements Our material cash requirements as of December 31, 2022 and any subsequent interim period primarily include our capital expenditures and operating lease obligations. We made capital expenditures of RMB11.0 million, RMB55.3 million and RMB52.8 million (US$7.7 million) in 2020, 2021 and 2022, respectively.
Material Cash Requirements Our material cash requirements as of December 31, 2023 and any subsequent interim period primarily include our capital expenditures and operating lease obligations. We made capital expenditures of RMB55.3 million, RMB52.8 million and RMB538.1 million (US$75.8 million) in 2021, 2022 and 2023, respectively.
Deferred guarantee income was RMB1.8 billion (US$261.7 million) as of December 31, 2022 compared to RMB1.1 billion as of December 31, 2021, primarily due to the increases in the loan origination volume.
Deferred Guarantee Income Deferred guarantee income was RMB1.8 billion as of December 31, 2022 compared to RMB1.1 billion as of December 31, 2021, primarily due to the increase in the loan origination volume.
Our origination, servicing expenses and other cost of revenue-related party decreased by 25.7% to RMB7.5 million in 2021 from RMB10.1 million in 2020, primarily due to the decreased data collection service from the related party. Sales and marketing expenses Sales and marketing expenses consist primarily of advertising and online marketing promotion expenses. 2022 Compared to 2021.
Our origination, servicing expenses and other cost of revenue-related party decreased by 99.5% from RMB7.5 million in 2021 to RMB37 thousand in 2022, primarily due to the decreased data collection service from the related party. Sales and marketing expenses Sales and marketing expenses consist primarily of advertising and online marketing promotion expenses. 2023 Compared to 2022 .
Our provision for loans receivables increased by 11.1% to RMB415.9 million (US$60.3 million) in 2022 from RMB374.2 million in 2021, primarily due to the increase in the loan origination volume and the outstanding loan balance of on-balance sheet loans. 2021 Compared to 2020.
Our provision for loans receivables increased by 11.1% from RMB374.2 million in 2021 to RMB415.9 million in 2022, primarily due to the increase in the loan origination volume and the outstanding loan balance of on-balance sheet loans. Provision for accounts receivable and contract assets 2023 Compared to 2022 .
We recorded other income of RMB220.7 million (US$32.0 million) in 2022, compared to RMB122.4 million in 2021. We recorded other income in 2022, primarily due to other income of RMB224.8 million (US$32.6 million) from government subsidies and investment income from financial assets held for trading. 2021 Compared to 2020.
We recorded other income of RMB220.7 million in 2022 compared to RMB122.4 million in 2021, primarily due to other income of RMB224.8 million from government subsidies and investment income from financial assets held for trading. Income Tax Expenses 2023 Compared to 2022 .
When our estimates of the standalone selling prices for loan facilitation service increased/decreased by 1% while holding all other estimates constant, our loan facilitation service revenue would increase/decrease by approximately RMB87 million. Our estimate of the key assumptions related to revenue recognition did not change significantly throughout the periods presented.
When our estimates of the standalone selling prices for loan facilitation service as a percentage of total consideration increased/decreased by 100 basis points while holding all other estimates constant, our loan facilitation service revenue would increase/decrease by approximately RMB22 million. Our estimate of the key assumptions related to revenue recognition did not change significantly throughout the periods presented.
Our provision for accounts receivables and other receivables increased by 180.8% to RMB390.9 million (US$56.7 million) in 2022 from RMB139.2 million in 2021, primarily due to the increase in the loan origination volume and the outstanding loan balance of off-balance sheet loans. 2021 Compared to 2020.
Our provision for accounts receivable and contract assets increased by 180.8% from RMB139.2 million in 2021 to RMB390.9 million in 2022, primarily due to the increase in the loan origination volume and the outstanding loan balance of off-balance sheet loans. Other Income 2023 Compared to 2022 .
We intend to optimize our fraud detection capabilities, improve accuracy of our credit scoring model and enhance our collection effectiveness on a continuing basis through the combination of our big-data analytical capabilities and the increasing amount of data we accumulate through our operations. 124 Table of Contents For our institutional funding partners, we provide our institutional funding partners with quality assurance commitments either through our own financing guarantee subsidiary or through third-party financing guarantee companies for a substantial majority of the loans funded by our institutional funding partners.
We intend to optimize our fraud detection capabilities, improve accuracy of our credit scoring model and enhance our collection effectiveness on a continuing basis through the combination of our big-data analytical capabilities and the increasing amount of data we accumulate through our operations. 107 Table of Contents For our institutional funding partners, we provide our institutional funding partners with quality assurance commitments for a substantial majority of the loans they have funded.
Our origination, servicing expenses and other cost of revenue increased by 11.1% to RMB2,038.6 million (US$295.6 million) in 2022 from RMB1,834.5 million in 2021, primarily due the increase in expenditures for employee benefits. Origination, servicing expenses and other cost of revenue for the period included share-based compensation of RMB26.7 million (US$3.9 million). 2021 Compared to 2020.
Origination, servicing expenses and other cost of revenue for the period included share-based compensation of RMB33.8 million (US$4.8 million). 113 Table of Contents 2022 Compared to 2021 . Our origination, servicing expenses and other cost of revenue increased by 11.1% from RMB1,834.5 million in 2021 to RMB2,038.6 million in 2022, primarily due to the increase in expenditures for employee benefits.
No Hong Kong profit tax has been levied as we did not have assessable profit that was earned in or derived from the Hong Kong subsidiary during the periods presented. Hong Kong does not impose a withholding tax on dividends.
Hong Kong Our subsidiary incorporated in Hong Kong is subject to Hong Kong profit tax at a rate of 16.5%. No Hong Kong profit tax has been levied as we did not have assessable profit that was earned in or derived from the Hong Kong subsidiary during the periods presented. Hong Kong does not impose a withholding tax on dividends.
Net Profit As a result of the foregoing, our net profit was RMB2.0 billion in 2020, RMB2.5 billion in 2021 and RMB2.3 billion (US$330.8 million) in 2022. Taxation Cayman Islands We are incorporated in the Cayman Islands. The Cayman Islands currently have no income, corporation or capital gains tax and no estate duty, inheritance tax or gift tax.
Net Profit As a result of the foregoing, our net profit was RMB2.5 billion in 2021, RMB2.3 billion in 2022 and RMB2.4 billion (US$335.7 million) in 2023. Taxation Cayman Islands We are incorporated in the Cayman Islands. The Cayman Islands currently have no income, corporation or capital gains tax.
Although we consolidate the results of Beijing Paipairongxin, Shanghai Zihe, and Shanghai Ledao, three of the consolidated variable interest entities, and their subsidiaries, we only have access to the assets or earnings of Beijing Paipairongxin, Shanghai Zihe, Shanghai Ledao and their subsidiaries through our contractual arrangements with Beijing Paipairongxin, Shanghai Zihe, Shanghai Ledao and their shareholders. See “Item 4.
Although we consolidate the results of the consolidated variable interest entities and their subsidiaries, we only have access to the assets or earnings of the consolidated variable interest entities and their subsidiaries through our contractual arrangements with the consolidated variable interest entities and their shareholders. See “Item 4. Information on the Company—C.
