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

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

+984 added−960 removedSource: 20-F (2024-04-26) vs 20-F (2023-04-25)

Top changes in Hello Group Inc.'s 2023 20-F

984 paragraphs added · 960 removed · 817 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

340 edited+80 added−72 removed362 unchanged
Biggest changeOur international operations may expose us to a number of risks, including: • lack of acceptance of our product and service offerings, and challenges of localizing our offerings to appeal to local tastes; • compliance with applicable laws and regulations in multiple jurisdictions, including, but not limited to, internet content provider licenses and other applicable licenses or governmental authorizations; • challenges in commercializing our platforms in international markets without infringing, misappropriating or otherwise violating the intellectual property rights of third parties; • challenges in formulating effective marketing strategies targeting users from various jurisdictions and cultures, who have a diverse range of preferences and demands; 28 Table of Contents • challenges in replicating or adapting our company policies and procedures to operating environments that are different from each other, including technology infrastructure; • challenges in managing compliance with local labor regulations and risks associated with labor dispute across different jurisdictions; • fluctuations in currency exchange rates; • increased competition with local players in different markets and sub-markets; • political instability and general economic or political conditions in particular countries or regions, including territorial or trade disputes, war and terrorism; • exposure to different tax jurisdictions that may subject us to greater fluctuations in our effective tax rate and assessments in multiple jurisdictions on various tax-related assertions, including transfer pricing adjustments and permanent establishment; • compliance with privacy laws and data security laws, including heightened restrictions and barriers on the transfer of data between different jurisdictions; and • increased costs associated with doing business in multiple jurisdictions.
Biggest changeOur business partners primarily include popular talents and their agencies, third parties that promote our platform and applications and third parties that provide us technology support; • challenges in commercializing our platforms in international markets without infringing, misappropriating or otherwise violating the intellectual property rights of third parties; • challenges in formulating effective marketing strategies targeting users from various jurisdictions and cultures, who have a diverse range of preferences and demands; • challenges in replicating or adapting our company policies and procedures to operating environments that are different from each other, including technology infrastructure; • challenges in managing compliance with local labor regulations and risks associated with labor dispute across different jurisdictions; • fluctuations in currency exchange rates; • increased competition with local players in different markets and sub-markets; • political instability and general economic or political conditions in particular countries or regions, including territorial or trade disputes, war and terrorism; • boycotts and embargoes that may be imposed by the international community on countries in which we offer our mobile applications; • exposure to different tax jurisdictions that may subject us to greater fluctuations in our effective tax rate and assessments in multiple jurisdictions on various tax-related assertions, including transfer pricing adjustments and permanent establishment; • compliance with privacy laws and data security laws, including heightened restrictions and barriers on the transfer of data between different jurisdictions; • regulatory regime and business practices that essentially favor domestic companies, such as tariffs, protectionism, subsidies and restrictions on foreign ownership, which could, among other things, give rise to competitive disadvantage for us and hinder our ability to execute our business strategies; • actions by local governments or others to restrict access to our products and services or to cause us to discontinue our operations in a particular market, regardless of whether these actions are taken for political, security or other reasons; • other actions or interventions by local governments, including various forms of exchange controls, expropriation of assets and cancellation of contractual rights; and 29 Table of Contents • increased costs associated with doing business in multiple jurisdictions.
For more detailed information, see “Item 3. Key Information—D.
For more detailed information, see “Item 3. Key Information—D.
For example, Notice 78 requires online live broadcast platforms to set a limit to the number of virtual gifts a user can send per day and per month, as well as the amount that can be gifted at any one time.
For example, the Notice 78 requires online live broadcast platforms to set a limit to the number of virtual gifts a user can send per day and per month, as well as the amount that can be gifted at any one time.
For example, Opinions 3 requires online live broadcast platforms to reasonably limit the maximum amount of a single virtual gift and a single virtual gifting per time to remind the users whose daily consumption amount has triggered the corresponding threshold, and to set necessary cooling off period and deferred payment period.
For example, the Opinions 3 requires online live broadcast platforms to reasonably limit the maximum amount of a single virtual gift and a single virtual gifting per time to remind the users whose daily consumption amount has triggered the corresponding threshold, and to set necessary cooling off period and deferred payment period.
We are still in the process of obtaining further guidance from regulatory authorities and evaluating the applicability and effect of the various requirements under Notice 78 and Opinions 3 on our business. Any limits on user spending on virtual gifting ultimately imposed may negatively impact our revenues derived from virtual gifting and our results of operations.
We are still in the process of obtaining further guidance from regulatory authorities and evaluating the applicability and effect of the various requirements under the Notice 78 and the Opinions 3 on our business. Any limits on user spending on virtual gifting ultimately imposed may negatively impact our revenues derived from virtual gifting and our results of operations.
We have limited experience in international markets. If we fail to meet the challenges presented by our international operations, our business, financial condition and results of operations may be adversely affected. We have limited experience in international markets and we expect to enter into and expand our operations into international markets.
If we fail to meet the challenges presented by our international operations, our business, financial condition and results of operations may be adversely affected. We have limited experience in international markets and we expect to enter into and expand our operations into international markets.
Moreover, the costs of identifying and consummating acquisitions may be significant. In addition to possible shareholders’ approval, we may also have to obtain approvals and licenses from the governmental authorities in the mainland China for the acquisitions and comply with applicable mainland China laws and regulations, which could result in increased costs and delays.
Moreover, the costs of identifying and consummating acquisitions may be significant. In addition to possible shareholders’ approval, we may also have to obtain approvals and licenses from the governmental authorities in mainland China for the acquisitions and comply with applicable mainland China laws and regulations, which could result in increased costs and delays.
If our mainland China subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us. 40 Table of Contents Under mainland China laws and regulations, a foreign-invested enterprise in the mainland China, such as Beijing Momo Information Technology Co., Ltd., or Beijing Momo IT, may pay dividends only out of its accumulated profits as determined in accordance with mainland China accounting standards and regulations.
If our mainland China subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us. 40 Table of Contents Under mainland China laws and regulations, a foreign-invested enterprise in mainland China, such as Beijing Momo Information Technology Co., Ltd., or Beijing Momo IT, may pay dividends only out of its accumulated profits as determined in accordance with mainland China accounting standards and regulations.
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.
Under Circular 6, a security review is required for mergers and acquisitions by foreign investors having “national defense and security” concerns and mergers and acquisitions by which foreign investors may acquire the “de facto control” of domestic enterprises with “national security” concerns.
Under the Circular 6, a security review is required for mergers and acquisitions by foreign investors having “national defense and security” concerns and mergers and acquisitions by which foreign investors may acquire the “de facto control” of domestic enterprises with “national security” concerns.
However, NDRC or other government agencies may publish explanations in the future determining that our business is in an industry subject to the security review, in which case our future acquisitions in the mainland China, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited.
However, the NDRC or other government agencies may publish explanations in the future determining that our business is in an industry subject to the security review, in which case our future acquisitions in mainland China, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited.
Pursuant to the Cybersecurity Review Measures, critical information infrastructure operators that procure internet products and services, and operators of network platforms conducting data processing activities must be subject to the cybersecurity review if their activities affect or may affect national security.
Pursuant to the Cybersecurity Review Measures, critical information infrastructure operators that procure internet products and services, and operators of network platforms conducting data processing activities must be subject to the cybersecurity review if their activities affect or may affect national security.
On November 14, 2021, the CAC published a draft of the Administrative Regulations for Internet Data Security, or the Draft Data Security Regulations, for public comments.
On November 14, 2021, the CAC published a draft of the Administrative Regulations for Internet Data Security, or the Draft Data Security Regulations, for public comments.
The Draft Data Security Regulations provides that data processors conducting the following activities must apply for cybersecurity review: (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, which affects or may affect national security; (ii) a foreign listing by a data processor processing personal information of over one million users; (iii) a listing in Hong Kong which affects or may affect national security; or (iv) other data processing activities that affect or may affect national security.
The Draft Data Security Regulations provides that data processors conducting the following activities must apply for cybersecurity review: (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, which affects or may affect national security; (ii) a foreign listing by a data processor processing personal information of over one million users; (iii) a listing in Hong Kong which affects or may affect national security; or (iv) other data processing activities that affect or may affect national security.
There have been no further clarifications from the authorities as of the date of this annual report as to the standards for determining such activities that “affects or may affect national security.” The period for which the CAC solicited comments on this draft ended on December 13, 2021, but there is no timetable as to when the draft regulations will be enacted.
There have been no further clarifications from the authorities as of the date of this annual report as to the standards for determining such activities that “affects or may affect national security.” The period for which the CAC solicited comments on this draft ended on December 13, 2021, but there is no timetable as to when the draft regulations will be enacted.
Public Notice 7 also addresses the transfer of the equity interest in a foreign intermediate holding company widely. In addition, Public Notice 7 provides clear criteria on how to assess reasonable commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings.
The Public Notice 7 also addresses the transfer of the equity interest in a foreign intermediate holding company widely. In addition, the Public Notice 7 provides clear criteria on how to assess reasonable commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings.
The SAFE promulgated the Circular on Relevant Issues Relating to Foreign Exchange Control on Domestic Resident’s Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, in July 2014 that requires mainland China residents or entities to register with SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing.
SAFE promulgated the Circular on Relevant Issues Relating to Foreign Exchange Control on Domestic Resident’s Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, in July 2014 that requires mainland China residents or entities to register with SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing.
In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plans of Overseas Publicly-Listed Companies, or Circular 7.
In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plans of Overseas Publicly-Listed Companies, or the Circular 7.
Participants of a stock incentive plan who are mainland China residents must retain a qualified mainland China agent, which could be a mainland China subsidiary of such overseas publicly listed company or another qualified institution selected by such mainland China subsidiary, to conduct the SAFE registration and other procedures with respect to the stock incentive plan on behalf of its participants.
Participants of a stock incentive plan who are mainland China residents must retain a qualified mainland China agent, which could be a mainland China subsidiary of such overseas publicly listed company or another qualified institution selected by such mainland China subsidiary, to conduct SAFE registration and other procedures with respect to the stock incentive plan on behalf of its participants.
On June 9, 2016, SAFE promulgated the Circular on Reforming and Regulating of Administrative Policy on Settlement of Foreign Exchange of Capital Account, or SAFE Circular 16, which became effective on June 9, 2016.
On June 9, 2016, SAFE promulgated the Circular on Reforming and Regulating the Administrative Policy on Settlement of Foreign Exchange of Capital Account, or SAFE Circular 16, which became effective on June 9, 2016.
SAFE Circular 29 further specifies that the domestic equity investment set forth in Circular 28 is not limited to direct investment in a domestic enterprise but also includes equity investment conducted in the form of “equity transfer.” According to the Circular on Improving Administration of Foreign Exchange to Support the Development of Foreign-related Business, or the SAFE Circular 8, issued by the SAFE on April 10, 2020, eligible enterprises are allowed to make domestic payments by using their capital funds, foreign credits and the income under capital accounts of overseas listing without submitting the evidentiary materials concerning authenticity of such capital to banks in advance, provided that their capital use is authentic and in compliance with administrative regulations on the use of income under capital accounts.
SAFE Circular 29 further specifies that the domestic equity investment set forth in Circular 28 is not limited to direct investment in a domestic enterprise but also includes equity investment conducted in the form of “equity transfer.” According to the Circular on Improving Administration of Foreign Exchange to Support the Development of Foreign-related Business, or SAFE Circular 8, issued by SAFE on April 10, 2020, eligible enterprises are allowed to make domestic payments by using their capital funds, foreign credits and the income under capital accounts of overseas listing without submitting the evidentiary materials concerning authenticity of such capital to banks in advance, provided that their capital use is authentic and in compliance with administrative regulations on the use of income under capital accounts.
Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: • the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC; • the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; • the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and • the selective disclosure rules by issuers of material nonpublic information under Regulation FD; and certain audit committee independence requirements in Rule 10A-3 of the Exchange Act.
Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: • the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC; • the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; • the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; • the selective disclosure rules by issuers of material nonpublic information under Regulation FD; and • certain audit committee independence requirements in Rule 10A-3 of the Exchange Act.
We may be unable to successfully monetize Tantan’s social and dating services due to, among other reasons, COVID-19’s negative impact on Tantan’s user retention and engagement, Tantan’s users ceasing to use mobile technology for dating and socializing, Tantan’s users opting to forgo paid services on the app, perceived or actual privacy concerns, the introduction of new regulations on the use and monetization of user data, any interruption of Tantan’s business operations from the inspection and administrative measures taken by relevant governmental authorities, and the introduction of competition offering services at lower cost or additional or different features.
We may be unable to successfully monetize Tantan’s social and dating services due to, among other reasons, COVID-19’s negative impact on Tantan’s user retention and engagement, Tantan’s users ceasing to use mobile technology for dating and socializing, Tantan’s users opting to forgo paid services on the app, perceived or actual privacy concerns, the introduction of new regulations on the use and monetization of user data, any interruption of Tantan’s business operations from the inspection and administrative measures taken by the governmental authorities, and the introduction of competition offering services at lower cost or additional or different features.
Risks Related to Our Business and Industry • If we fail to retain our existing users, further grow our user base, or if user engagement on our platform declines, our business and operating results may be materially and adversely affected.; • We cannot guarantee that the monetization strategies we have adopted will be successfully implemented or generate sustainable revenues and profits; • We operate in a highly dynamic market, which makes it difficult to evaluate our future prospects; • We currently generate a substantial majority of our revenues from our live video service.
Risks Related to Our Business and Industry • If we fail to retain our existing users, further grow our user base, or if user engagement on our platform declines, our business and operating results may be materially and adversely affected; • We cannot guarantee that the monetization strategies we have adopted will be successfully implemented or generate sustainable revenues and profits; • We operate in a highly dynamic market, which makes it difficult to evaluate our future prospects; • We currently generate a majority of our revenues from our live video service.
If we fail to obtain the relevant approval or complete the filings and other relevant regulatory procedures, we may face sanctions by the CSRC or other mainland China regulatory agencies, which may include fines and penalties on our operations in mainland China, limitations on our operating privileges in mainland China, restrictions on or prohibition of the payments or remittance of dividends by our subsidiaries in mainland China, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs.