Quality assurance receivable increased by 79.2% from RMB0.9 billion as of December 31, 2021 to RMB1.7 billion (US$242.1 million) as of December 31, 2022, primarily due to the increases in the loan origination volume. Accounts Receivable and Contract Assets and Related Provision Accounts receivable and contract assets primarily consists of transaction service fees for facilitation and post facilitation services.
Quality assurance receivable increased by 5.1% from RMB1.7 billion as of December 31, 2022 to RMB1.8 billion (US$247.3 million) as of December 31, 2023, primarily due to the increases in the loan origination volume. 118 Table of Contents Accounts Receivable and Contract Assets and Related Provision Accounts receivable and contract assets primarily consists of transaction service fees for facilitation and post facilitation services.
(2) The interest income from loans originated under the overseas trust arrangements was nil, RMB22,381 and RMB22,576 for the year ended December 31, 2020, 2021, and 2022, respectively. 129 Table of Contents The following table sets forth the average balances and interest rates of the interest-earning asset and interest-bearing liability under the trust arrangements for the periods presented: Average balance Interest income/ expense Yield/ rate Average balance Interest income/ expense Yield/ rate Average balance Interest income/ expense Yield/ rate 2020 2021 2022 (RMB in thousands) Interest-earning Assets Loans receivable from consolidated trusts (1) 3,891,493 1,256,608 32.3 % 1,306,889 407,077 31.1 % 2,047,322 571,240 27.9 % Interest-bearing liabilities Funds payable to investors of consolidated trusts (1) 2,459,700 228,320 9.3 % 1,073,133 73,846 6.9 % 2,057,290 146,306 7.1 % The net yield on interest-earning assets 26.4 % 25.5 % 20.8 % Note: (1) The average balance of loans receivable from the overseas consolidated trusts was nil, RMB50,888, RMB63,071 for the year ended December 31, 2020, 2021, and 2022, respectively.
The following table sets forth the average balances and interest rates of the interest-earning asset and interest-bearing liability under the trust arrangements for the periods presented: 112 Table of Contents Average balance Interest income/ expense Yield/ rate Average balance Interest income/ expense Yield/ rate Average balance Interest income/ expense Yield/ rate 2021 2022 2023 (RMB in thousands) Interest-earning Assets Loans receivable from consolidated trusts (1) 1,306,889 407,077 31.1 % 2,047,322 571,240 27.9 % 967,289 260,694 27.0 % Interest-bearing liabilities Funds payable to investors of consolidated trusts (1) 1,073,133 73,846 6.9 % 2,057,290 146,306 7.1 % 894,481 53,114 5.9 % The net yield on interest-earning assets 25.5 % 20.8 % 21.5 % Note: (1) The average balance of loans receivable from the overseas consolidated trusts was RMB50,888, RMB63,071 and nil for the year ended December 31, 2021, 2022, and 2023, respectively.
Credit losses for quality assurance commitment Credit losses for quality assurance commitment was accounted for in addition to and separately from the guarantee liabilities accounted for under ASC 460.
Credit losses for quality assurance commitment Credit losses for quality assurance commitment was accounted for in addition to and separately from the guarantee liabilities accounted for under the Accounting Standards Codification 460. 2023 Compared to 2022 .
Liability from Quality Assurance Commitment Liability from quality assurance commitment was RMB3.2 billion as of December 31, 2021 compared to RMB2.4 billion as of December 31, 2020, primarily due to a 80.4% increase in the outstanding loan balance, partially offset by the improved delinquency rates.
Liability from Quality Assurance Commitment Liability from quality assurance commitment increased to RMB3.6 billion as of December 31, 2022 from RMB3.2 billion as of December 31, 2021, primarily due to a 33.8% increase in the outstanding loan balance, partially offset by the improved delinquency rates.
Net cash provided by investing activities was RMB2.0 billion in 2021, which was mainly attributable to proceeds from short-term investments in an amount of RMB13.5 billion from maturity of wealth management products, and proceeds from investment in loans originated and held by us in an amount of RMB7.0 billion, partially offset by cash paid for purchase of short-term investments (mainly wealth management products) in an amount of RMB12.7 billion, and cash paid for investment in loans originated and held by us in an amount of RMB5.8 billion.
Investing Activities Net cash provided by investing activities was RMB1.4 billion (US$199.1 million) in 2023, which was mainly attributable to proceeds from short-term investments in an amount of RMB12.4 billion (US$1.8 billion) from maturity of time deposits and wealth management products, and proceeds from investment in loans originated and held by us in an amount of RMB7.3 billion (US$1.0 billion), partially offset by purchase of short-term investments (mainly time deposits and wealth management products) in an amount of RMB11.9 billion (US$1.7 billion) and cash paid for investment in loans originated and held by us in an amount of RMB5.8 billion (US$821.0 million).
Loans that are delinquent for 180 days or more are typically considered charged-off and are not included in the delinquency rate calculation. The following table provides the delinquency rates for all outstanding loans on our platform as of the respective dates indicated.
Loans that are delinquent for 180 days or more are typically considered charged-off and are not included in the delinquency rate calculation. The following table provides our 90 day+ delinquency rates for outstanding loans on our platform in China as of December 31 of 2021, 2022, and 2023.
Restricted Cash Restricted cash mainly included cash under the quality assurance commitment and in the quality assurance fund, cash in investor reserve funds, cash received from investors and borrowers that has yet to be disbursed, cash received via consolidated trust that has not been distributed, cash held as collateral for short-term borrowings and cash held in escrow accounts.
Restricted Cash Restricted cash mainly included cash under the quality assurance commitment and in the quality assurance fund, cash received from investors and borrowers that has yet to be disbursed, cash received via consolidated trust that has not been distributed, cash held in escrow accounts, and cash received from borrower to be distributed to funding partners.
Provision for credit loss allowance mainly consist of provision for accounts receivable and contract assets for loan facilitation and post facilitation services. Accounts receivable and contract assets increased by 103.4% to RMB2.1 billion in 2021 from RMB1.1 billion in 2020, mainly due to the increase in loan origination volume in the fourth quarter of 2021.
Provision for credit loss allowance mainly consist of provision for accounts receivable and contract assets for loan facilitation and post facilitation services. Accounts receivable and contract assets increased by 26.7% to RMB2.7 billion as of December 31, 2022 from RMB2.1 billion as of December 31, 2021, mainly due to the increase in the loan origination volume.
Other revenue decreased by 3.9% to RMB534.9 million (US$77.5 million) in 2022 from RMB556.7 million in 2021, primarily due to the decrease in the customer referral fees from other third-party platforms. 2021 Compared to 2020.
Other revenue decreased by 1.1% from RMB534.9 million in 2022 to RMB528.9 million (US$74.5 million) in 2023, primarily due to the disposal of a pilot run. 2022 Compared to 2021 . Other revenue decreased by 3.9% from RMB556.7 million in 2021 to RMB534.9 million in 2022, primarily due to the decrease in the customer referral fees from other third-party platforms.
Our research and development expenses as a percentage of our total operating revenues decreased from 4.6% to 4.4%. 2021 Compared to 2020. Research and development expenses increased by 17.5% to RMB434.9 million in 2021 from RMB370.2 million in 2020 as we continued to invest in our technology capabilities in 2021.