If we fail to obtain the approval or complete the filings and other regulatory procedures, we may face sanctions by the CSRC or other mainland China regulatory agencies, which may include fines and penalties on our operations in mainland China, limitations on our operating privileges in mainland China, restrictions on or prohibition of the payments or remittance of dividends by our subsidiaries in mainland China, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs.
We have experienced, and may in the future experience, service disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes and cybersecurity related threats as follows: • our technology, system, networks and our users’ devices have been subject to, and may continue to be the target of, cyber-attacks, computer viruses, malicious code, phishing attacks or information security breaches that could result in an unauthorized release, gathering, monitoring, misuse, loss or destruction of confidential, proprietary and other information of ours, our employees or sensitive information provided by our users, or otherwise disrupt our, our users’ or other third parties’ business operations; 32 Table of Contents • we periodically encounter attempts to create false accounts or use our platform to send targeted and untargeted spam messages to our users, or take other actions on our platform for purposes such as spamming or spreading misinformation, and we may not be able to repel spamming attacks; • the use of encryption and other security measures intended to protect our systems and confidential data may not provide absolute security, and losses or unauthorized access to or releases of confidential information may still occur; • our security measures may be breached due to employee error, malfeasance or unauthorized access to sensitive information by our employees, who may be induced by outside third parties, and we may not be able to anticipate any breach of our security or to implement adequate preventative measures; and • we may be subject to information technology system failures or network disruptions caused by natural disasters, accidents, power disruptions, telecommunications failures, acts of terrorism or war, computer viruses, physical or electronic break-ins, or other events or disruptions.
We have experienced, and may in the future experience, service disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes and cybersecurity related threats as follows: • our technology, system, networks and our users’ devices have been subject to, and may continue to be the target of, cyber-attacks, computer viruses, malicious code, phishing attacks or information security breaches that could result in an unauthorized release, gathering, monitoring, misuse, loss or destruction of confidential, proprietary and other information of ours, our employees or sensitive information provided by our users, or otherwise disrupt our, our users’ or other third parties’ business operations; • we periodically encounter attempts to create false accounts or use our platform to send targeted and untargeted spam messages to our users, or take other actions on our platform for purposes such as spamming or spreading misinformation, and we may not be able to repel spamming attacks; • the use of encryption and other security measures intended to protect our systems and confidential data may not provide absolute security, and losses or unauthorized access to or releases of confidential information may still occur; • our security measures may be breached due to employee error, malfeasance or unauthorized access to sensitive information by our employees, who may be induced by outside third parties, and we may not be able to anticipate any breach of our security or to implement adequate preventative measures; and • we may be subject to information technology system failures or network disruptions caused by natural disasters, accidents, power disruptions, telecommunications failures, acts of terrorism or war, computer viruses, physical or electronic break-ins, or other events or disruptions.
A number of factors could negatively affect user retention, growth and engagement, including if: 16 Table of Contents • we are unable to attract new users to our platform or retain existing ones; • we fail to introduce new and improved services, or if we introduce services that are not favorably received by users; • we are unable to combat spam on or inappropriate or abusive use of our platform, which may lead to negative public perception of us and our brand; • technical or other problems prevent us from delivering our services in a rapid and reliable manner or otherwise adversely affect the user experience; • we suffer from negative publicity, fail to maintain our brand or if our reputation is damaged; • we fail to address user concerns related to privacy and communication, safety, security or other factors; • there are adverse changes in our services that are mandated by, or that we elect to make to address, legislation, regulations or government policies; and • the growth of the number of smartphone users in mainland China stalls.
A number of factors could negatively affect user retention, growth and engagement, including if: 17 Table of Contents • we are unable to attract new users to our platform or retain existing ones; • we fail to introduce new and improved services, or if we introduce services that are not favorably received by users; • we are unable to combat spam on or inappropriate or abusive use of our platform, which may lead to negative public perception of us and our brand; • technical or other problems prevent us from delivering our services in a rapid and reliable manner or otherwise adversely affect the user experience; • we suffer from negative publicity, fail to maintain our brand or if our reputation is damaged; • we fail to address user concerns related to privacy and communication, safety, security or other factors; • there are adverse changes in our services that are mandated by, or that we elect to make to address, legislation, regulations or government policies; and • the growth of the number of smartphone users in mainland China stalls.
There remain significant uncertainties regarding the ultimate outcome of arbitration should legal action become necessary. These uncertainties could limit our ability to enforce these contractual arrangements. In addition, arbitration awards are final and can only be enforced in mainland China courts through arbitration award recognition proceedings, which could cause additional expenses and delays.
There remain uncertainties regarding the ultimate outcome of arbitration should legal action become necessary. These uncertainties could limit our ability to enforce these contractual arrangements. In addition, arbitration awards are final and can only be enforced in mainland China courts through arbitration award recognition proceedings, which could cause additional expenses and delays.
The mainland China tax authorities have the discretion under SAT Circular 59, Bulletin 37 and Public Notice 7 to make adjustments to the taxable capital gains based on the difference between the fair value of the equity interests transferred and the cost of investment. We may pursue acquisitions in the future that may involve complex corporate structures.
The mainland China tax authorities have the discretion under the Circular 59, the Bulletin 37 and the Public Notice 7 to make adjustments to the taxable capital gains based on the difference between the fair value of the equity interests transferred and the cost of investment. We may pursue acquisitions in the future that may involve complex corporate structures.
With reference to the California tax code, the phrase “doing business in California” is described as “ actively engaging in any transaction for the purpose of financial or pecuniary gain or profit.” We are currently not actively doing business in California, and thus, there is still uncertainty regarding whether the CCPA will apply to us.
With reference to the California tax code, the phrase “doing business in California” is described as “actively engaging in any transaction for the purpose of financial or pecuniary gain or profit.” We are currently not actively doing business in California, and thus, there is still uncertainty regarding whether the CCPA will apply to us.
Other Subsidiaries Primary Beneficiaries of Consolidated Affiliated Entities and Their Subsidiaries Consolidated Affiliated Entities and Their Subsidiaries Eliminating Adjustments Consolidated Totals (in RMB thousands) Net cash (used in) provided by operating activities (4) (61,675 ) (364,460 ) 108,819 1,544,207 — 1,226,891 Loans to Hello Group companies (6,636 ) — — (1,232,857 ) 1,239,493 — Cash dividends received from subsidiaries 3,075,912 3,600,000 — — (6,675,912 ) — Payment for short-term investments — — (300,000 ) — — (300,000 ) Purchase of short-term deposits — — (900,000 ) (800,000 ) — (1,700,000 ) Cash received on maturity of short-term deposits — — 4,860,000 550,000 — 5,410,000 Purchase of long-term deposits — — (2,750,000 ) — — (2,750,000 ) Cash received on maturity of long-term deposits — — 500,000 700,000 — 1,200,000 Other investing activities — — (146,083 ) 1,928 — (144,155 ) Net cash provided by (used in) investing activities 3,069,276 3,600,000 1,263,917 (780,929 ) (5,436,419 ) 1,715,845 Borrowings under loan from Hello Group companies — 6,636 1,232,857 — (1,239,493 ) — Dividends payment to Hello Group Inc. — (3,075,912 ) (3,600,000 ) — 6,675,912 — Payment for redemption of convertible bonds (2,136,987 ) — — — — (2,136,987 ) Repurchase of ordinary shares (392,374 ) — — — — (392,374 ) Dividends payment to Hello Group’s shareholders (840,997 ) — — — — (840,997 ) Other financing activities (21,258 ) (40,943 ) — — — (62,201 ) Net cash (used in) provided by financing activities (3,391,616 ) (3,110,219 ) (2,367,143 ) — 5,436,419 (3,432,559 ) For the Year Ended December 31, 2021 Hello Group Inc.
Other Subsidiaries Primary Beneficiaries of VIEs VIEs and Their Consolidated Subsidiaries Eliminating Adjustments Consolidated Totals (in RMB thousands) Net cash (used in) provided by operating activities (4) (61,675 ) (364,460 ) 108,819 1,544,207 — 1,226,891 Loans to Hello Group companies (6,636 ) — — (1,232,857 ) 1,239,493 — Cash dividends received from subsidiaries 3,075,912 3,600,000 — — (6,675,912 ) — Payment for short-term investments — — (300,000 ) — — (300,000 ) Purchase of short-term deposits — — (900,000 ) (800,000 ) — (1,700,000 ) Cash received on maturity of short-term deposits — — 4,860,000 550,000 — 5,410,000 Purchase of long-term deposits — — (2,750,000 ) — — (2,750,000 ) Cash received on maturity of long-term deposits — — 500,000 700,000 — 1,200,000 Other investing activities — — (146,083 ) 1,928 — (144,155 ) Net cash provided by (used in) investing activities 3,069,276 3,600,000 1,263,917 (780,929 ) (5,436,419 ) 1,715,845 Borrowings under loan from Hello Group companies — 6,636 1,232,857 — (1,239,493 ) — Dividends payment to Hello Group Inc. — (3,075,912 ) (3,600,000 ) — 6,675,912 — Payment for redemption of convertible bonds (2,136,987 ) — — — — (2,136,987 ) Repurchase of ordinary shares (392,374 ) — — — — (392,374 ) Dividends payment to Hello Group’s shareholders (840,997 ) — — — — (840,997 ) Other financing activities (21,258 ) (40,943 ) — — — (62,201 ) Net cash (used in) provided by financing activities (3,391,616 ) (3,110,219 ) (2,367,143 ) — 5,436,419 (3,432,559 ) For the Year Ended December 31, 2021 Hello Group, Inc.
Circular 19 provides that, among other things, the foreign-invested company may convert the foreign currency in its capital account into RMB on a “at will” basis and the RMB funds so converted can be used for equity investments provided that equity investment is included in the business scope of such foreign-invested company.
SAFE Circular 19 provides that, among other things, the foreign-invested company may convert the foreign currency in its capital account into RMB on a “at will” basis and the RMB funds so converted can be used for equity investments provided that equity investment is included in the business scope of such foreign-invested company.
Although we do not conduct any business in the European Economic Area, in the event that residents of the European Economic Area access our platform and input protected information, we may become subject to provisions of the GDPR. Additionally, California recently enacted legislation that has been dubbed the first “GDPR-like” law in the U.S.
Although we do not conduct any business in the European Economic Area, in the event that residents of the European Economic Area access our platform and input protected information, we may become subject to provisions of the GDPR. Additionally, California enacted legislation that has been dubbed the first “GDPR-like” law in the U.S.
As it is in short sellers’ interest for the price of the security to decline, many short sellers publish, or arrange for the publication of, negative opinions and allegations regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a security short.
As it is in short sellers’ interest for the price of the security to decline, many short sellers publish, or arrange for the publication of, negative opinions and allegations regarding the issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a security short.
Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities, we may be required to obtain additional licenses, permits, filings or approvals for the functions and services of our platform in the future, and may not be able to maintain or renew our current licenses, permits, filings or approvals.
Given the uncertainties of interpretation and implementation of the laws and regulations and the enforcement practice by the government authorities, we may be required to obtain additional licenses, permits, filings or approvals for the functions and services of our platform in the future, and may not be able to maintain or renew our current licenses, permits, filings or approvals.
Although we have adopted internal procedures to monitor content and to remove offending content once we become aware of any potential or alleged violation, we may not be able to identify all the content that may violate relevant laws and regulations or third-party intellectual property rights.
Although we have adopted internal procedures to monitor content and to remove offending content once we become aware of any potential or alleged violation, we may not be able to identify all the content that may violate the laws and regulations or third-party intellectual property rights.
Furthermore, internet content providers are also prohibited from displaying content that may be deemed by relevant government authorities as instigating ethnical hatred and harming ethnical unity, harming the national religious policy, “socially destabilizing” or leaking “state secrets” of the mainland China.
Furthermore, internet content providers are also prohibited from displaying content that may be deemed by the government authorities as instigating ethnical hatred and harming ethnical unity, harming the national religious policy, “socially destabilizing” or leaking “state secrets” of mainland China.
Any further rulemaking under Notice 78, Opinions 3 or other intensified regulation with respect to online live broadcast may increase our compliance burden, and may have an adverse impact on our business and results of operations.
Any further rulemaking under the Notice 78, the Opinions 3 or other intensified regulation with respect to online live broadcast may increase our compliance burden, and may have an adverse impact on our business and results of operations.
While we would strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed against the relevant short sellers by principles of freedom of speech, applicable state law or issues of commercial confidentiality.
While we would strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed against the short sellers by principles of freedom of speech, applicable state law or issues of commercial confidentiality.
Notice 78 also sets forth requirements for certain online live broadcast businesses with respect to real-name registration, limits on user spending on virtual gifting, restrictions on minors on virtual gifting, online live broadcast review personnel requirements, content tagging requirements, and other requirements.
The Notice 78 also sets forth requirements for certain online live broadcast businesses with respect to real-name registration, limits on user spending on virtual gifting, restrictions on minors on virtual gifting, online live broadcast review personnel requirements, content tagging requirements, and other requirements.
Moreover, failure to comply with the SAFE registration described above could result in liability under mainland China laws for evasion of applicable foreign exchange restrictions. We cannot compel all of our beneficial owners to comply with SAFE registration requirements.
Moreover, failure to comply with SAFE registration described above could result in liability under mainland China laws for evasion of applicable foreign exchange restrictions. We cannot compel all of our beneficial owners to comply with SAFE registration requirements.
We may incur substantial financial, operational and managerial costs in response to and in anticipation to the relevant regulatory and policy risks, and we may not be able to effectively predict, estimate or manage those risks in a timely and cost-efficient manner.
We may incur substantial financial, operational and managerial costs in response to and in anticipation to the regulatory and policy risks, and we may not be able to effectively predict, estimate or manage those risks in a timely and cost-efficient manner.
GAAP. On February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Overseas Listing Trial Measures, and five supporting guidelines, which came into effect on March 31, 2023.
On February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Overseas Listing Trial Measures, and five supporting guidelines, which came into effect on March 31, 2023.
If our strategic initiatives do not enhance our ability to monetize our existing services or enable us to develop new approaches to monetization, we may not be able to maintain or increase our revenues and profits or recover any associated costs. 17 Table of Contents We may in the future introduce new services to further diversify our revenue streams, including services with which we have little or no prior development or operating experience.