Our research and development expenses as a percentage of our total operating revenues decreased from 4.4% to 4.1%. 2022 Compared to 2021 . Research and development expenses increased by 13.0% from RMB434.9 million in 2021 to RMB491.5 million in 2022, as we continued investing in our technology capabilities in 2022.
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. 140 Table of Contents E.
Trend Information Other than as disclosed in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the current fiscal year that are reasonably likely to have a material effect on our net revenues, income, profitability, liquidity or capital reserves, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
Critical Accounting Estimates We prepare our consolidated financial statements in accordance with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) disclosure of contingent assets and liabilities at the end of each reporting period and (iii) the reported amounts of revenues and expenses during each reporting period.
GAAP, which requires us to make judgments, estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) disclosure of contingent assets and liabilities at the end of each reporting period and (iii) the reported amounts of revenues and expenses during each reporting period.
Net cash provided by investing activities was RMB1.0 billion in 2020, which was mainly attributable to proceeds from investment in loans originated and held by us in an amount of RMB12.8 billion, and proceeds from short-term investments in an amount of RMB6.2 billion from maturity of wealth management products, partially offset by cash paid for investment in loans originated and held by us in an amount of RMB9.8 billion, and cash paid for purchase of short-term investments (mainly wealth management products) in an amount of RMB8.0 billion.
Net cash used in investing activities was RMB1.6 billion in 2022, which was mainly attributable to cash paid for purchase of short-term investments (mainly time deposits and wealth management products) in an amount of RMB17.1 billion, and cash paid for investment in loans originated and held by us in an amount of RMB10.1 billion, partially offset by proceeds from short-term investments in an amount of RMB15.0 billion from maturity of time deposits and wealth management products, and proceeds from investment in loans originated and held by us in an amount of RMB10.8 billion.
We are also subject to surcharges on VAT payments in accordance with PRC law. VAT has been phased in since May 2012 to replace the business tax that was previously applicable to the services we provide. During the periods presented, we were not subject to business tax on the services we provide.
Value added tax has been phased in since May 2012 to replace the business tax that was previously applicable to the services we provide. During the periods presented, we were not subject to business tax on the services we provide.
The loan origination volume generated from repeat borrowers, who had at least one drawdown before, as a percentage of the total loan origination volume facilitated on our platform in China decreased from 88.2% in 2020 to 80.0% in 2021.
The increase in the loan origination volume was primarily driven by the increase in loan origination volume generated from repeat borrowers. The loan origination volume generated from repeat borrowers, who had at least one drawdown before, as a percentage of the total loan origination volume facilitated on our platform in China increased from 80.0% in 2021 to 86.8% in 2022.
Research and development expenses increased by 13.0% to RMB491.5 million (US$71.3 million) in 2022 from RMB434.9 million in 2021 as we continued investing in our technology capabilities in 2022. Our research and development expenses in 2022 included the share-based compensation expenses of RMB26.5 million (US$3.8 million).
Research and development expenses increased by 4.0% from RMB491.5 million in 2022 to RMB511.0 million (US$72.0 million) in 2023 as we continued investing in our technology capabilities in 2023. Our research and development expenses in 2023 included the share-based compensation expenses of RMB36.1 million (US$5.1 million).
In these periods, our capital expenditures were mainly used for purchases of property, equipment and software. Our capital expenditures for 2023 are expected to be approximately RMB45.8 million (US$6.6 million), primarily due to the optimization of server units and IT infrastructure. Our operating lease obligations relate to our leases of office premises.
In 2023, our capital expenditures were mainly used for purchases of headquarter building in Shanghai. We expect our capital expenditures for 2024 to be approximately RMB62.2 million (US$8.8 million), primarily due to the optimization of server units and IT infrastructure. Our operating lease obligations relate to our leases of office premises.
Our online customer acquisition expenses primarily include expenses paid to internet marketing channels for online advertising and search engine marketing as well as to certain websites that enable us to reach quality borrowers. The increase in expenses associated with online customer acquisition was primarily due to the increase in the number of new registered users on our platform.
Our online customer acquisition expenses primarily include expenses paid to internet marketing channels for online advertising and search engine marketing as well as to certain websites that enable us to reach quality borrowers.
The fair value of quality assurance commitment upon loan origination is released as guarantee income systematically over the term of the loans subject to quality assurance commitment. As we transitioned our business towards the better quality borrowers, the fair value of quality assurance commitment upon loan origination decreased due to the better asset quality. 2021 Compared to 2020.
The fair value of quality assurance commitment upon loan origination is released as guarantee income systematically over the term of the loans subject to quality assurance commitment. 2022 Compared to 2021 .
The gain from investment in loans was primarily due to the interest income from loans held by consolidated trusts.
The gain from investment in loans was primarily due to the interest income from the loans originated in the overseas markets and the interest income from the loans held by consolidated trusts. The increase in deferred tax assets was primarily due to the increase in the deferred revenue.
GAAP. 130 Table of Contents Operating Expenses Our operating expenses consist of origination and servicing expenses, sales and marketing expenses and general and administrative expenses, research and development expenses, provision for accounts receivable and provision for loans receivable.
Operating Expenses Our operating expenses consist of origination and servicing expenses, sales and marketing expenses, general and administrative expenses, research and development expenses, credit losses for quality assurance commitment, provision for loans receivable, and provision for accounts receivable and contract assets.

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Item 6. [Reserved]

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

51 edited+5 added−21 removed46 unchanged
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.
The audit committee is responsible for, among other things: 129 Table of Contents • 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.
In general, the plan administrator determines the vesting schedule, which is specified in the relevant award agreement. Acceleration of awards upon change in control.
In general, the plan administrator determines the vesting schedule, which is specified in the award agreement. Acceleration of awards upon change in control .
Share Ownership Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares 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 outstanding ordinary shares.
Share Ownership Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares 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 outstanding ordinary shares.
As of March 31, 2023, none of our outstanding Class A or Class B ordinary shares were held by record holders 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.
As of March 31, 2024, none of our outstanding Class A or Class B ordinary shares were held by record holders 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.
Our PRC subsidiaries and the consolidated variable interest entities 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. 143 Table of Contents Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers.
Our PRC subsidiaries and the consolidated variable interest entities 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.
Ho received his bachelor’s degree in engineering from Northwestern University, Illinois. Mr. Ho is also a Chartered Financial Analyst. 142 Table of Contents Mr. Jimmy Y. Lai has been serving as our independent director since November 2017. Mr. Lai currently serves as the chief financial officer of Kneron, a leading provider of full stack edge AI solutions company. Mr.
Ho received his bachelor’s degree in engineering from Northwestern University, Illinois. Mr. Ho is also a Chartered Financial Analyst. Mr. Jimmy Y. Lai has been serving as our independent director since November 2017. Mr. Lai currently serves as the chief financial officer of Kneron, a leading provider of full stack edge AI solutions company. Mr.
The business address of Bing Xiang is Floor 20th, Tower East II, Dongfang Square, Dongcheng District, Beijing, China. † For each person and group included in this column, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of the total number of shares outstanding and the number of shares such person or group has the right to acquire upon exercise of option, warrant or other right within 60 days after March 31, 2023. †† For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class.