If our strategic initiatives do not enhance our ability to monetize our existing services or enable us to develop new approaches to monetization, we may not be able to maintain or increase our revenues and profits or recover any associated costs. 18 Table of Contents We may in the future introduce new services to further diversify our revenue streams, including services with which we have little or no prior development or operating experience.
Other Subsidiaries Primary Beneficiaries of Consolidated Affiliated Entities and Their Subsidiaries Consolidated Affiliated Entities and Their Subsidiaries Eliminating Adjustments Consolidated Totals (in RMB thousands) Third-party revenues — 549,310 1,865 12,152,997 — 12,704,172 Inter-company revenues (1) — — 4,134,173 — (4,134,173 ) — Total costs and expenses (237,702 ) (539,969 ) (2,906,256 ) (11,547,507 ) 4,134,173 (11,097,261 ) Income (loss) from subsidiaries and VIEs (2) 1,616,391 1,768,959 463,592 — (3,848,942 ) — Other income 86,582 2,364 284,091 51,269 — 424,306 Income (loss) before income tax expense and share of loss on equity method investments 1,465,271 1,780,664 1,977,465 656,759 (3,848,942 ) 2,031,217 Income tax expenses — (164,290 ) (208,425 ) (189,566 ) — (562,281 ) Share of income (loss) on equity method investments 19,012 (1 ) (82 ) (7,856 ) — 11,073 Net income (loss) 1,484,283 1,616,373 1,768,958 459,337 (3,848,942 ) 1,480,009 Less: net loss attributable to non-controlling interests — (18 ) — (4,256 ) — (4,274 ) Net income (loss) attributable to Hello Group’s shareholders 1,484,283 1,616,391 1,768,958 463,593 (3,848,942 ) 1,484,283 For the Year Ended December 31, 2021 Hello Group Inc.
Other Subsidiaries Primary Beneficiaries of VIEs VIEs and Their Consolidated Subsidiaries Eliminating Adjustments Consolidated Totals (in RMB thousands) Third-party revenues — 549,310 1,865 12,152,997 — 12,704,172 Inter-company revenues (1) — — 4,134,173 — (4,134,173 ) — Total costs and expenses (237,702 ) (539,969 ) (2,906,256 ) (11,547,507 ) 4,134,173 (11,097,261 ) Income (loss) from subsidiaries and the VIEs (2) 1,616,391 1,768,959 463,592 — (3,848,942 ) — Other income 86,582 2,364 284,091 51,269 — 424,306 Income (loss) before income tax expense and share of loss on equity method investments 1,465,271 1,780,664 1,977,465 656,759 (3,848,942 ) 2,031,217 Income tax expenses — (164,290 ) (208,425 ) (189,566 ) — (562,281 ) Share of income (loss) on equity method investments 19,012 (1 ) (82 ) (7,856 ) — 11,073 Net income (loss) 1,484,283 1,616,373 1,768,958 459,337 (3,848,942 ) 1,480,009 Less: net loss attributable to non-controlling interests — (18 ) — (4,256 ) — (4,274 ) Net income (loss) attributable to Hello Group’s shareholders 1,484,283 1,616,391 1,768,958 463,593 (3,848,942 ) 1,484,283 9 Table of Contents For the Year Ended December 31, 2021 Hello Group, Inc.
Under the PRC Enterprise Income Tax Law, or the EIT Law, which became effective on January 1, 2008, as amended on February 24, 2017 and further amended on December 29, 2018, an enterprise established outside the mainland China with “de facto management bodies” within the mainland China is considered a “resident enterprise” for mainland China enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income.
Under the PRC Enterprise Income Tax Law, which became effective on January 1, 2008, as amended on February 24, 2017 and further amended on December 29, 2018, an enterprise established outside mainland China with “de facto management bodies” within mainland China is considered a “resident enterprise” for mainland China enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income.
The Cybersecurity Review Measures further stipulates that network platform operators that hold personal information of over one million users shall apply with the Cybersecurity Review Office for a cybersecurity review before any initial public offering at a foreign stock exchange. Given that the Cybersecurity Review Measures was recently promulgated, there are substantial uncertainties as to its interpretation, application, and enforcement.
The Cybersecurity Review Measures further stipulates that network platform operators that hold personal information of over one million users shall apply with the Cybersecurity Review Office for a cybersecurity review before any initial public offering at a foreign stock exchange. Given that the Cybersecurity Review Measures were recently promulgated, there are substantial uncertainties as to its interpretation, application, and enforcement.
The Cybersecurity Review Measures further stipulates that network platform operators that hold personal information of over one million users shall apply with the Cybersecurity Review Office for a cybersecurity review before any initial public offering at a foreign stock exchange. Given that the Cybersecurity Review Measures was recently promulgated, there are substantial uncertainties as to its interpretation, application, and enforcement.
The Cybersecurity Review Measures further stipulates that network platform operators that hold personal information of over one million users shall apply with the Cybersecurity Review Office for a cybersecurity review before any initial public offering at a foreign stock exchange. Given that the Cybersecurity Review Measures were recently promulgated, there are substantial uncertainties as to its interpretation, application, and enforcement.
In connection with enforcing these rules, regulations, policies and requirements, relevant government authorities may suspend services by, or revoke licenses of, any internet or mobile content service provider that is deemed to provide illicit or pornographic information or content online or on mobile devices, and such activities may be intensified in connection with any ongoing government campaigns to eliminate prohibited content online.
In connection with enforcing these rules, regulations, policies and requirements, the government authorities may suspend services by, or revoke licenses of, any internet or mobile content service provider that is deemed to provide illicit or pornographic information or content online or on mobile devices, and such activities may be intensified in connection with any ongoing government campaigns to eliminate prohibited content online.
On March 15, 2019, the National People’s Congress, or the NPC, approved the PRC Foreign Investment Law, which took effect on January 1, 2020 and replaced the Sino-Foreign Equity Joint Venture Enterprise Law, the Sino-Foreign Cooperative Joint Venture Enterprise Law and the Foreign Owned Enterprise Law, together with their implementation rules and ancillary regulations, to become the legal foundation for foreign investment in the mainland China.
On March 15, 2019, the National People’s Congress approved the PRC Foreign Investment Law, which took effect on January 1, 2020 and replaced the Sino-Foreign Equity Joint Venture Enterprise Law, the Sino-Foreign Cooperative Joint Venture Enterprise Law and the Foreign Owned Enterprise Law, together with their implementation rules and ancillary regulations, to become the legal foundation for foreign investment in mainland China.
In general, we expect that data security and data protection compliance will receive greater attention and focus from regulators, both domestically and globally, as well as attract continued or greater public scrutiny and attention going forward, which could increase our compliance costs and subject us to heightened risks and challenges associated with data security and protection.
In general, we expect that data security and data protection compliance will receive greater attention and focus from regulators, both in China and globally, as well as attract continued or greater public scrutiny and attention going forward, which could increase our compliance costs and subject us to heightened risks and challenges associated with data security and protection.
Moreover, different mainland China regulatory bodies, including the Standing Committee of the National People’s Congress, or the NPC, the Ministry of Industry and Information Technology, or the MIIT, the CAC, the Ministry of Public Security, or the MPS, and the State Administration for Market Regulation, or the SAMR, have enforced data privacy and protections laws and regulations with varying standards and applications.
Moreover, different mainland China regulatory bodies, including the Standing Committee of the National People’s Congress, the Ministry of Industry and Information Technology, or the MIIT, the CAC, the Ministry of Public Security, and the State Administration for Market Regulation, or the SAMR, have enforced data privacy and protections laws and regulations with varying standards and applications.
Accordingly, we treat the consolidated affiliated entities as the consolidated entities under the accounting principles generally accepted in the United States, or U.S. GAAP, and we consolidate the financial results of the consolidated affiliated entities in the consolidated financial statements in accordance with U.S. GAAP. For more details of these contractual arrangements, see “Item 4. Information on the Company—C.
Accordingly, we treat the VIEs as the consolidated entities under the accounting principles generally accepted in the United States, or U.S. GAAP, and we consolidate the financial results of the VIEs in the consolidated financial statements in accordance with U.S. GAAP. For more details of these contractual arrangements, see “Item 4. Information on the Company—C.
The mainland China anti-monopoly laws may increase our compliance burden, particularly in the context of relevant mainland China authorities recently strengthening supervision and enforcement of the PRC Anti-Monopoly Law against internet platforms. There are significant uncertainties associated with the evolving legislative activities and varied local implementation practices of anti-monopoly and competition laws and regulations in mainland China.
The mainland China anti-monopoly laws may increase our compliance burden, particularly in the context of the mainland China authorities recently strengthening supervision and enforcement of the PRC Anti-Monopoly Law against internet platforms. There are uncertainties associated with the evolving legislative activities and varied local implementation practices of anti-monopoly and competition laws and regulations in mainland China.
The selected consolidated statements of comprehensive income data for the years ended December 31, 2018 and 2019 and the selected consolidated balance sheets data as of December 31, 2018, 2019 and 2020 have been derived from our audited consolidated financial statements not included in this annual report. Our audited consolidated financial statements are prepared and presented in accordance with U.S.
The selected consolidated statements of comprehensive income data for the years ended December 31, 2019 and 2020 and the selected consolidated balance sheets data as of December 31, 2019, 2020 and 2021 have been derived from our audited consolidated financial statements not included in this annual report. Our audited consolidated financial statements are prepared and presented in accordance with U.S.
The Cybersecurity Review Measures and the Draft Data Security Regulations remain unclear on whether the relevant requirements will be applicable to companies that are already listed in the United States, such as us, if we were to pursue another listing outside of the mainland China.
In addition, the Cybersecurity Review Measures and the Draft Data Security Regulations remain unclear on whether the requirements will be applicable to companies that are already listed in the United States, such as us, if we were to pursue another listing outside of the mainland China.
Companies in the internet, technology and media industries are frequently involved in litigation based on allegations of infringement of intellectual property rights, unfair competition, invasion of privacy, defamation and other violations of other parties’ rights. The validity, enforceability and scope of protection of intellectual property rights in internet-related industries, particularly in mainland China, are uncertain and still evolving.
Companies in the internet, technology and media industries are frequently involved in litigation based on allegations of infringement of intellectual property rights, unfair competition, invasion of privacy, defamation and other violations of other parties’ rights. The validity, enforceability and scope of protection of intellectual property rights in internet-related industries, including in mainland China, are uncertain and still evolving.
Economic conditions in mainland China are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in mainland China. Any severe or prolonged slowdown in the global or mainland China economy may materially and adversely affect our business, results of operations, and financial condition.
Economic conditions in China are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in China. Any severe or prolonged slowdown in the global or Chinese economy may materially and adversely affect our business, financial condition and results of operations.
According to SAFE Circular 16, the foreign exchange capital of foreign-invested enterprises, or FIEs, foreign debt and funds raised through offshore listings may be settled on a discretionary basis, and can be settled at banks. The proportion of such discretionary settlement is temporarily determined as 100%.
According to SAFE Circular 16, the foreign exchange capital of foreign-invested enterprises and foreign debt and funds raised through offshore listings may be settled on a discretionary basis, and can be settled at banks. The proportion of such discretionary settlement is temporarily determined as 100%.
Risks Related to Doing Business in mainland 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; • Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in mainland China.
Risk Factors—Risks Related to Doing Business in Mainland 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;” • Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in mainland China.
Under the EIT Law and related regulations, dividends, interests, rent or royalties payable by a foreign-invested enterprise, such as our mainland China subsidiaries, to any of its foreign non-resident enterprise investors, and proceeds from any such foreign enterprise investor’s disposition of assets (after deducting the net value of such assets) are subject to a 10% withholding tax, unless the foreign enterprise investor’s jurisdiction of incorporation has a tax treaty with mainland China that provides for a reduced rate of withholding tax.
Under the PRC Enterprise Income Tax Law and related regulations, dividends, interests, rent or royalties payable by a foreign-invested enterprise, such as our mainland China subsidiaries, to any of its foreign non-resident enterprise investors, and proceeds from any such foreign enterprise investor’s disposition of assets (after deducting the net value of such assets) are subject to a 10% withholding tax, unless the foreign enterprise investor’s jurisdiction of incorporation has a tax treaty with mainland China that provides for a reduced rate of withholding tax.
The selected consolidated statements of comprehensive income data for the years ended December 31, 2020, 2021 and 2022 and the selected consolidated balance sheets data as of December 31, 2021 and 2022 have been derived from our audited consolidated financial statements included in this annual report beginning on page F-1.
The selected consolidated statements of comprehensive income data for the years ended December 31, 2021, 2022 and 2023 and the selected consolidated balance sheets data as of December 31, 2022 and 2023 have been derived from our audited consolidated financial statements included in this annual report beginning on page F-1.
Convincing potential new users, customers and platform partners of the value of our services is critical to increasing the number of our users, customers and platform partners and to the success of our business. 19 Table of Contents Our business is subject to complex and evolving Chinese and international laws and regulations regarding cybersecurity, information security, privacy and data protection.
Convincing potential new users, customers and platform partners of the value of our services is critical to increasing the number of our users, customers and platform partners and to the success of our business. 20 Table of Contents Our business is subject to complex and evolving Chinese and international laws and regulations regarding cybersecurity, information security, privacy and data protection.
SAT Bulletin 45 specifies that when provided with a copy of Chinese tax resident determination certificate from a resident Chinese controlled offshore incorporated enterprise, the payer should not withhold 10% income tax when paying the Chinese-sourced dividends, interest, royalties, among others, to the Chinese controlled offshore incorporated enterprise.
The STA Bulletin 45 specifies that when provided with a copy of Chinese tax resident determination certificate from a resident Chinese controlled offshore incorporated enterprise, the payer should not withhold 10% income tax when paying the Chinese-sourced dividends, interest, royalties, among others, to the Chinese controlled offshore incorporated enterprise.
Most of these ways are subject to mainland China regulations and approvals. For example, loans by us to our wholly-owned mainland China subsidiaries to finance their activities cannot exceed statutory limits and must be registered with the local counterpart of SAFE.
Most of these ways are subject to mainland China regulations and approvals. For example, loans from us to our wholly-owned mainland China subsidiaries to finance their activities cannot exceed statutory limits and must be registered with the local counterpart of SAFE.
In addition, an independent registered public accounting firm must attest to and report on the effectiveness of the company’s internal control over financial reporting. Our management has concluded that our internal controls over financial reporting were effective as of December 31, 2022.
In addition, an independent registered public accounting firm must attest to and report on the effectiveness of the company’s internal control over financial reporting. Our management has concluded that our internal controls over financial reporting were effective as of December 31, 2023.
For example, the M&A Rules require that the MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a mainland China domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that impact or may impact national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or mainland China time-honored brand.
For example, the M&A Rules require that the Ministry of Commerce be notified in advance of any change-of-control transaction in which a foreign investor takes control of a mainland China domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that impact or may impact national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or mainland China time-honored brand.
Furthermore, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies like us. These broad market and industry fluctuations may adversely affect the market price of our ADSs.
Furthermore, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies like ours. These broad market and industry fluctuations may adversely affect the market price of our ADSs.
Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (except for our memorandum and articles of association, our register of mortgages and charges and special resolutions of our shareholders) or to obtain copies of lists of shareholders of these companies.
Shareholders of Cayman Islands exempted companies like ours have no general rights under Cayman Islands law to inspect corporate records (except for our memorandum and articles of association, our register of mortgages and charges and special resolutions of our shareholders) or to obtain copies of lists of shareholders of these companies.
Risk Factors—Risks Related to Doing Business in Mainland China—Uncertainties in the interpretation and enforcement of mainland China laws and regulations could limit the legal protections available to you and us.” There are very few precedents and little official guidance as to how contractual arrangements in the context of a variable interest entity, or a consolidated affiliated entity, should be interpreted or enforced under mainland China law.
Risk Factors—Risks Related to Doing Business in Mainland China—Uncertainties in the interpretation and enforcement of mainland China laws and regulations could limit the legal protections available to you and us.” There are very few precedents and little official guidance as to how contractual arrangements in the context of a variable interest entity, or a VIE, should be interpreted or enforced under mainland China law.
On June 24, 2022, the Standing Committee of the NPC issued an amendment of the PRC Anti-Monopoly Law, which increases the fines for illegal concentration of undertakings to “up to 10% of its sales amount in the previous year if the concentration of undertakings has or may have an effect of excluding or limiting competition; or a fine of up to RMB5 million if the concentration of undertakings does not have an effect of excluding or limiting competition.” The amendment also stipulates that if a concentration does not reach the threshold prescribed by the State Council, there is evidence proving the concentration has or may have effect of excluding or limiting competition, the Anti-monopoly Law enforcement agency of the State Council may require the undertakings to complete the filings.
On June 24, 2022, the Standing Committee of the National People’s Congress issued an amendment of the PRC Anti-Monopoly Law, which increases the fines for illegal concentration of undertakings to “up to 10% of its sales amount in the previous year if the concentration of undertakings has or may have an effect of excluding or limiting competition; or a fine of up to RMB5 million if the concentration of undertakings does not have an effect of excluding or limiting competition.” The amendment also stipulates that if a concentration does not reach the threshold prescribed by the State Council, there is evidence proving the concentration has or may have effect of excluding or limiting competition, the anti-monopoly Law enforcement agency of the State Council may require the undertakings to complete the filings.
Since our inception, we have terminated tens of million user accounts because we viewed content generated by those users to be indecent and we terminated a substantial percentage of new user accounts in order to eliminate spam, fictitious accounts and indecent content from our platform.
Since our inception, we have terminated tens of millions of user accounts because we viewed content generated by those users to be indecent and we terminated a substantial percentage of new user accounts in order to eliminate spam, fictitious accounts and indecent content from our platform.
Failure of our mainland China stock option holders to complete their SAFE registrations may subject these mainland China residents to fines and legal sanctions and may also limit our ability to contribute additional capital into our mainland China subsidiaries, limit our mainland China subsidiaries’ ability to distribute dividends to us, or otherwise materially adversely affect our business. 51 Table of Contents Mainland China regulation of loans to, and direct investment in, mainland China entities by offshore holding companies and governmental control of currency conversion may restrict or prevent us from using offshore funds to make loans to our mainland China subsidiaries and consolidated affiliated entities and their subsidiaries, or to make additional capital contributions to our mainland China subsidiaries.
Failure of our mainland China stock option holders to complete their SAFE registrations may subject these mainland China residents to fines and legal sanctions and may also limit our ability to contribute additional capital into our mainland China subsidiaries, limit our mainland China subsidiaries’ ability to distribute dividends to us, or otherwise materially adversely affect our business. 51 Table of Contents Mainland China regulation of loans to, and direct investment in, mainland China entities by offshore holding companies and governmental control of currency conversion may restrict or prevent us from using offshore funds to make loans to our mainland China subsidiaries and the VIEs and their subsidiaries, or to make additional capital contributions to our mainland China subsidiaries.
As a result, many of these companies are now conducting internal and external investigations into the allegations and, in the interim, are subject to shareholder lawsuits and/or SEC enforcement actions. 30 Table of Contents Any allegations or reports published by short sellers against our company may be followed by periods of instability in the market price of our ADSs and negative publicity.
As a result, many of these companies are now conducting internal and external investigations into the allegations and, in the interim, are subject to shareholder lawsuits and/or SEC enforcement actions. Any allegations or reports published by short sellers against our company may be followed by periods of instability in the market price of our ADSs and negative publicity.
For example, the European Union General Data Protection Regulation (“GDPR”), which came into effect on May 25, 2018, includes operational requirements for companies that receive or process personal data of residents of the European Economic Area.
For example, the European Union General Data Protection Regulation, or the GDPR, which came into effect on May 25, 2018, includes operational requirements for companies that receive or process personal data of residents of the European Economic Area.
Moreover, staying in compliance with relevant regulatory requirements may result in limitation to our scope of service, reduction in user engagement or loss of users, diversion of our management team’s attention and increased operational costs and expenses.
Moreover, staying in compliance with the regulatory requirements may result in limitation to our scope of service, reduction in user engagement or loss of users, diversion of our management team’s attention and increased operational costs and expenses.
This would negatively impact our ability to attract users and maintain the level of user engagement. Existing or future strategic alliances, long-term investments and acquisitions may have a material and adverse effect on our business, reputation and results of operations. We have made and intend to continue to make long-term investments in third-party companies.
This would negatively impact our ability to attract users and maintain the level of user engagement. 33 Table of Contents Existing or future strategic alliances, long-term investments and acquisitions may have a material and adverse effect on our business, reputation and results of operations. We have made and intend to continue to make long-term investments in third-party companies.
Furthermore, if the consolidated affiliated entities undergo a voluntary or involuntary liquidation proceeding, their respective shareholders or unrelated third-party creditors may claim rights to some or all of its assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business, financial condition and results of operations. 39 Table of Contents Contractual arrangements we have entered into with the consolidated affiliated entities may be subject to scrutiny by the mainland China tax authorities.
Furthermore, if the VIEs undergo a voluntary or involuntary liquidation proceeding, their respective shareholders or unrelated third-party creditors may claim rights to some or all of its assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business, financial condition and results of operations. 39 Table of Contents Contractual arrangements we have entered into with the VIEs may be subject to scrutiny by the mainland China tax authorities.
The extent to which the pandemic impacts our results of operations going forward will depend on future developments which are uncertain and unpredictable, including the frequency, duration and extent of outbreaks of COVID-19, the appearance of new variants with different characteristics, the effectiveness of efforts to contain or treat cases, and future actions that may be taken in response to these developments.
The extent to which the pandemic impacts our results of operations going forward will depend on future developments, including the frequency, duration and extent of future outbreaks of COVID-19, the appearance of new variants with different characteristics, the effectiveness of efforts to contain or treat cases, and future actions that may be taken in response to these developments.
On December 24, 2021, nine authorities, including the NDRC, jointly issued the Opinions on Promoting the Healthy and Sustainable Development of Platform Economy, which provides that, among others, monopolistic agreements, abuse of dominant market position and illegal concentration of business operators in the field of platform economy will be strictly investigated and punished in accordance with the relevant laws.
On December 24, 2021, nine authorities, including the NDRC, jointly issued the Opinions on Promoting the Healthy and Sustainable Development of Platform Economy, which provides that, among others, monopolistic agreements, abuse of dominant market position and illegal concentration of business operators in the field of platform economy will be strictly investigated and punished in accordance with the law.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

253 edited+54 added−20 removed205 unchanged
Biggest changeWhere a non-resident enterprise transfers taxable assets indirectly by disposing of the equity interests of an overseas holding company, which is an indirect transfer, the non-resident enterprise as either the transferor or the transferee, or the mainland China entity that directly owns the taxable assets, may report such indirect transfer to the relevant tax authority. 82 Table of Contents Where non-resident investors were involved in our private equity financing, if such transactions were determined by the tax authorities to lack reasonable commercial purpose, we and our non-resident investors may become at risk of being taxed under Bulletin 37 and Public Notice 7 and may be required to expend valuable resources to comply with Bulletin 37 and Public Notice 7 or to establish that we should not be taxed under Bulletin 37 and Public Notice 7.
Biggest changeWhere non-resident investors were involved in our private equity financing, if such transactions were determined by the tax authorities to lack reasonable commercial purpose, we and our non-resident investors may become at risk of being taxed under the Bulletin 37 and the Public Notice 7 and may be required to expend valuable resources to comply with the Bulletin 37 and the Public Notice 7 or to establish that we should not be taxed under the Bulletin 37 and the Public Notice 7. 83 Table of Contents The mainland China tax authorities have the discretion under the Circular 59, the Bulletin 37 and the Public Notice 7 to make adjustments to the taxable capital gains based on the difference between the fair value of the equity interests transferred and the cost of investment.
Under Circular 6, a security review is required for mergers and acquisitions by foreign investors having “national defense and security” concerns and mergers and acquisitions by which foreign investors may acquire the “de facto control” of domestic enterprises with “national security” concerns.
Under the Circular 6, a security review is required for mergers and acquisitions by foreign investors having “national defense and security” concerns and mergers and acquisitions by which foreign investors may acquire the “de facto control” of domestic enterprises with “national security” concerns.
Failure to make such filing may subject such foreign investor to rectification within prescribed period, and will be recorded as negative credit information of such foreign investor in the relevant national credit information system, which would then subject such investors to joint punishment as provided by relevant rules.
Failure to make such filing may subject such foreign investor to rectification within prescribed period, and will be recorded as negative credit information of such foreign investor in the national credit information system, which would then subject such investors to joint punishment as provided by relevant rules.
Circular 56 reiterates the requirement set forth in the Audio/Video Broadcasting Rules that online audio/video service providers must obtain a license from the SARFT. Furthermore, Circular 56 requires all online audio/video service providers to be either wholly state-owned or state-controlled.
The Circular 56 reiterates the requirement set forth in the Audio/Video Broadcasting Rules that online audio/video service providers must obtain a license from the SARFT. Furthermore, the Circular 56 requires all online audio/video service providers to be either wholly state-owned or state-controlled.
In other words, these movies and television shows, whether produced in the mainland China or overseas, must be pre-approved by SARFT, and the distributors of these movies and television shows must obtain an applicable permit before releasing any such movie or television show.
In other words, these movies and television shows, whether produced in mainland China or overseas, must be pre-approved by SARFT, and the distributors of these movies and television shows must obtain an applicable permit before releasing any such movie or television show.
In 2012, the SARFT and the CAC issued a Notice on Improving the Administration of Online Audio/Video Content Including Internet Drama and Micro Films. In 2014, the Administration of Press, Publication, Radio, Film and Television, or SAPPRFT released a Supplemental Notice on Improving the Administration of Online Audio/Video Content Including Internet Drama and Micro Films.
In 2012, the SARFT and the CAC issued a Notice on Improving the Administration of Online Audio/Video Content Including Internet Drama and Micro Films. In 2014, the Administration of Press, Publication, Radio, Film and Television, or the SAPPRFT released a Supplemental Notice on Improving the Administration of Online Audio/Video Content Including Internet Drama and Micro Films.
On February 9, 2021, the CAC, MIIT and other five departments jointly issued the Guiding Opinions on Strengthening of Administration of Online Live Broadcast, which became effective on the same day. The guidance opinions clarified various regulatory license requirements applicable to online live broadcast platforms, and provided additional compliance requirements on broadcast platform management.
On February 9, 2021, the CAC, the MIIT and other five departments jointly issued the Guiding Opinions on Strengthening of Administration of Online Live Broadcast, which became effective on the same day. The guidance opinions clarified various regulatory license requirements applicable to online live broadcast platforms, and provided additional compliance requirements on broadcast platform management.
From 22:00 to 8:00 the next day, online game operators shall not provide online game services in any form for minors. The duration for an online game operator to provide the minors with online game services shall not exceed three hours per day on any statutory holiday or one and half hours per day on any other day.
From 22:00 to 8:00 the next day, online game operators shall not provide online game services in any form to minors. The duration for an online game operator to provide the minors with online game services shall not exceed three hours per day on any statutory holiday or one and half hours per day on any other day.
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 be a company; (ii) it must directly own the required percentage of equity interests and voting rights in the mainland China resident enterprise; and (iii) it must have directly owned such required percentage in the mainland China 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, or the 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 be a company; (ii) it must directly own the required percentage of equity interests and voting rights in the mainland China resident enterprise; and (iii) it must have directly owned such required percentage in the mainland China resident enterprise throughout the 12 months prior to receiving the dividends.
Furthermore, the Measures for the Administration of Non-resident Taxpayers’ Enjoyment of Treaty Benefits, which became effective in January 2020, provide that non-resident taxpayers’ enjoyment of treaty benefits shall be handled in the manner of “self-assessment, claim for and enjoyment of treaty benefits and retention of relevant materials for review,” thus, where non-resident taxpayers determine on their own that the conditions for them to enjoy the treatments under tax treaties are meet, may enjoy treatments under tax treaties on their own during the tax filings by themselves or through withholding agents, and shall collect and retain relevant materials for future inspection, and be subject to administration by relevant tax authorities afterwards.