The business address of Bing Xiang is Floor 20th, Tower East II, Dongfang Square, Dongcheng District, Beijing, China. 132 Table of Contents † For each person and group included in this column, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of the total number of shares outstanding and the number of shares such person or group has the right to acquire upon exercise of option, warrant or other right within 60 days after March 31, 2024. †† For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class.
The exercise price of granted options may be amended or adjusted in the absolute discretion of our board of directors, or a committee designated by our board of directors, without the approval of our shareholders or the recipients of the options. 145 Table of Contents Eligibility.
The exercise price of granted options may be amended or adjusted in the absolute discretion of our board of directors, or a committee designated by our board of directors, without the approval of our shareholders or the recipients of the options. Eligibility .
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable. 151 Table of Contents
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable. 133 Table of Contents
Unless terminated earlier, the plan will terminate automatically in 2027. Our board of directors has the authority to amend or terminate the plan subject to shareholder approval to the extent necessary to comply with applicable law. However, no such action may impair the rights of any award recipient unless agreed by the recipient.
Our board of directors has the authority to amend or terminate the plan subject to shareholder approval to the extent necessary to comply with applicable law. However, no such action may impair the rights of any award recipient unless agreed by the recipient.
The registered office address of Emma & Oliver Holding Limited is Geneva Place, Waterfront Drive, P.O. Box 3469, Road Town, Tortola, British Virgin Islands.
Honghui Hu is the sole shareholder and the sole director of Emma & Oliver Holding Limited. The registered office address of Emma & Oliver Holding Limited is Geneva Place, Waterfront Drive, P.O. Box 3469, Road Town, Tortola, British Virgin Islands.
Our directors also have a duty to exercise the skill they actually possess and such care and diligence that a reasonably prudent person would exercise in comparable circumstances.
Our directors must also exercise their powers only for a proper purpose. Our directors also have a duty to exercise the skill they actually possess and such care and diligence that a reasonably prudent person would exercise in comparable circumstances.
Box 3469, Road Town, Tortola, British Virgin Islands. (3) Represents (i) 65,209,800 Class B ordinary shares directly held by Metallica Holding Limited, a company incorporated in the British Virgin Islands, and (ii) 4,632,626 ADSs, representing 23,163,130 Class A ordinary shares, directly held by Metallica Holding Limited. Mr.
Box 3469, Road Town, Tortola, British Virgin Islands. (3) Represents (i) 65,209,800 Class B ordinary shares directly held by Metallica Holding Limited, a company incorporated in the British Virgin Islands, and (ii) 4,483,989 ADSs, representing 22,419,945 Class A ordinary shares, directly held by Metallica Holding Limited. Mr.
The committee or the full board of directors, as appropriate, will determine the provisions and terms and conditions of each option grant. Award agreements.
Our board of directors, or a committee designated by our board of directors, will administer the plan. The committee or the full board of directors, as appropriate, will determine the provisions and terms and conditions of each option grant. Award agreements .
We have adopted a dual class ordinary share structure. The calculations in the table below are based on 1,400,592,809 outstanding ordinary shares (consisting of 831,392,809 Class A ordinary shares and 569,200,000 Class B ordinary shares) as of March 31, 2023. Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
We have adopted a dual class ordinary share structure. The calculations in the table below are based on 1,299,225,219 outstanding ordinary shares (consisting of 730,025,219 Class A ordinary shares and 569,200,000 Class B ordinary shares) as of March 31, 2024. Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
Tiezheng Li, and (iv) 2,414,710 Class A ordinary shares that Mr. Tiezheng Li may purchase upon exercise of options within 60 days after March 31, 2023. Mr. Tiezheng Li is the sole shareholder and the sole director of Happyariel Holding Limited. The registered office address of Happyariel Holding Limited is Geneva Place, Waterfront Drive, P.O.
Tiezheng Li, and (iv) 3,700,860 Class A ordinary shares that Mr. Tiezheng Li may purchase upon exercise of share-based awards within 60 days after March 31, 2024. Mr. Tiezheng Li is the sole shareholder and the sole director of Happyariel Holding Limited. The registered office address of Happyariel Holding Limited is Geneva Place, Waterfront Drive, P.O.
Lai and Bing Xiang satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange and Rule 10A-3 under the Securities Exchange Act of 1934.
Lai and Bing Xiang satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange and Rule 10A-3 under the Securities Exchange Act of 1934. In addition, we have determined that Jimmy Y.
(1) Represents (i) 394,818,900 Class B ordinary shares directly held by PPD Investment Limited, a company incorporated in the British Virgin Islands, and (ii) 5,939,542 ADSs, representing 29,697,710 Class A ordinary shares, directly held by PPD Investment Limited. Mr. Shaofeng Gu is the sole shareholder and the sole director of PPD Investment Limited.
(1) Represents (i) 394,818,900 Class B ordinary shares directly held by PPD Investment Limited, a company incorporated in the British Virgin Islands, and (ii) 6,356,792 ADSs, representing 31,783,960 Class A ordinary shares, directly held by PPD Investment Limited. Mr. Shaofeng Gu is the sole shareholder and the sole director of PPD Investment Limited.
(7) Represents (i) 38,884 ADSs, representing 194,420 Class A ordinary shares beneficially owned by Susquehanna Fundamental Investments, LLC, a company incorporated in Delaware, and (ii) 16,490,862 ADSs, representing 82,454,310 Class A ordinary shares, beneficially owned by Susquehanna Securities, LLC, as reported in a Schedule 13G/A filed by Susquehanna Fundamental Investments, LLC and Susquehanna Securities, LLC on February 14, 2023.
(5) Represents (i) 38,884 ADSs, representing 194,420 Class A ordinary shares beneficially owned by Susquehanna Fundamental Investments, LLC, a company incorporated in Delaware, and (ii) 16,490,862 ADSs, representing 82,454,310 Class A ordinary shares, and options to buy 1,900 ADSs, representing 9,500 Class A ordinary shares, beneficially owned by Susquehanna Securities, LLC, as reported in a Schedule 13G/A filed by Susquehanna Fundamental Investments, LLC and Susquehanna Securities, LLC on February 12, 2024.
The nominating and corporate governance committee is responsible for, among other things: • selecting and recommending nominees for election by the shareholders or appointment by the board; • reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; • making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and 148 Table of Contents • advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken.
The nominating and corporate governance committee is responsible for, among other things: • selecting and recommending nominees for election by the shareholders or appointment by the board; • reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; • making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and • advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken. 130 Table of Contents Duties of Directors Under Cayman Islands law, our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly and a duty to act in what they consider in good faith to be in our best interests.
Mr. Gu served as our strategy adviser from December 2016 to March 2019, chief strategy officer from August 2014 to December 2016, chief technology officer from January 2011 to August 2014 and chief executive officer from 2007 to 2011. Prior to founding our company, Mr.
Gu served as our strategy adviser from December 2016 to March 2019, chief strategy officer from August 2014 to December 2016, chief technology officer from January 2011 to August 2014 and chief executive officer from 2007 to 2011. Prior to founding our company, Mr. Gu was the founder and the chief executive officer of Shanghai Jufei Internet Technology Co., Ltd.
The plan permits the grant of three types of awards: options, restricted shares and restricted share units. The maximum number of our shares that may be issued pursuant to all awards under the 2017 Plan is 1,000,000,000 ordinary shares after giving effect to the 100-for-1 share split effected by us in October 2017.