Furthermore, the Measures for the Administration of Non-resident Taxpayers’ Enjoyment of Treaty Benefits, which became effective in January 2020, provide that non-resident taxpayers’ enjoyment of treaty benefits shall be handled in the manner of “self-assessment, claim for and enjoyment of treaty benefits and retention of relevant materials for review,” thus, where non-resident taxpayers determine on their own that the conditions for them to enjoy the treatments under tax treaties are meet, may enjoy treatments under tax treaties on their own during the tax filings by themselves or through withholding agents, and shall collect and retain relevant materials for future inspection, and be subject to administration by the tax authorities afterwards.
Accordingly, Momo Technology HK Company Limited may be able to benefit from the 5% withholding tax rate for the dividends it receives from Beijing Momo IT, if it satisfies the conditions prescribed under Circular 81 and other relevant tax rules and regulations, and obtain the approvals as required.
Accordingly, Momo Technology HK Company Limited may be able to benefit from the 5% withholding tax rate for the dividends it receives from Beijing Momo IT, if it satisfies the conditions prescribed under the Circular 81 and other relevant tax rules and regulations, and obtain the approvals as required.
Public Notice 7 introduces a new tax regime, and extends its tax jurisdiction to capture not only indirect transfers but also transactions involving transfer of immovable property in mainland China and assets held under the establishment and place, in mainland China of a foreign company through the offshore transfer of a foreign intermediate holding company.
The Public Notice 7 introduces a new tax regime, and extends its tax jurisdiction to capture not only indirect transfers but also transactions involving transfer of immovable property in mainland China and assets held under the establishment and place, in mainland China of a foreign company through the offshore transfer of a foreign intermediate holding company.
Public Notice 7 also addresses transfer of the equity interest in a foreign intermediate holding company widely. In addition, Public Notice 7 provides clear criteria on how to assess reasonable commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings.
The Public Notice 7 also addresses transfer of the equity interest in a foreign intermediate holding company widely. In addition, the Public Notice 7 provides clear criteria on how to assess reasonable commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings.
Provisions of the Supreme People’s Court on Certain Issues Related to the Application of Law in the Trial of Civil Cases Involving Disputes over Infringement of the Right of Dissemination through Information Networks, promulgated by the Supreme People’s Court in December 2012 and further revised on December 29, 2020 and took effect on January 1, 2021, stipulate that internet users or internet service providers who provide works, performances or audio/video products, for which others have the right of dissemination through information networks or make these available on any information network without authorization shall be deemed to have infringed upon the right of dissemination through information networks.
Provisions of the Supreme People’s Court on Certain Issues Related to the Application of Law in the Trial of Civil Cases Involving Disputes over Infringement of the Right of Dissemination through Information Networks promulgated by the Supreme People’s Court in December 2012, further revised on December 29, 2020 and took effect on January 1, 2021, stipulate that internet users or internet service providers who provide works, performances or audio/video products, for which others have the right of dissemination through information networks or make these available on any information network without authorization shall be deemed to have infringed upon the right of dissemination through information networks.
Pursuant to this circular, the opening of various special purpose foreign exchange accounts (e.g. pre-establishment expenses account, foreign exchange capital account, guarantee account), the reinvestment of RMB proceeds by foreign investors in the mainland China, and remittance of foreign exchange profits and dividends by a FIE to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible before.
Pursuant to this circular, the opening of various special purpose foreign exchange accounts (e.g., pre-establishment expenses account, foreign exchange capital account, guarantee account), the reinvestment of RMB proceeds by foreign investors in mainland China, and remittance of foreign exchange profits and dividends by a FIE to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible before.
On June 9, 2016, SAFE promulgated the Circular on Reforming and Regulating of Administrative Policy on Settlement of Foreign Exchange of Capital Account, or SAFE Circular 16, which became effective on the same date.
On June 9, 2016, SAFE promulgated the Circular on Reforming and Regulating the Administrative Policy on Settlement of Foreign Exchange of Capital Account, or SAFE Circular 16, which became effective on the same date.
SAFE Circular 29 further specifies that the domestic equity investment set forth in Circular 28 is not limited to direct investment in a domestic enterprise but also includes equity investment conducted in the form of “equity transfer.” According to the Circular on Improving Administration of Foreign Exchange to Support the Development of Foreign-related Business, issued by the SAFE on April 10, 2020, eligible enterprises are allowed to make domestic payments by using their capital funds, foreign credits and the income under capital accounts of overseas listing, without submitting the evidentiary materials concerning authenticity of such capital for banks in advance; provided that their capital use is authentic and in compliance with administrative regulations on the use of income under capital accounts.
SAFE Circular 29 further specifies that the domestic equity investment set forth in Circular 28 is not limited to direct investment in a domestic enterprise but also includes equity investment conducted in the form of “equity transfer.” According to the Circular on Improving Administration of Foreign Exchange to Support the Development of Foreign-related Business, issued by SAFE on April 10, 2020, eligible enterprises are allowed to make domestic payments by using their capital funds, foreign credits and the income under capital accounts of overseas listing, without submitting the evidentiary materials concerning authenticity of such capital for banks in advance; provided that their capital use is authentic and in compliance with administrative regulations on the use of income under capital accounts.
Other labor-related regulations and rules of the mainland China stipulate the maximum number of working hours per day and per week as well as the minimum wages.
Other labor-related regulations and rules of mainland China stipulate the maximum number of working hours per day and per week as well as the minimum wages.
Mainland China residents or entities who have contributed legitimate domestic or offshore interests or assets to SPVs but have yet to obtain SAFE registration before the implementation of the Circular 37 shall register their ownership interests or control in such SPVs with SAFE or its local branch.
Mainland China residents or entities who have contributed legitimate domestic or offshore interests or assets to SPVs but have yet to obtain SAFE registration before the implementation of SAFE Circular 37 shall register their ownership interests or control in such SPVs with SAFE or its local branch.
In such event, these regulatory agencies may impose fines and penalties on our operations in the mainland China, limit our operating privileges in the mainland China, delay or restrict the repatriation of the proceeds from our initial public offering into the mainland China, or take other actions that could have a material adverse effect on our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs.
In such event, these regulatory agencies may impose fines and penalties on our operations in mainland China, limit our operating privileges in mainland China, delay or restrict the repatriation of the proceeds from our initial public offering into mainland China, or take other actions that could have a material adverse effect on our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs.
The Overseas Listing Trial Measures provides that an overseas listing or offering is explicitly prohibited, if any of the following: (i) such securities offering and listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules; (ii) the intended securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council in accordance with law; (iii) the domestic company intending to make the securities offering and listing, or its controlling shareholder(s) and the actual controller, have committed relevant crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining the order of the socialist market economy during the latest three years; (iv) the domestic company intending to make the securities offering and listing is currently under investigations for suspicion of criminal offenses or major violations of laws and regulations, and no conclusion has yet been made thereof; or (v) there are material ownership disputes over equity held by the domestic company’s controlling shareholder(s) or by other shareholder(s) that are controlled by the controlling shareholder(s) and/or actual controller.
The Overseas Listing Trial Measures provides that an overseas listing or offering is explicitly prohibited, if any of the following: (i) such securities offering and listing is explicitly prohibited by provisions in laws, administrative regulations and state rules; (ii) the intended securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council in accordance with law; (iii) the domestic company intending to make the securities offering and listing, or its controlling shareholder(s) and the actual controller, have committed relevant crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining the order of the socialist market economy during the latest three years; (iv) the domestic company intending to make the securities offering and listing is currently under investigations for suspicion of criminal offenses or major violations of laws and regulations, and no conclusion has yet been made thereof; or (v) there are material ownership disputes over equity held by the domestic company’s controlling shareholder(s) or by other shareholder(s) that are controlled by the controlling shareholder(s) and/or actual controller.
If we fail to obtain the relevant approval or complete the filings and other relevant regulatory procedures, we may face sanctions by the CSRC or other mainland China regulatory agencies, which may include fines and penalties on our operations in mainland China, limitations on our operating privileges in mainland China, restrictions on or prohibition of the payments or remittance of dividends by our subsidiaries in mainland China, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs.
If we fail to obtain the approval or complete the filings and other relevant regulatory procedures, we may face sanctions by the CSRC or other mainland China regulatory agencies, which may include fines and penalties on our operations in mainland China, limitations on our operating privileges in mainland China, restrictions on or prohibition of the payments or remittance of dividends by our subsidiaries in mainland China, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs.
Under these circulars, the employees working in the mainland China who exercise share options or are granted restricted shares will be subject to mainland China individual income tax.
Under these circulars, the employees working in mainland China who exercise share options or are granted restricted shares will be subject to mainland China individual income tax.
Beijing Yiliulinger, a wholly-owned subsidiary of Beijing Momo IT, entered into contractual arrangements with Hainan Miaoka, Hainan Yilingliuer and their respective shareholders. QOOL Media Technology (Tianjin) Co., Ltd. entered into contractual arrangements with Tianjin QOOL Media and its shareholders. Tantan Technology entered into contractual arrangements with Tantan Culture and its shareholder. Beijing Wozaixiangxiang entered into contractual arrangements with Tianjin Nishuodedoudui.
Beijing Yiliulinger, a wholly-owned subsidiary of Beijing Momo IT, entered into contractual arrangements with Hainan Miaoka, Hainan Yilingliuer and their respective shareholders. QOOL Media Technology (Tianjin) Co., Ltd. entered into contractual arrangements with Tianjin QOOL Media and its shareholder. Tantan Technology entered into contractual arrangements with Tantan Culture and its shareholder. Beijing Wozaixiangxiang entered into contractual arrangements with Tianjin Nishuodedoudui.
However, there have been no clarifications from the relevant authorities as of the date of this annual report as to the standards for determining whether an activity is one that “affects or may affect national security.” In addition, the draft Regulations requires that data processors that process “important data” or are listed overseas must conduct an annual data security assessment by itself or commission a data security service provider to do so, and submit the assessment report of the preceding year to the municipal cybersecurity department by the end of January each year.
However, there have been no clarifications from the authorities as of the date of this annual report as to the standards for determining whether an activity is one that “affects or may affect national security.” In addition, the draft regulations requires that data processors that process “important data” or are listed overseas must conduct an annual data security assessment by itself or commission a data security service provider to do so, and submit the assessment report of the preceding year to the municipal cybersecurity department by the end of January each year.
The foreign exchange income of capital account and RMB obtained by domestic enterprise from foreign exchange settlement must not be used (i) directly or indirectly for payment beyond the business scope of the enterprises or payment prohibited by relevant laws and regulations; (ii) directly or indirectly for investment in securities and investment in wealth management products except for principal-guaranteed bank wealth management products, unless otherwise explicitly provided; (iii) for extending loans to non-affiliate enterprises, unless permitted by the scope of business; and/or (iv) for construction or purchase of real estate that is not for self-use, except for foreign-invested real estate enterprises.
The foreign exchange income of capital account and RMB obtained by domestic enterprise from foreign exchange settlement must not be used (i) directly or indirectly for payment beyond the business scope of the enterprises or payment prohibited by laws and regulations; (ii) directly or indirectly for investment in securities and investment in wealth management products except for principal-guaranteed bank wealth management products, unless otherwise explicitly provided; (iii) for extending loans to non-affiliate enterprises, unless permitted by the scope of business; and/or (iv) for construction or purchase of real estate that is not for self-use, except for foreign-invested real estate enterprises.
The Comment Threading Services Provisions requires that the Comment threading service providers shall (1) verifying the real identity information of the registered users under the principle of “using real name at back end and using alias or real name voluntarily at front end” and not providing comment threading services to users who have not verified their real identity information or fraudulently use the identity information of organizations or others; (2) establishing and improving the system for the protection of the personal information of users, following the principles of “legitimacy, appropriateness, necessity and good faith” in the processing of the personal information of users, disclosing the rules for processing personal information, informing the users of the purpose and method of processing, type of personal information to be processed, storage period and other matters, and obtaining individuals’ consents according to the law, unless otherwise provided for by laws or administrative regulations; (3) establishing the system of “censorship before release” for comment threading services provided for news information; (4) providing the corresponding static version of information content at the same time on the same platform and page if the comment threading services are provided by way of bullet screens; (5) establishing and improving a system of review and management of comments posted, real-time inspection, emergency response and reporting acceptance and other information security management systems, timely identifying and disposing of illegal and negative information, and reporting to the cyberspace administration; (6) innovating the management methods for comments posted, researching and developing information security management technology for comments posted and improving the ability to dispose of illegal and negative information, timely identifying risks such as security defects and loopholes in the comment threading services, taking remedial measures and reporting the same to the cyberspace administrations; (7) being staffed with a review editorial team that adapts to the scale of service, strengthening the review trainings and improving the professionalism of review editors; (8) cooperating with the cyberspace administrations in conducting supervision and inspection in accordance with the law and providing necessary technical and data support and assistance. 75 Table of Contents Regulations on Anti-monopoly and Anti-unfair Competition On September 2, 1993, the Standing Committee of the National People’s Congress adopted the PRC Anti-unfair Competition Law, which took effect on December 1, 1993, and was amended on April 23, 2019.
The Administrative Provisions on Comment Threading Services on the Internet requires that the Comment threading service providers shall (1) verifying the real identity information of the registered users under the principle of “using real name at back end and using alias or real name voluntarily at front end” and not providing comment threading services to users who have not verified their real identity information or fraudulently use the identity information of organizations or others; (2) establishing and improving the system for the protection of the personal information of users, following the principles of “legitimacy, appropriateness, necessity and good faith” in the processing of the personal information of users, disclosing the rules for processing personal information, informing the users of the purpose and method of processing, type of personal information to be processed, storage period and other matters, and obtaining individuals’ consents according to the law, unless otherwise provided for by laws or administrative regulations; (3) establishing the system of “censorship before release” for comment threading services provided for news information; (4) providing the corresponding static version of information content at the same time on the same platform and page if the comment threading services are provided by way of bullet screens; (5) establishing and improving a system of review and management of comments posted, real-time inspection, emergency response and reporting acceptance and other information security management systems, timely identifying and disposing of illegal and negative information, and reporting to the cyberspace administration; (6) innovating the management methods for comments posted, researching and developing information security management technology for comments posted and improving the ability to dispose of illegal and negative information, timely identifying risks such as security defects and loopholes in the comment threading services, taking remedial measures and reporting the same to the cyberspace administrations; (7) being staffed with a review editorial team that adapts to the scale of service, strengthening the review trainings and improving the professionalism of review editors; (8) cooperating with the cyberspace administrations in conducting supervision and inspection in accordance with the law and providing necessary technical and data support and assistance. 76 Table of Contents Regulations on Anti-Monopoly and Anti-Unfair Competition On September 2, 1993, the Standing Committee of the National People’s Congress adopted the PRC Anti-unfair Competition Law, which took effect on December 1, 1993, and was amended on April 23, 2019.
According to relevant official answers to press questions published on the SARFT’s website dated February 3, 2008, officials from the SARFT and the Ministry of Information Industry clarified that online audio/video service providers that already had been operating lawfully prior to the issuance of Circular 56 may re-register and continue to operate without becoming state-owned or controlled, provided that such providers have not engaged in any unlawful activities.
According to the official answers to press questions published on the SARFT’s website dated February 3, 2008, officials from the SARFT and the Ministry of Information Industry clarified that online audio/video service providers that already had been operating lawfully prior to the issuance of the Circular 56 may re-register and continue to operate without becoming state-owned or controlled, provided that such providers have not engaged in any unlawful activities.
Based on the Measures, the online live broadcast marketing platforms shall go through filing procedures, carry out safety assessment and acquire necessary licenses in accordance with relevant laws and regulations, and they shall also strengthen the management of online live broadcast marketing accounts, information security, marketing behavior and network and data security, while improving the protection of minors, consumer rights and interests and personal information and establishing the mechanism of registration and de-registration of online live broadcast marketing functions.
Based on the Measures, online live broadcast marketing platforms shall go through filing procedures, carry out safety assessment and acquire necessary licenses in accordance with laws and regulations, and they shall also strengthen the management of online live broadcast marketing accounts, information security, marketing behavior and network and data security, while improving the protection of minors, consumer rights and interests and personal information and establishing the mechanism of registration and de-registration of online live broadcast marketing functions.
For internet dramas or micro films produced and uploaded by individual users, the online audio/video service providers transmitting such content will be deemed responsible as a producer. Further, under this notice, online audio/video service providers can only transmit content uploaded by individuals whose identity has been verified and such content shall comply with the relevant content management rules.
For internet dramas or micro films produced and uploaded by individual users, the online audio/video service providers transmitting such content will be deemed responsible as a producer. Further, under this notice, online audio/video service providers can only transmit content uploaded by individuals whose identity has been verified and such content shall comply with the content management rules.
The Provisions state that, no organization or individual may abuse the security vulnerabilities of network products to engage in activities that endanger network security, or to illegally collect, sell, or publish the information on such security vulnerabilities. Anyone who is aware of the aforesaid offenses shall not provide technical support, advertising, payment settlement and other assistance to the relevant offenders.
The Provisions state that, no organization or individual may abuse the security vulnerabilities of network products to engage in activities that endanger network security, or to illegally collect, sell, or publish the information on such security vulnerabilities. Anyone who is aware of the aforesaid offenses shall not provide technical support, advertising, payment settlement and other assistance to the offenders.
According to the May 7 Opinions, online live broadcasting platforms shall, among others (1) prohibit minors from virtual gifting, and strength the implementation of real-name registration; (2) not provide online live broadcaster account registration service to minors under 16 and shall obtain the consent from guardians before allowing minors between 16 and 18 to register as a broadcaster on their platforms; (3) continue to upgrade the youth mode of the platform and establish an exclusive customer service team for minors to prioritize the settlement of complaints and disputes related to minors; (4) strengthen the administration on key functions of the platform and prohibit virtual gifting amount from being the sole criteria for the ranking of broadcasters or the criteria for the ranking of users; and (5) suspend all services under youth mode after 10:00 p.m. every day to ensure the rest time of minors.
According to the opinions, online live broadcasting platforms shall, among others (1) prohibit minors from virtual gifting, and strength the implementation of real-name registration; (2) not provide online live broadcaster account registration service to minors under 16 and shall obtain the consent from guardians before allowing minors between 16 and 18 to register as a broadcaster on their platforms; (3) continue to upgrade the youth mode of the platform and establish an exclusive customer service team for minors to prioritize the settlement of complaints and disputes related to minors; (4) strengthen the administration on key functions of the platform and prohibit virtual gifting amount from being the sole criteria for the ranking of broadcasters or the criteria for the ranking of users; and (5) suspend all services under youth mode after 10:00 p.m. every day to ensure the rest time of minors.
On September 17, 2021, the CAC, together with eight other government authorities, jointly issued the Guidelines on Strengthening the Comprehensive Regulation of Algorithms for Internet Information Services. The guidelines provide that daily monitoring of data use, application scenarios, and effects of algorithms must be carried out by the relevant regulators, and relevant regulators should conduct security assessments of algorithms.
On September 17, 2021, the CAC, together with eight other government authorities, jointly issued the Guidelines on Strengthening the Comprehensive Regulation of Algorithms for Internet Information Services. The guidelines provide that daily monitoring of data use, application scenarios, and effects of algorithms must be carried out by the regulators, and the regulators should conduct security assessments of algorithms.
Internet information providers that violate the prohibition may face criminal charges or administrative sanctions by the mainland China authorities. Internet information providers must monitor and control the information posted on their websites. If any prohibited content is found, they must remove the offensive content immediately, keep a record of it and report it to the relevant authorities.
Internet information providers that violate the prohibition may face criminal charges or administrative sanctions by the mainland China authorities. Internet information providers must monitor and control the information posted on their websites. If any prohibited content is found, they must remove the offensive content immediately, keep a record of it and report it to the authorities.
On December 8, 2022, the MIIT released the Administrative Measures for Data Security in Industry and Information Technology Sectors (Trial), or the MIIT Measures, which came into effect on January 1, 2023. The measures apply to data management in certain industries, including telecommunication sectors. The MIIT Measures set out three categories of data: ordinary data, important data and core data.
On December 8, 2022, the MIIT released the Administrative Measures for Data Security in Industry and Information Technology Sectors (Trial), which came into effect on January 1, 2023. The measures apply to data management in certain industries, including telecommunication sectors. The measures set out three categories of data: ordinary data, important data and core data.
Such measures define foreign investment as direct or indirect investment by foreign investors in the mainland China, which includes (i) investment in new onshore projects or establishment of wholly foreign owned onshore companies or joint ventures with foreign investors; (ii) acquiring equity or asset of onshore companies by merger and acquisition; and (iii) onshore investment by and through any other means.
Such measures define foreign investment as direct or indirect investment by foreign investors in mainland China, which includes (i) investment in new onshore projects or establishment of wholly foreign owned onshore companies or joint ventures with foreign investors; (ii) acquiring equity or asset of onshore companies by merger and acquisition; and (iii) onshore investment by and through any other means.
Under the Circular, a domestic company that holds an ICP license is prohibited from leasing, transferring or selling the license to foreign investors in any form, and from providing any assistance, including providing resources, sites or facilities, to foreign investors that conduct value-added telecommunications business illegally in mainland China.
Under this circular, a domestic company that holds an ICP license is prohibited from leasing, transferring or selling the license to foreign investors in any form, and from providing any assistance, including providing resources, sites or facilities, to foreign investors that conduct value-added telecommunications business illegally in mainland China.
The pledge becomes effective on the date when the pledge of equity interests contemplated under the agreement is registered with the relevant local administration for industry and commerce and will remain binding until Beijing Momo and its shareholders discharge all their obligations under the contractual arrangements.
The pledge becomes effective on the date when the pledge of equity interests contemplated under the agreement is registered with the local administration for industry and commerce and will remain binding until Beijing Momo and its shareholders discharge all their obligations under the contractual arrangements.
To comply with these laws and regulations, we have implemented internal procedures to monitor and review the content we have been licensed from content providers before they are released on our platform and remove any infringing content promptly after we receive notice of infringement from the legitimate rights holder. 83 Table of Contents On December 20, 2001, the State Council promulgated the new Regulations on Computer Software Protection, effective from January 1, 2002 and as amended in 2011 and 2013, which are intended to protect the rights and interests of the computer software copyright holders and encourage the development of software industry and information economy.
To comply with these laws and regulations, we have implemented internal procedures to monitor and review the content we have been licensed from content providers before they are released on our platform and remove any infringing content promptly after we receive notice of infringement from the legitimate rights holder. 84 Table of Contents On December 20, 2001, the State Council promulgated the new Regulations on Computer Software Protection, effective from January 1, 2002 and as amended in 2011 and 2013, which are intended to protect the rights and interests of the computer software copyright holders and encourage the development of software industry and information economy.
The RMB converted from relevant foreign exchange will be kept in a designated account, and if a domestic enterprise needs to make further payment from such account, it still must provide supporting documents and go through the review process with the banks.
The RMB converted from foreign exchange will be kept in a designated account, and if a domestic enterprise needs to make further payment from such account, it still must provide supporting documents and go through the review process with the banks.
Regulations Relating to Internet Content and Information Security The Administrative Measures on Internet Information Services specify that internet information services regarding news, publications, education, medical and health care, pharmacy and medical appliances, among other things, are to be examined, approved and regulated by the relevant authorities.
Regulations Relating to Internet Content and Information The Administrative Measures on Internet Information Services specify that internet information services regarding news, publications, education, medical and health care, pharmacy and medical appliances, among other things, are to be examined, approved and regulated by the relevant authorities.
Trademark license agreements shall be filed with the Trademark Office for record. In addition, if a registered trademark is recognized as a well-known trademark, the protection of the proprietary right of the trademark holder may reach beyond the specific class of the relevant products or services.
Trademark license agreements shall be filed with the Trademark Office for record. In addition, if a registered trademark is recognized as a well-known trademark, the protection of the proprietary right of the trademark holder may reach beyond the specific class of products or services.
Such provisions reiterate that internet audio and video information services providers shall obtain relevant qualifications required by laws and administrative regulations, and further provides that the systems for users’ registration, information issuance examination and information security management shall be established and enhanced.
Such provisions reiterate that internet audio and video information services providers shall obtain qualifications required by laws and administrative regulations, and further provides that the systems for users’ registration, information issuance examination and information security management shall be established and enhanced.
On June 27, 2022, the CAC promulgated the Administrative Provisions on the Account Information of Internet Users, effective from August 1, 2022, or the Account Information Provisions, which applies to the registration, use, and management of internet users’ account information by internet information service providers in mainland China.
On June 27, 2022, the CAC promulgated the Administrative Provisions on the Account Information of Internet Users, effective from August 1, 2022, which applies to the registration, use, and management of internet users’ account information by internet information service providers in mainland China.
These statutory common reserve funds and discretionary common reserve funds are not distributable as cash dividends. 86 Table of Contents SAFE Regulations on Offshore Special Purpose Companies Held by Mainland China Residents or Citizens SAFE Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or Circular 37, issued by SAFE and effective in July 2014, regulates foreign exchange matters in relation to the use of special purpose vehicles, or SPVs, by mainland China residents or entities to seek offshore investment and financing and conduct round trip investment in mainland China.
These statutory common reserve funds and discretionary common reserve funds are not distributable as cash dividends. 87 Table of Contents SAFE Regulations on Offshore Special Purpose Companies Held by Mainland China Residents or Citizens SAFE Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, issued by SAFE and effective in July 2014, regulates foreign exchange matters in relation to the use of special purpose vehicles, or SPVs, by mainland China residents or entities to seek offshore investment and financing and conduct round trip investment in mainland China.
The Security Assessment Measures further provide that a data processor intending to implement outbound data transfer under the following circumstances shall apply for security assessment to the CAC: (a) a data processor intending to provide critical data abroad; (b) a critical information infrastructure operator or a data processor processing the personal information of more than one million individuals intending to provide personal information abroad; (c) a data processor, who has cumulatively provided personal information of 100,000 individuals or sensitive personal information of 10,000 individuals abroad since January 1st of the previous year, intending to provide personal information abroad; and (d) other circumstances prescribed by the CAC for which application for security assessment for outbound data transfers is required.
The Security Assessment Measures further provide that a data processor intending to implement outbound data transfer under the following circumstances shall apply for security assessment to the CAC: (a) a data processor intending to provide critical data abroad; (b) a critical information infrastructure operator or a data processor processing the personal information of more than one million individuals intending to provide personal information abroad; (c) a data processor, who has cumulatively provided personal information of 100,000 individuals or sensitive personal information of 10,000 individuals abroad since January 1 of the previous year, intending to provide personal information abroad; and (d) other circumstances prescribed by the CAC for which application for security assessment for outbound data transfers is required.
Value Added Tax On January 1, 2012, the PRC State Council officially launched a pilot value-added tax (“VAT”) reform program, or Pilot Program, applicable to businesses in selected industries. Businesses in the Pilot Program would pay VAT instead of business tax.
Value-Added Tax On January 1, 2012, the PRC State Council officially launched a pilot value-added tax reform program, or the Pilot Program, applicable to businesses in selected industries. Businesses in the Pilot Program would pay value-added tax, or VAT, instead of business tax.
Furthermore, certain relevant assets, such as the relevant trademarks and domain names that are used in the value-added telecommunications business must be owned by the local ICP license holder or its shareholders.
Furthermore, certain assets, such as the trademarks and domain names that are used in the value-added telecommunications business must be owned by the local ICP license holder or its shareholders.
However, according to Circular 81, if the relevant tax authorities consider the transactions or arrangements we have are for the primary purpose of enjoying a favorable tax treatment, the relevant tax authorities may adjust the favorable withholding tax in the future.
However, according to the Circular 81, if the tax authorities consider the transactions or arrangements we have are for the primary purpose of enjoying a favorable tax treatment, the tax authorities may adjust the favorable withholding tax in the future.
Circular 37 requires that, before making contribution into an SPV, mainland China residents or entities are required to complete foreign exchange registration with the SAFE or its local branch.
SAFE Circular 37 requires that, before making contribution into an SPV, mainland China residents or entities are required to complete foreign exchange registration with SAFE or its local branch.
If the employees fail to pay or the mainland China subsidiaries fail to withhold their income taxes according to relevant laws and regulations, the mainland China subsidiaries may face sanctions imposed by the tax authorities or other mainland China government authorities.
If the employees fail to pay or the mainland China subsidiaries fail to withhold their income taxes according to laws and regulations, the mainland China subsidiaries may face sanctions imposed by the tax authorities or other mainland China government authorities.