The maximum number of our shares that may be issued pursuant to all awards under the 2017 Plan is 1,000,000,000 ordinary shares after giving effect to the 100-for-1 share split we effected in October 2017.
Lai * May 24, 2021 May 23, 2026 Jiayuan Xu * February 1, 2018 January 31, 2023 * January 28, 2019 January 27, 2024 * April 6, 2020 April 5, 2025 * October 6, 2020 October 5, 2025 Yuxiang Wang * February 1, 2018 January 31, 2023 * January 28, 2019 January 27, 2024 * April 6, 2020 April 5, 2025 * October 6, 2020 October 5, 2025 Other grantees as a Group 89,031,345 From February 1, 2018 to March 2, 2023 From January 31, 2023 to March 1, 2028 * Less than 1% of our total outstanding shares.
Lai * May 24, 2021 May 23, 2026 Jiayuan Xu * February 1, 2018 January 31, 2023 * January 28, 2019 January 27, 2024 * April 6, 2020 April 5, 2025 * October 6, 2020 October 5, 2025 * April 10, 2023 April 9, 2028 Yuxiang Wang * February 1, 2018 January 31, 2023 * January 28, 2019 January 27, 2024 * April 6, 2020 April 5, 2025 * October 6, 2020 October 5, 2025 * April 10, 2023 April 9, 2028 Pingping Chen * January 28, 2019 January 27, 2024 * April 6, 2020 April 5, 2025 * October 6, 2020 October 5, 2025 * April 10, 2023 April 9, 2028 * February 5, 2024 February 4, 2029 Other grantees as a Group 105,378,885 From February 1, 2018 to February 26, 2024 From January 31, 2023 to February 25, 2029 * Less than 1% of our total outstanding shares.
As of December 31, 2022 Number of employees % of total Functions: Operations 704 17.0 % Risk Management 901 21.7 % Research and Development 645 15.6 % Sales and Marketing 1,568 37.8 % General and Administration 326 7.9 % Total number of employees 4,144 100.0 % 149 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, housing, pension, medical insurance and unemployment insurance.
As of December 31, 2023 Number of employees % of total Functions: Operations 638 17.5 % Risk Management 907 24.9 % Research and Development 698 19.1 % Sales and Marketing 1,090 29.9 % General and Administration 315 8.6 % Total number of employees 3,648 100.0 % 131 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, housing, pension, medical insurance and unemployment insurance.
Ordinary Shares Beneficially Owned as of March 31, 2023 Class A ordinary shares Class B ordinary shares Percentage of total ordinary shares† Percentage of aggregate voting power†† Directors and Executive Officers** : Shaofeng Gu (1) 29,697,710 394,818,900 30.3 % 64.9 % Tiezheng Li (2) 9,632,905 27,987,900 2.7 % 4.7 % Jun Zhang (3) 23,163,130 65,209,800 6.3 % 10.9 % Honghui Hu (4) 3,600,000 54,883,400 4.2 % 9.0 % Simon Tak Leung Ho * — * * Jimmy Y.
Ordinary Shares Beneficially Owned as of March 31, 2024 Class A ordinary shares Class B ordinary shares Percentage of total ordinary shares† Percentage of aggregate voting power†† Directors and Executive Officers** : Shaofeng Gu (1) 31,783,960 394,818,900 32.8 % 65.4 % Tiezheng Li (2) 12,417,870 27,987,900 3.1 % 4.7 % Jun Zhang (3) 22,419,945 65,209,800 6.7 % 11.0 % Honghui Hu (4) — 54,883,400 4.2 % 9.1 % Simon Tak Leung Ho * — * * Jimmy Y.
(2) Represents (i) 27,987,900 Class B ordinary shares directly held by Happyariel Holding Limited, a company incorporated in the British Virgin Islands, (ii) 1,308,130 ADSs, representing 6,540,650 Class A ordinary shares directly held by Happyariel Holding Limited, (iii) 135,509 ADSs, representing 677,545 Class A ordinary shares directly held by Mr.
(2) Represents (i) 27,987,900 Class B ordinary shares directly held by Happyariel Holding Limited, a company incorporated in the British Virgin Islands, (ii) 1,406,330 ADSs, representing 7,031,650 Class A ordinary shares, directly held by Happyariel Holding Limited, (iii) 337,072 ADSs, representing 1,685,360 Class A ordinary shares, directly held by Mr.
Zhang was our chairman of our board of directors from December 2016 to March 2020, co-chief executive officer from September 2018 to March 2020 and chief executive officer from January 2011 to September 2018. Mr.
Jun Zhang is one of our four co-founders and has been serving as our director since September 2011 and our adviser since March 2020. Mr. Zhang was our chairman of our board of directors from December 2016 to March 2020, co-chief executive officer from September 2018 to March 2020 and chief executive officer from January 2011 to September 2018. Mr.
Lai 66 Independent Director Bing Xiang 60 Independent Director Jiayuan Xu 42 Chief Financial Officer Yuxiang Wang 43 Chief Operating Officer and Chief Technology Officer Mr. Shaofeng Gu is one of our four co-founders and has been serving as our director since April 2009, chief innovation officer since March 2019 and chairman of our board of directors since March 2020.
Shaofeng Gu is one of our four co-founders and has been serving as our director since April 2009, chief innovation officer since March 2019 and chairman of our board of directors since March 2020. Mr.
The following table summarizes, as of March 31, 2023, the options granted (excluding those cancelled, forfeited or expired) under the 2013 Plan and 2017 Plan to our directors, executive officers and other grantees.
The following table summarizes, as of March 31, 2024, the number of Class A ordinary shares underlying the options that we granted (excluding those that were canceled, forfeited, or expired) to our directors, executive officers, and other grantees under the 2017 Plan.
Li also served as our chief strategy officer from July 2017 to April 2020, our chief operating officer from April 2015 to July 2017 and our chief risk officer from January 2011 to April 2015. Prior to founding our company, Mr. Li served as a risk manager at China Minsheng Banking Corporation Limited from 2006 to 2011. Mr.
Li also served as our president from May 2020 to March 2024, our chief strategy officer from July 2017 to April 2020, our chief operating officer from April 2015 to July 2017 and our chief risk officer from January 2011 to April 2015. Prior to founding our company, Mr.
Xu served various positions at our company from June 2015 to November 2020, including our senior vice president for finance, head of financial institutions department and our financial controller. Prior to joining us, Mr. Xu served as the head of financial management department of Nanyang Commercial Bank (China) Co., Ltd. from 2008 to 2015. Mr.
Jiayuan Xu has been serving as our chief financial officer since December 2020. Prior to serving as our chief financial officer, Mr. Xu served various positions at our company from June 2015 to November 2020, including our senior vice president for finance, head of financial institutions department and our financial controller. Prior to joining us, Mr.
The executive officers have also agreed to disclose in confidence to us all inventions, designs and trade secrets which they conceive, develop or reduce to practice during the executive officer’s employment with us and to assign all right, title and interest in them to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and trade secrets.
The executive officers have also agreed to disclose in confidence to us all inventions, designs and trade secrets which they conceive, develop or reduce to practice during the executive officer’s employment with us and to assign all right, title and interest in them to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and trade secrets. 126 Table of Contents In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment and typically for one year following the last date of employment.