In addition, all value-added telecommunications service providers are required to maintain network and information security in accordance with the standards set forth under the relevant mainland China regulations.
In addition, all value-added telecommunications service providers are required to maintain network and information security in accordance with the standards set forth under the mainland China regulations.
As of the date of this annual report, Momo and Tantan collectively have a dedicated team of 797 personnel reviewing and handling content on our mobile platform for compliance with applicable laws and regulations. They are aided by both proprietary and third-party software and technologies to sweep our platforms and the data being transmitted on a real-time basis around-the-clock.
As of the date of this annual report, Momo and Tantan collectively have a dedicated team of 707 personnel reviewing and handling content on our mobile platform for compliance with applicable laws and regulations. They are aided by both proprietary and third-party software and technologies to sweep our platforms and the data being transmitted on a real-time basis around-the-clock.
On the basis of continuing to allow investment FIEs (including foreign investment companies, foreign-funded venture capital enterprises and foreign-funded equity investment enterprises) to use the registered capital for domestic equity investment in accordance with the laws and regulations, SAFE Circular 28 canceled the restriction on the non-investment FIEs and allows the non-investment FIEs (like Beijing Momo IT) to use the registered capital for domestic equity investment under the premise of not violating the existing Negative List and the authenticity and compliance of the domestic equity investment projects.
On the basis of continuing to allow investment foreign-invested enterprises (including foreign investment companies, foreign-funded venture capital enterprises and foreign-funded equity investment enterprises) to use the registered capital for domestic equity investment in accordance with the laws and regulations, SAFE Circular 28 canceled the restriction on the non-investment foreign-invested enterprises and allows the non-investment foreign-invested enterprises (like Beijing Momo IT) to use the registered capital for domestic equity investment under the premise of not violating the existing Negative List and the authenticity and compliance of the domestic equity investment projects.
Risk Factors—Risks Related to Our Corporate Structure—If the mainland China government finds that the agreements that establish the structure for operating certain of our operations in mainland China do not comply with mainland China regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.” On May 24, 2016, the General Office of the SAPPRFT promulgated the Circular on the Administration over Mobile Game Publishing Services, which became effective as of July 1, 2016.
Risk Factors—Risks Related to Our Corporate Structure—If the mainland China government finds that the agreements that establish the structure for operating certain of our operations in mainland China do not comply with mainland China regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.” 71 Table of Contents On May 24, 2016, the General Office of the SAPPRFT promulgated the Circular on the Administration over Mobile Game Publishing Services, which became effective as of July 1, 2016.
In the mainland China, software developed by mainland China citizens, legal persons or other organizations is automatically protected immediately after its development, without an application or approval.
In mainland China, software developed by mainland China citizens, legal persons or other organizations is automatically protected immediately after its development, without an application or approval.
In accordance with the Announcement 39, with effect from April 1, 2019 to December 31, 2021, taxpayers in service industry relating to production and life-support services are allowed to deduct additional 10% of the deductible input tax for the current period. The above VAT preferential policy was then extended until December 31, 2022 according to Announcement 11 of 2022.
In accordance with the Announcement 39, with effect from April 1, 2019 to December 31, 2021, taxpayers in service industry relating to production and life-support services are allowed to deduct additional 10% of the deductible input tax for the current period. The above VAT preferential policy was then extended until December 31, 2022.
The most updated version of the Negative List, which was promulgated by the MOFCOM and the NDRC and became effective from January 1, 2022, imposes the 50% restrictions on foreign ownership in value-added telecommunications business except for e-commerce business, domestic multiparty communications, storage and forwarding and call center services as well.
The most updated version of the Negative List, which was promulgated by the Ministry of Commerce and the NDRC and became effective from January 1, 2022, imposes the 50% restrictions on foreign ownership in value-added telecommunications business except for e-commerce business, domestic multiparty communications, storage and forwarding and call center services as well.
Regulations on Broadcasting Audio/Video Programs through the Internet and Online Live Broadcasting On July 6, 2004, the State Administration of Radio Film and Television, or SARFT, promulgated Administrative Measures for the Broadcast of Audio/Video Programs via Information Networks such as the Internet, or the Audio/Video Broadcasting Rules, which came into effect as of October 11, 2004 and was amended on August 28, 2015.
Regulations on Broadcasting Audio/Video Programs Through the Internet and Online Live Broadcasting On July 6, 2004, the State Administration of Radio Film and Television, or the SARFT, promulgated Administrative Measures for the Broadcast of Audio/Video Programs via Information Networks such as the Internet, or the Audio/Video Broadcasting Rules, which came into effect as of October 11, 2004 and were amended on August 28, 2015.
The Circular provides that game publishing service entities shall be responsible for examining the contents of their games and applying for game publication numbers.
This circular provides that game publishing service entities shall be responsible for examining the contents of their games and applying for game publication numbers.
The relevant mainland China government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities in accordance with the Law around July 2021.
The mainland China government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities in accordance with the Law around July 2021.
The Rules specifies the scope of necessary personal information to be collected each for a variety of common mobile internet apps, such as online live broadcast Apps, instant messaging Apps, online game Apps. Operators of such Apps shall not refuse to provide basic services to users on the ground of users’ refusal to provide their personal non-essential information.
The rules specify the scope of necessary personal information to be collected each for a variety of common mobile internet apps, such as online live broadcast apps, instant messaging apps, online game apps. Operators of such apps shall not refuse to provide basic services to users on the ground of users’ refusal to provide their personal non-essential information.
In addition, the tax circular mentioned above specifies that certain mainland China-invested overseas enterprises controlled by a Chinese enterprise or a Chinese enterprise group in the mainland China will be classified as mainland China resident enterprises if the following are located or resided in the mainland China: senior management personnel and departments that are responsible for daily production, operation and management; financial and personnel decision making bodies; key properties, accounting books, the company seal, and minutes of board meetings and shareholders’ meetings; and half or more of the senior management or directors who have the voting rights. 81 Table of Contents Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, the withholding tax rate in respect to the payment of dividends by a mainland China enterprise to a Hong Kong enterprise is reduced to 5% from a standard rate of 10% if the Hong Kong enterprise directly holds at least 25% of the mainland China enterprise.
In addition, this circular specifies that certain mainland China-invested overseas enterprises controlled by a Chinese enterprise or a Chinese enterprise group in mainland China will be classified as mainland China resident enterprises if the following are located or resided in mainland China: senior management personnel and departments that are responsible for daily production, operation and management; financial and personnel decision making bodies; key properties, accounting books, the company seal, and minutes of board meetings and shareholders’ meetings; and half or more of the senior management or directors who have the voting rights. 82 Table of Contents Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, the withholding tax rate in respect to the payment of dividends by a mainland China enterprise to a Hong Kong enterprise is reduced to 5% from a standard rate of 10% if the Hong Kong enterprise directly holds at least 25% of the mainland China enterprise.
On March 12, 2022, the NDRC and the MOFCOM issued the Negative List for Market Access (2022 Version), which provides that, among others, non-state capital shall not engage in online live broadcasting of events and activities involving politics, economy, military affairs, diplomatic affairs, major social events, culture, science and technology, public health, education and sports and such other activities and events related to political direction, public opinion orientation and value orientation.
On March 12, 2022, the NDRC and the Ministry of Commerce issued the Negative List for Market Access (2022 Version), which provides that, among others, non-state capital shall not engage in online live broadcasting of events and activities involving politics, economy, military affairs, diplomatic affairs, major social events, culture, science and technology, public health, education and sports and such other activities and events related to political direction, public opinion orientation and value orientation.
If an ICP license holder fails to comply with the requirements in the Circular and also fails to remedy such non-compliance within a specified period of time, the MIIT or its local counterparts have the discretion to take administrative measures against such license holder, including revoking its ICP license.
If an ICP license holder fails to comply with the requirements in the circular and also fails to remedy such non-compliance within a specified period of time, the MIIT or its local counterparts have the authority to take administrative measures against such license holder, including revoking its ICP license.
According to the Internet Measures, internet information services are divided into two categories: services of an operative nature and services of a non-operative nature. Our business conducted through our immomo.com website and Momo application involves operating internet information services, which requires us to obtain an ICP license.
According to the Administrative Measures on Internet Information Services, internet information services are divided into two categories: services of an operative nature and services of a non-operative nature. Our business conducted through our immomo.com website and Momo application involves operating internet information services, which requires us to obtain an ICP license.
Regulations on Mobile Internet Applications On June 28, 2016, the CAC issued the Administrative Provisions on Mobile Internet Application Information Services, which was amended on June 14, 2022 and became effective on August 1, 2022. The amended provisions clarify the requirements in relation to the provision of application information services and application distribution services in mainland China.
Regulations on Mobile Internet Applications On June 28, 2016, the CAC issued the Administrative Provisions on Mobile Internet Application Information Services, which were amended on June 14, 2022 and became effective on August 1, 2022. The amended provisions clarify the requirements in relation to the provision of application information services and application distribution services in mainland China.
If the internet culture operating entity identifies any illegal content, it shall immediately suspend the products or services containing such content and preserve relevant record, and, in the event that such illegal content constitutes material issues, report to provincial branch of MOC.
If the internet culture operating entity identifies any illegal content, it shall immediately suspend the products or services containing such content and preserve relevant record, and, in the event that such illegal content constitutes material issues, report to provincial branch of the Ministry of Culture.
The mainland China subsidiaries of such overseas listed company have obligations to file documents related to employee share options or restricted shares with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options.
The mainland China subsidiaries of such overseas listed company have obligations to file documents related to employee share options or restricted shares with competent tax authorities and to withhold individual income taxes of those employees who exercise their share options.
Any uncertainties or negative publicity regarding such approval requirement could materially and adversely affect our business, prospects, financial condition, reputation, and the trading price of our ADSs. In December 2021, the CAC, together with other authorities, jointly promulgated the Cybersecurity Review Measures, which became effective on February 15, 2022 and replaces its predecessor regulation.
Any uncertainties or negative publicity regarding such approval requirement could materially and adversely affect our business, prospects, financial condition, reputation, and the trading price of our ADSs. 90 Table of Contents In December 2021, the CAC, together with other authorities, jointly promulgated the Cybersecurity Review Measures, which became effective on February 15, 2022 and replaces its predecessor regulation.
Failure to comply with the registration procedures set forth in Circular 37, or making misrepresentation on or failure to disclose controllers of FIE that is established through round-trip investment, may result in restrictions on the foreign exchange activities of the relevant FIEs, including payment of dividends and other distributions, such as proceeds from any reduction in capital, share transfer or liquidation, to its offshore parent or affiliate, and the capital inflow from the offshore parent, and may also subject relevant mainland China residents or entities to penalties under mainland China foreign exchange administration regulations.
Failure to comply with the registration procedures set forth in SAFE Circular 37, or making misrepresentation on or failure to disclose controllers of FIE that is established through round-trip investment, may result in restrictions on the foreign exchange activities of the relevant foreign-invested enterprises, including payment of dividends and other distributions, such as proceeds from any reduction in capital, share transfer or liquidation, to its offshore parent or affiliate, and the capital inflow from the offshore parent, and may also subject relevant mainland China residents or entities to penalties under mainland China foreign exchange administration regulations.
Pursuant to the Civil Code, the personal information of a natural person shall be protected by the law.
Pursuant to the PRC Civil Code, the personal information of a natural person shall be protected by the law.
The Confidentiality and Archives Administration Provisions requires mainland China domestic enterprises or its overseas listing vehicles, among others, seeking to offer or list its securities in overseas markets either directly or indirectly, to establish and improve their confidentiality and archives administration systems and take other necessary measures to prevent them from disclosing state secrets, secrets related to state authorities’ affairs or undermining national or public interests.
It requires mainland China domestic enterprises or its overseas listing vehicles, among others, seeking to offer or list its securities in overseas markets either directly or indirectly, to establish and improve their confidentiality and archives administration systems and take other necessary measures to prevent them from disclosing state secrets, secrets related to state authorities’ affairs or undermining national or public interests.
The Telecommunications Regulations divide the telecommunications services into two categories: infrastructure telecommunications services and value-added telecommunications services. The operation of value-added telecommunications services is subject to the examination, approval and licenses granted by the MIIT or its provincial-level communications administrative bureaus.
The Regulations on Telecommunications of China divide the telecommunications services into two categories: infrastructure telecommunications services and value-added telecommunications services. The operation of value-added telecommunications services is subject to the examination, approval and licenses granted by the MIIT or its provincial-level communications administrative bureaus.
Yan Tang, Yong Li, Xiaoliang Lei and Zhiwei Li, each of whom holds 72.0%, 16.0%, 6.4% and 5.6% of the equity interest in Beijing Momo, respectively. Except for Zhiwei Li and Xiaoliang Lei, the shareholders of Beijing Momo are our shareholders and directors.
Each of Messrs. Yan Tang, Yong Li, Xiaoliang Lei and Zhiwei Li holds 72.0%, 16.0%, 6.4% and 5.6% of the equity interest in Beijing Momo, respectively. Except for Zhiwei Li and Xiaoliang Lei, the shareholders of Beijing Momo are our shareholders and directors.
On April 23, 2021, the CAC and six other departments jointly issued the Administration Measures on Online Live Broadcast Marketing Activities (Trial), which became effective on May 25, 2021, to strengthen the administration of online live broadcast performance for marketing activities.
On April 16, 2021, the CAC and six other departments jointly issued the Administration Measures on Online Live Broadcast Marketing Activities (Trial), which became effective on May 25, 2021, to strengthen the administration of online live broadcast performance for marketing activities.
These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by mainland China-based companies and proposed to take effective measures, such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by mainland China-based overseas-listed companies. 87 Table of Contents On February 17, 2023, the CSRC promulgated Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies, or the Overseas Listing Trial Measures and relevant five guidelines, which became effective on March 31, 2023.
These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by mainland China-based companies and proposed to take effective measures, such as promoting the construction of regulatory systems to deal with the risks and incidents faced by mainland China-based overseas-listed companies. 88 Table of Contents On February 17, 2023, the CSRC promulgated Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies, or the Overseas Listing Trial Measures, and five supporting guidelines, which became effective on March 31, 2023.