Gu received his bachelor’s degree in communication science and engineering from Shanghai Jiaotong University in China. Mr. Tiezheng Li is one of our four co-founders and has been serving as our chief executive officer since March 2023, president since May 2020, vice chairman of the board since September 2018, and director since March 2015. Mr.
Tiezheng Li is one of our four co-founders and has been serving as our chief executive officer since March 2023, vice chairman of the board since September 2018, and director since March 2015. Mr.
Mr. Jun Zhang is the sole shareholder and the sole director of Metallica Holding Limited. The registered office address of Metallica Holding Limited is Geneva Place, Waterfront Drive, P.O. Box 3469, Road Town, Tortola, British Virgin Islands.
Jun Zhang is the sole shareholder and the sole director of Metallica Holding Limited. The registered office address of Metallica Holding Limited is Geneva Place, Waterfront Drive, P.O. Box 3469, Road Town, Tortola, British Virgin Islands. (4) Represents 54,883,400 Class B ordinary shares directly held by Emma & Oliver Holding Limited, a company incorporated in the British Virgin Islands. Mr.
Mr. Wang worked at Baidu.com as a product head of Baidu mobile browser from 2012 to 2013. Mr. Wang served as the product director at TeleNav, a company providing location-based services including navigation, from 2009 to 2012. Prior to that, Mr. Wang served as a senior product manager at MiTAC Research (Shanghai) Ltd., an electronics company, from 2002 to 2009.
Wang served as the vice president of product at Opera Software ASA, a Norwegian software company, from 2013 to 2015. Mr. Wang worked at Baidu.com as a product head of Baidu mobile browser from 2012 to 2013. Mr. Wang served as the product director at TeleNav, a company providing location-based services including navigation, from 2009 to 2012.
Our officers are appointed by and serve at the discretion of the board of directors. D. Employees We had 4,144 employees as of December 31, 2022. As of December 31, 2022, 1,634 of our employees were located in Shanghai while the remaining employees were located in other regions.
Our officers are appointed by and serve at the discretion of the board of directors. D. Employees We had 4,259 employees as of December 31, 2021, 4,144 employees as of December 31, 2022, and 3,648 employees as of December 31, 2023.
Yuxiang Wang has been serving as our chief operating officer since March 2023 and our chief technology officer since October 2019. Mr. Wang served as our chief product officer from June 2015 to March 2023. Prior to joining us, Mr. Wang served as the vice president of product at Opera Software ASA, a Norwegian software company, from 2013 to 2015.
Xu is also a member of Chinese Institute of Certified Public Accountants. Mr. Yuxiang Wang has been serving as our chief operating officer since March 2023 and our chief technology officer since October 2019. Mr. Wang served as our chief product officer from June 2015 to March 2023. Prior to joining us, Mr.
Xu was an audit manager at PricewaterhouseCoopers Zhong Tian LLP from 2003 to 2008. Mr. Xu received his bachelor’s degree in international trade and finance from Shanghai Jiaotong University in and FMBA degree from China Europe International Business School. Mr. Xu is also a member of Chinese Institute of Certified Public Accountants. Mr.
Xu served as the head of financial management department of Nanyang Commercial Bank (China) Co., Ltd. from 2008 to 2015. Mr. Xu was an audit manager at PricewaterhouseCoopers Zhong Tian LLP from 2003 to 2008. Mr. Xu received his bachelor’s degree in international trade and finance from Shanghai Jiaotong University and FMBA degree from China Europe International Business School. Mr.
Directors and Senior Management The following table sets forth information regarding our directors and executive officers as of the date of this annual report. 141 Table of Contents Directors and Executive Officers Age Position/Title Shaofeng Gu 44 Chairman of the Board and Chief Innovation Officer Tiezheng Li 38 Vice Chairman of the Board, President and Chief Executive Officer Jun Zhang 45 Director Honghui Hu 45 Director Simon Tak Leung Ho 49 Director Jimmy Y.
Directors and Executive Officers Age Position/Title Shaofeng Gu 45 Chairman of the Board and Chief Innovation Officer Tiezheng Li 39 Vice Chairman of the Board and Chief Executive Officer Jun Zhang 46 Director Honghui Hu 46 Director Simon Tak Leung Ho 50 Director Jimmy Y.
Lai * — * * Bing Xiang * — * * Jiayuan Xu * — * * Yuxiang Wang * — * * All directors and executive officers as a group 84,069,660 542,900,000 44.7 % 89.6 % Principal Shareholders: PPD Investment Limited (5) 29,697,710 394,818,900 30.3 % 64.9 % Metallica Holding Limited (6) 23,163,130 65,209,800 6.3 % 10.9 % Susquehanna Entities (7) 82,648,730 — 5.9 % * * Less than 1% of our total outstanding shares. 150 Table of Contents ** Except for Jimmy Y.
Lai * — * * Bing Xiang * — * * Pingping Chen * — * * Jiayuan Xu * — * * Yuxiang Wang * — * * All directors and executive officers as a group 86,294,445 542,900,000 48.2 % 90.3 % Principal Shareholders: PPD Investment Limited (1) 31,783,960 394,818,900 32.8 % 65.4 % Metallica Holding Limited (3) 22,419,945 65,209,800 6.7 % 11.0 % Susquehanna Entities (5) 82,670,730 — 6.4 % * * Less than 1% of our total outstanding shares. ** Except for Jimmy Y.
Term of options. The term of each option grant shall be stated in the award agreement, provided that the term shall not exceed ten years from the date of the grant. Transfer restrictions. Subject to certain exceptions, awards may not be transferred by the recipient, except as otherwise provided by applicable laws or the award agreement. Termination of the plan.
Term of options . The term of each option grant shall be stated in the award agreement, provided that the term may not exceed ten years from the date of the grant. 127 Table of Contents Transfer restrictions .
Name Class A Ordinary Shares Underlying Restricted Share Units Awarded Date of Grant Date of Expiration Tiezheng Li * October 6, 2020 October 5, 2025 * June 1, 2022 May 31, 2027 * January 23, 2023 January 22, 2028 Bing Xiang * May 24, 2021 May 23, 2026 Jimmy Y.
The following table summarizes, as of March 31, 2024, the number of Class A ordinary shares underlying the restricted share units that we granted (excluding those that were canceled, forfeited, or expired) to our directors, executive officers, and other grantees under the 2017 Plan. 128 Table of Contents Name Class A Ordinary Shares Underlying Restricted Share Units Awarded Date of Grant Date of Expiration Tiezheng Li * October 6, 2020 October 5, 2025 * June 1, 2022 May 31, 2027 * January 23, 2023 January 22, 2028 Bing Xiang * May 24, 2021 May 23, 2026 Jimmy Y.
Name Ordinary Shares Underlying Options Awarded Exercise Price (US$/Share) Date of Grant Date of Expiration Shaofeng Gu * 0.126 March 21, 2016 March 20, 2021 Tiezheng Li * 0.007 January 29, 2014 January 28, 2019 * 0.030 April 1, 2015 March 31, 2020 * 0.126 March 21, 2016 March 20, 2021 * 1.400 February 1, 2018 January 31, 2024 * 0.654 January 28, 2019 January 27, 2024 Jun Zhang * 0.007 January 29, 2014 January 28, 2019 * 0.030 April 1, 2015 March 31, 2020 * 0.126 March 21, 2016 March 20, 2021 * 0.320 February 1, 2017 January 31, 2022 * 1.400 February 1, 2018 January 31, 2023 Honghui Hu * 0.007 January 29, 2014 January 28, 2019 * 0.126 March 21, 2016 March 20, 2021 Simon Tak Leung Ho * 0.126 September 7, 2016 September 6, 2022 * 1.400 February 1, 2018 January 31, 2024 * 0.330 April 6, 2020 April 6, 2022 Jiayuan Xu * 0.030 May 5, 2015 May 4, 2020 * 0.126 March 21, 2016 March 20, 2021 * 0.320 February 1, 2017 January 31, 2022 * 0.330 April 6, 2020 April 5, 2025 Yuxiang Wang * 0.030 June 15, 2015 June 14, 2020 * 0.126 March 21, 2016 March 20, 2021 * 0.320 February 1, 2017 January 31, 2022 Other grantees as a Group 74,169,020 From 0.0001 to 1.400 From July 1, 2012 to April 6, 2020 From June 30, 2018 to April 5, 2025 * Less than 1% of our total outstanding shares. 146 Table of Contents The following table summarizes, as of March 31, 2023, the restrict share units granted under the 2017 Plan to our directors and executive officers and other grantees.
Name Class A Ordinary Shares Underlying Options Awarded Exercise Price (US$/ Share) Date of Grant Date of Expiration Tiezheng Li * 1.400 February 1, 2018 January 31, 2025 * 0.654 January 28, 2019 January 27, 2025 * 0.794 April 10, 2023 April 9, 2028 Jun Zhang * 1.400 February 1, 2018 January 31, 2023 Simon Tak Leung Ho * 1.400 February 1, 2018 January 31, 2024 * 0.330 April 6, 2020 April 6, 2022 Jiayuan Xu * 0.330 April 6, 2020 April 5, 2025 Other grantees as a Group 1,653,135 From 0.32 to 1.400 From April 1, 2017 to April 6, 2020 From September 28, 2019 to April 5, 2025 * Less than 1% of our total outstanding shares.
Gu was the founder and the chief executive officer of Shanghai Jufei Internet Technology Co., Ltd. (Podlook), a startup running podcast aggregation business, from 2005 to 2007. Prior to founding Podlook, Mr. Gu served as a technical lead of Microsoft Corporation from 2000 to 2005. Mr.
(Podlook), a startup running podcast aggregation business, from 2005 to 2007. Prior to founding Podlook, Mr. Gu served as a technical lead of Microsoft Corporation from 2000 to 2005. Mr. Gu received his bachelor’s degree in communication science and engineering from Shanghai Jiaotong University in China. 124 Table of Contents Mr.
Xiang received his bachelor’s degree in mechanical engineering from Xi’an Jiaotong University and a PhD degree in finance and accounting from the University of Alberta. Mr. Jiayuan Xu has been serving as our chief financial officer since December 2020. Prior to serving as our chief financial officer, Mr.
Xiang received his bachelor’s degree in mechanical engineering from Xi’an Jiaotong University and a PhD degree in finance and accounting from the University of Alberta. 125 Table of Contents Ms.
The following table sets forth the numbers of our employees categorized by function as of December 31, 2022.
As of December 31, 2023, 1,493 of our employees were located in Shanghai while the remaining employees were located in other regions in China or other countries. The following table sets forth the numbers of our employees categorized by function as of December 31, 2023.
We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors.
Compensation For the fiscal year ended December 31, 2023, we paid an aggregate of approximately RMB19.5 million (US$2.8 million) in cash to our directors and officers. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors.
Our board of directors may amend, alter or discontinue the 2013 Plan, but no amendment, alteration or discontinuation shall be made if such amendment, alteration or discontinuation would impair the rights of a participant under any award without such participant’s consent. 2017 Plan In October 2017, we adopted our 2017 Share Incentive Plan, or the 2017 Plan, which allows us to offer a variety of share-based incentive awards to employees, officers, directors and individual consultants who render services to us.
Share Incentive Plan In October 2017, we adopted our 2017 Share Incentive Plan, or the 2017 Plan, which allows us to offer a variety of share-based incentive awards to employees, officers, directors and individual consultants who render services to us. The plan permits the grant of three types of awards: options, restricted shares and restricted share units.
Li received his bachelor’s degree in civil engineering from Shanghai Jiaotong University in China and FMBA degree from China Europe International Business School in China. Mr. Jun Zhang is one of our four co-founders and has been serving as our director since September 2011 and our adviser since March 2020. Mr.
Li served as a risk manager at China Minsheng Banking Corporation Limited from 2006 to 2011. Mr. Li received his bachelor’s degree in civil engineering from Shanghai Jiaotong University in China and FMBA degree from China Europe International Business School in China. Mr.
Mr. Wang received his bachelor’s degree in communication engineering from Jiangsu University, his master’s degree in software engineering from Fudan University and his EMBA degree from China Europe International Business School. B. Compensation For the fiscal year ended December 31, 2022, we paid an aggregate of approximately RMB23.0 million (US$3.3 million) in cash to our directors and officers.
Prior to that, Mr. Wang served as a senior product manager at MiTAC Research (Shanghai) Ltd., an electronics company, from 2002 to 2009. Mr. Wang received his bachelor’s degree in communication engineering from Jiangsu University, his master’s degree in software engineering from Fudan University and his EMBA degree from China Europe International Business School. B.
As of March 31, 2023, options to purchase 127,415,885 Class A ordinary shares were granted (excluding those cancelled, forfeited or expired) under the 2013 Plan and 127,415,885 Class A ordinary shares underlying those options were issued. The following paragraphs describe the principal terms of the 2013 Plan. Type of awards. The 2013 Plan permits the awards of options. Plan administration.
As of March 31, 2024, options to purchase a total of 7,518,325 Class A ordinary shares were outstanding under the 2017 Plan, and restricted share units to receive a total of 66,811,350 Class A ordinary shares were outstanding under the 2017 Plan. The following paragraphs summarize the terms of the 2017 Plan: Plan administration .
Removed
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A.
Added
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. Directors and Senior Management The following table sets forth information regarding our directors and executive officers as of the date of this annual report.
Removed
In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment and typically for one year following the last date of employment.
Added
Lai 67 Independent Director Bing Xiang 61 Independent Director Pingping Chen 40 President and Chief Compliance Officer Jiayuan Xu 43 Chief Financial Officer Yuxiang Wang 44 Chief Operating Officer and Chief Technology Officer Mr.
Removed
Share Incentive Plans 2013 Plan In June 2013, our board of directors approved our stock option plan, as amended, or the 2013 Plan, to provide incentives to employees, directors and consultants and promote the success of our business. The maximum number of ordinary shares that may be issued under the 2013 Plan is 221,917,800.
Added
Pingping Chen has been serving as our president and chief compliance officer since March 2024, maintaining her existing responsibilities across legal, compliance, human resources, and internal controls, which she has held since 2019. Ms. Chen was the chief executive officer of Pai Pai Xin, from 2016 to 2018.
Removed
As of the completion of our initial public offering, options to purchase 134,455,800 Class A ordinary shares had been granted and outstanding but no ordinary shares underlying those options are issued and outstanding due to the exercisability restriction before the initial public offering of our ordinary shares.
Added
Prior to that, she held the position of vice president of our company, overseeing the legal, compliance, government relations, and innovation departments from 2013 to 2016. Ms. Chen received her master’s degree in law from Fudan University and her EMBA from the China Europe International Business School. Mr.
Removed
The 2013 Plan will be administered by our board of directors or by the compensation committee, which will be authorized by our board. The plan administrator has the power and authority to determine the persons who are eligible to receive awards, the number of awards, as well as other terms and conditions of awards. Award agreement.
Added
Subject to certain exceptions, awards may not be transferred by the recipient, except as otherwise provided by applicable laws or the award agreement. Termination of the plan . Unless terminated earlier, the plan will terminate automatically in 2027.
Removed
Any award granted under the 2013 Plan is evidenced by an award agreement that sets forth terms, conditions and limitations for such award, which may include the number of options awarded, the exercise price, the provisions applicable in the event of the grantee’s employment or service terminates, among other provisions.
Removed
The plan administrator may amend the terms of any award, prospectively or retroactively; provided that no such amendment shall impair the rights of any participant without his or her consent. 144 Table of Contents Eligibility. We may grant awards to directors, officers, employees and consultants of our company or any of our subsidiaries. Vesting schedule.
Removed
Except as otherwise approved by the plan administrator and subject to forfeiture and arrangement on termination of employment or service, 25% of the shares subject to the option shall become vested on the first anniversary of the vesting commencement date, with the remaining 75% to vest annually thereafter in three equal installments.
Removed
If a change of control event occurs, such participant’s options will be immediately vested and exercisable. Exercise of options. Vested options will become exercisable after an initial public offering of our ordinary shares, subject to other terms and conditions provided in the relevant award agreements.
Removed
Once all the preconditions are met, a participant may exercise options in whole or in part by giving written notice of exercise to us specifying information such as the number of shares to be purchased, as well as making full payment of the aggregate exercise price of the shares so purchased. Term of options.
Removed
The plan administrator will determine the term of each option and provide it in the relevant award agreement, but no option shall be exercisable more than five or six years after the grant date, as the case may be. Transfer restrictions.
Removed
Except under the laws of descent and distribution or otherwise permitted by the plan administrator, the participant will not be permitted to sell, transfer, pledge or assign any option. In principle, all options shall be exercisable only by the participants.
Removed
However, a participant may also transfer one or more options to a trust controlled by him or her for estate planning purposes. Termination and amendment of the 2013 Plan.
Removed
As of March 31, 2023, options to purchase 6,710,045 Class A ordinary shares had been granted (excluding those cancelled, forfeited or expired) under the 2017 Plan and 3,769,345 Class A ordinary shares underlying those options were issued and outstanding.
Removed
As of March 31, 2023, 109,433,625 restricted share units had been granted (excluding those cancelled, forfeited or expired) and 57,312,525 Class A ordinary shares underlying these restricted share units were issued. The following paragraphs summarize the terms of the 2017 Plan: Plan administration. Our board of directors, or a committee designated by our board of directors, will administer the plan.
Removed
We rely on the exemption provided by Rule 10A-3(b)(1)(iv)(A) under the Securities Exchange Act of 1934, which allows a minority of the members of our audit committee not to be independent for one year from November 9, 2017, the date of effectiveness of our registration statement on Form F-1. 147 Table of Contents In addition, we have determined that Jimmy Y.
Removed
Duties of Directors Under Cayman Islands law, our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly and a duty to act in what they consider in good faith to be in our best interests. Our directors must also exercise their powers only for a proper purpose.
Removed
Jun Zhang is the sole shareholder and the sole director of Metallica Holding Limited. The registered office address of Metallica Holding Limited is Geneva Place, Waterfront Drive, P.O. Box 3469, Road Town, Tortola, British Virgin Islands.
Removed
(4) Represents (i) 54,883,400 Class B ordinary shares directly held by Emma & Oliver Holding Limited, a company incorporated in the British Virgin Islands, and (ii) 720,000 ADSs, representing 3,600,000 Class A ordinary shares, directly held by Emma & Oliver Holding Limited. Mr. Honghui Hu is the sole shareholder and the sole director of Emma & Oliver Holding Limited.
Removed
(5) Represents (i) 394,818,900 Class B ordinary shares directly held by PPD Investment Limited, a company incorporated in the British Virgin Islands, and (ii) 5,939,542 ADSs, representing 29,697,710 Class A ordinary shares, directly held by PPD Investment Limited. Mr. Shaofeng Gu is the sole shareholder and the sole director of PPD Investment Limited.
Removed
The registered office address of PPD Investment Limited is Geneva Place, Waterfront Drive, P.O. Box 3469, Road Town, Tortola, British Virgin Islands. (6) Represents (i) 65,209,800 Class B ordinary shares directly held by Metallica Holding Limited, a company incorporated in the British Virgin Islands, and (ii) 4,632,626 ADSs, representing 23,163,130 Class A ordinary shares, directly held by Metallica Holding Limited.

Item 7. Management's Discussion & Analysis

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

3 edited+2 added−0 removed2 unchanged
As a result, we operate our relevant business through Beijing Paipairongxin, Shanghai Zihe, and Shanghai Ledao, the consolidated variable interest entities, and their subsidiaries based on series of contractual arrangements. For a description of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure.” Employment Agreements and Indemnification Agreements See “Item 6. Directors, Senior Management and Employees—B.
As a result, we operate certain business through Beijing Paipairongxin, Shanghai Zihe, and Shanghai Ledao, the consolidated variable interest entities, and their subsidiaries based on series of contractual arrangements. For a description of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure.” Employment Agreements and Indemnification Agreements See “Item 6. Directors, Senior Management and Employees—B.
In 2020, we and PPcredit agreed to extend the term of the original service agreement to December 31, 2022. In 2020, 2021 and 2022, we incurred RMB10.1 million, RMB7.5 million and RMB37.0 thousand (US$5.4 thousand) expenses for such services.
In 2020, we and PPcredit agreed to extend the term of the original service agreement to December 31, 2022. In 2021 and 2022, we incurred RMB7.5 million and RMB37.0 thousand expenses for such services. In 2023, this service agreement was terminated and no expenses were incurred.
As of December 31, 2020, 2021 and 2022, the amount due to PPcredit was RMB2.0 million, RMB2.3 million and RMB1.0 million (US$145.0 thousand), respectively. C. Interests of Experts and Counsel Not applicable.
As of December 31, 2023, the amount due to Guoya was RMB124 thousand. C. Interests of Experts and Counsel Not applicable.
Added
As of December 31, 2022 and 2023, the amount due to PPcredit was RMB1.0 million and RMB10.0 thousand, respectively. As of December 31, 2022 and 2023, the amount due from PPcredit was nil and RMB3.9 million, respectively.
Added
Transactions with Guoya Shanghai Gouya Technology Co., Ltd., which we refer to as Guoya, was founded in November 2020 by our founders to provide smart vending machine services. In August 2023, we disposed of 70% of the equity interest in Gouya, and Gouya became a related party of our company since then.

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