According to this Circular, online game companies shall provide minors only with one hour of online game services at prescribed periods, namely between 8 pm and 9 pm on Fridays, Saturdays, Sundays and public holidays. The Circular reinstates that online game companies shall strictly implement the real-name registration and login requirements for online game user accounts.
According to this circular, online game companies shall provide minors only with one hour of online game services at prescribed periods, namely between 8 p.m. and 9 p.m. on Fridays, Saturdays, Sundays and public holidays. This circular reinstates that online game companies shall strictly implement the real-name registration and login requirements for online game user accounts.
According to this Circular, online game companies shall provide minors only with one hour of online game services at prescribed periods, namely between 8 pm and 9 pm on Fridays, Saturdays, Sundays and public holidays. The Circular reinstates that online game companies shall strictly implement the real-name registration and login requirements for online game user accounts.
According to this circular, online game companies shall provide minors only with one hour of online game services at prescribed periods, namely between 8 p.m. and 9 p.m. on Fridays, Saturdays, Sundays and public holidays. This circular reinstates that online game companies shall strictly implement the real-name registration and login requirements for online game user accounts.
The Standing Committee of the NPC has enacted the Decisions on Maintaining Internet Security on December 28, 2000, which may subject violators to criminal punishment in mainland China for any effort to: (i) gain improper entry into a computer or system of strategic importance; (ii) disseminate politically disruptive information; (iii) leak state secrets; (iv) spread false commercial information; or (v) infringe intellectual property rights.
The Standing Committee of the National People’s Congress has enacted the Decisions on Maintaining Internet Security on December 28, 2000, which may subject violators to criminal punishment in mainland China for any effort to: (i) gain improper entry into a computer or system of strategic importance; (ii) disseminate politically disruptive information; (iii) leak state secrets; (iv) spread false commercial information; or (v) infringe intellectual property rights.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeYear Ended December 31, 2020 2021 2022 RMB % RMB % RMB % (in thousands, except for percentages) Net revenues 15,024,188 100.0 14,575,719 100.0 12,704,172 100.0 Live video service 9,637,579 64.1 8,378,945 57.5 6,510,460 51.2 Value-added service 5,112,182 34.0 5,971,792 41.0 6,007,018 47.3 Mobile marketing services 198,197 1.4 159,010 1.1 124,956 1.0 Mobile games 39,564 0.3 47,712 0.3 55,732 0.4 Other services 36,666 0.2 18,260 0.1 6,006 0.1 Cost and expenses Cost of revenues (7,976,781 ) (53.1 ) (8,383,431 ) (57.5 ) (7,421,419 ) (58.4 ) Research and development expenses (1,167,677 ) (7.8 ) (1,131,781 ) (7.8 ) (1,006,219 ) (7.9 ) Sales and marketing expenses (2,813,922 ) (18.7 ) (2,604,309 ) (17.9 ) (2,073,617 ) (16.3 ) General and administrative expenses (763,150 ) (5.1 ) (624,700 ) (4.3 ) (596,006 ) (4.7 ) Impairment loss on goodwill and intangible assets — — (4,397,012 ) (30.1 ) — — Total cost and expenses (12,721,530 ) (84.7 ) (17,141,233 ) (117.6 ) (11,097,261 ) (87.3 ) Other operating income 228,777 1.5 175,947 1.2 20,632 0.2 Income (loss) from operations 2,531,435 16.8 (2,389,567 ) (16.4 ) 1,627,543 12.9 Interest income 444,471 3.0 384,279 2.6 368,879 2.9 Interest expense (78,872 ) (0.5 ) (73,776 ) (0.5 ) (83,530 ) (0.7 ) Other gain or loss, net 1,500 0.0 (16,000 ) (0.1 ) 118,325 0.9 Income before income tax and share of income on equity method investments 2,898,534 19.3 (2,095,064 ) (14.4 ) 2,031,217 16.0 Income tax expense (755,620 ) (5.0 ) (822,556 ) (5.6 ) (562,281 ) (4.4 ) Income before share of income on equity method investments 2,142,914 14.3 (2,917,620 ) (20.0 ) 1,468,936 11.6 Share of income (loss) on equity method investments (42,522 ) (0.3 ) (8,084 ) (0.1 ) 11,073 0.0 Net income (loss) 2,100,392 14.0 (2,925,704 ) (20.1 ) 1,480,009 11.6 Comparison of the Years Ended December 31, 2020, 2021 and 2022 Net revenues We currently generate revenues primarily from live video service, value-added service, mobile marketing services, mobile games, and other services.
Biggest changeYear Ended December 31, 2021 2022 2023 RMB % RMB % RMB % (in thousands, except for percentages) Net revenues 14,575,719 100.0 12,704,172 100.0 12,002,323 100.0 Live video service 8,378,945 57.5 6,510,460 51.2 6,072,871 50.6 Value-added service 5,971,792 41.0 6,007,018 47.3 5,752,571 47.9 Mobile marketing services 159,010 1.1 124,956 1.0 133,677 1.1 Mobile games 47,712 0.3 55,732 0.4 19,610 0.2 Other services 18,260 0.1 6,006 0.1 23,594 0.2 Cost and expenses Cost of revenues (8,383,431 ) (57.5 ) (7,421,419 ) (58.4 ) (7,025,394 ) (58.5 ) Research and development expenses (1,131,781 ) (7.8 ) (1,006,219 ) (7.9 ) (884,590 ) (7.4 ) Sales and marketing expenses (2,604,309 ) (17.9 ) (2,073,617 ) (16.3 ) (1,414,949 ) (11.8 ) General and administrative expenses (624,700 ) (4.3 ) (596,006 ) (4.7 ) (502,479 ) (4.2 ) Impairment loss on goodwill and intangible assets (4,397,012 ) (30.1 ) — — — — Total cost and expenses (17,141,233 ) (117.6 ) (11,097,261 ) (87.3 ) (9,827,412 ) (81.9 ) Other operating income 175,947 1.2 20,632 0.2 130,105 1.1 (Loss) income from operations (2,389,567 ) (16.4 ) 1,627,543 12.9 2,305,016 19.2 Interest income 384,279 2.6 368,879 2.9 436,253 3.6 Interest expense (73,776 ) (0.5 ) (83,530 ) (0.7 ) (62,223 ) (0.5 ) Other gain or loss, net (16,000 ) (0.1 ) 118,325 0.9 (26,685 ) (0.2 ) 100 Table of Contents Year Ended December 31, 2021 2022 2023 RMB % RMB % RMB % (in thousands, except for percentages) (Loss) income before income tax and share of income on equity method investments (2,095,064 ) (14.4 ) 2,031,217 16.0 2,652,361 22.1 Income tax expense (822,556 ) (5.6 ) (562,281 ) (4.4 ) (630,023 ) (5.2 ) (Loss) income before share of income on equity method investments (2,917,620 ) (20.0 ) 1,468,936 11.6 2,022,338 16.8 Share of (loss) income on equity method investments (8,084 ) (0.1 ) 11,073 0.0 (70,643 ) (0.6 ) Net (loss) income (2,925,704 ) (20.1 ) 1,480,009 11.6 1,951,695 16.3 Comparison of the Years Ended December 31, 2021, 2022 and 2023 Net Revenues We currently generate revenues primarily from live video service, value-added service, mobile marketing services, mobile games, and other services.
On top of brand promotions, we make ongoing efforts to optimize our channel investment strategy along with relevant product and operational efforts, to focus on growing our user base, enhancing user engagement and improving user acquisition efficiency with disciplined sales and marketing spending. Taxation Cayman Islands We are registered by way of continuation into the Cayman Islands.
On top of brand promotions, we make ongoing efforts to optimize our channel marketing investment strategy along with relevant product and operational efforts, to focus on growing our user base, enhancing user engagement and improving user acquisition efficiency with disciplined sales and marketing spending. Taxation Cayman Islands We are registered by way of continuation into the Cayman Islands.
Accordingly, in 2021 and 2022 Tantan Technology recorded the preferential tax rate adjustment from 15% to 0% for income tax expense of the fiscal year of 2020 and 2021. The other entities incorporated in the mainland China were subject to an enterprise income tax at a rate of 25% for the years ended December 31, 2020, 2021 and 2022.
Accordingly, in 2021 and 2022 Tantan Technology recorded the preferential tax rate adjustment from 15% to 0% for income tax expense of the fiscal year of 2020 and 2021. The other entities incorporated in mainland China were subject to an enterprise income tax at a rate of 25% for the years ended December 31, 2021, 2022 and 2023.
Tantan Technology applied for Software Enterprise (“SE”) status for fiscal year 2020 and 2021 and was approved in 2021 and 2022, which entitled Tantan Technology to enjoy an income tax exemption in 2020 and 2021.
Tantan Technology applied for Software Enterprise status for fiscal year 2020 and 2021 and was approved in 2021 and 2022, which entitled Tantan Technology to enjoy an income tax exemption in 2020 and 2021.
In accordance with the Announcement 39, with effect from April 1, 2019 to December 31, 2021, taxpayers in service industry relating to production and life-support services are allowed to deduct additional 10% of the deductible input tax for the current period. The above VAT preferential policy was then extended until December 31,2022 according to Announcement 11 of 2022.
In accordance with the Announcement 39, with effect from April 1, 2019 to December 31, 2021, taxpayers in service industry relating to production and life-support services are allowed to deduct additional 10% of the deductible input tax for the current period. The above VAT preferential policy was then extended until December 31,2022.
A finding that we owe additional taxes could significantly reduce the consolidated net income and the value of your investment.” 99 Table of Contents Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods indicated, both in absolute amounts and as percentages of our total net revenues.
A finding that we owe additional taxes could significantly reduce the consolidated net income and the value of your investment.” Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods indicated, both in absolute amounts and as percentages of our total net revenues.
For a detailed discussion of our significant accounting policies and related judgments, see “Notes to Consolidated Financial Statements – Note 2 Significant Accounting Policies.” Impairment of Long-Lived Assets Other Than Goodwill We review our long-lived assets, including intangible assets with finite lives, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (asset group) may no longer be recoverable.
For a detailed discussion of our significant accounting policies and related judgments, see “Notes to Consolidated Financial Statements—Note 2 Significant Accounting Policies.” 114 Table of Contents Impairment of Long-Lived Assets Other Than Goodwill We review our long-lived assets, including intangible assets with finite lives, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (asset group) may no longer be recoverable.
Based on our evaluation of the situation in connection with such investigation, an unfavorable outcome is probable and the amount is reasonably estimable. Our bank balance of RMB92.9 million (US$13.5 million) as of December 31, 2022 was restricted for withdrawal related to the ongoing investigation. Therefore, we determined that RMB92.9 million should be recorded as other operating loss.
Based on our evaluation of the situation in connection with such investigation, an unfavorable outcome is probable and the amount is reasonably estimable. Our bank balance of RMB92.9 million as of December 31, 2022 was restricted for withdrawal related to the ongoing investigation. Therefore, we determined that RMB92.9 million should be recorded as other operating loss.
Such direct loans to the nominee shareholders would be eliminated in our consolidated financial statements against the consolidated affiliated entities’ share capital. Our full-time employees in the mainland China participate in a government-mandated contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, maternity insurance, employee housing fund and other welfare benefits are provided to such employees.
Such direct loans to the nominee shareholders would be eliminated in our consolidated financial statements against the VIEs’ share capital. Our full-time employees in mainland China participate in a government-mandated contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, maternity insurance, employee housing fund and other welfare benefits are provided to such employees.
Risk Factors—Risks Related to Doing Business in Mainland China—mainland China regulation of loans to, and direct investment in, mainland China entities by offshore holding companies and governmental control of currency conversion may restrict or prevent us from using offshore funds to make loans to our mainland China subsidiaries and consolidated affiliated entities and their subsidiaries, or to make additional capital contributions to our mainland China subsidiaries.” As a result, there is uncertainty with respect to our ability to provide prompt financial support to our mainland China subsidiaries and consolidated affiliated entities when needed.
Risk Factors—Risks Related to Doing Business in Mainland China—mainland China regulation of loans to, and direct investment in, mainland China entities by offshore holding companies and governmental control of currency conversion may restrict or prevent us from using offshore funds to make loans to our mainland China subsidiaries and the VIEs and their subsidiaries, or to make additional capital contributions to our mainland China subsidiaries.” As a result, there is uncertainty with respect to our ability to provide prompt financial support to our mainland China subsidiaries and the VIEs when needed.
All of our entities have obtained the VAT special invoices as the deduction vouchers, and therefore, we have adopted the net presentation of VAT. Pursuant to applicable mainland China laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the mainland China tax authorities.
All of our entities have obtained the VAT special invoices as the deduction vouchers, and therefore, we have adopted the net presentation of VAT. 99 Table of Contents Pursuant to applicable mainland China laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the mainland China tax authorities.
Our live video service revenues decreased from RMB8,378.9 million in 2021 to RMB6,510.5 million (US$943.9 million) in 2022, primarily due to (i) the macro headwinds and consumption softness as a result of COVID-19, (ii) products adjustments to meet regulatory changes, and (iii) to a lesser extent, the reduction in Tantan’s marketing investments in 2022 and strategic adjustments to lower Tantan’s monetization level in the second half of 2021. 2021 compared to 2020 .
Our live video service revenues decreased from RMB8,378.9 million in 2021 to RMB6,510.5 million in 2022, primarily due to (i) the macro headwinds and consumption softness as a result of COVID-19, (ii) products adjustments to meet regulatory changes, and (iii) to a lesser extent, the reduction in Tantan’s marketing investments in 2022 and strategic adjustments to lower Tantan’s monetization level in the second half of 2021.
Therefore, we applied an enterprise income tax rate of 15% to determine the tax liabilities for Chengdu Momo in the years ended December 31, 2020, 2021 and 2022.
Therefore, we applied an enterprise income tax rate of 15% to determine the tax liabilities for Chengdu Momo in the years ended December 31, 2021, 2022 and 2023.
The decrease was mainly due to a contingent loss of RMB92.9 million (US$13.5 million) in 2022 related to an ongoing investigation of the alleged illegal activity on the source of the funding consumed on Momo’s platform. There is no suspected or alleged wrongdoing on the part of our company.
The decrease was mainly due to a contingent loss of RMB92.9 million in 2022 related to an ongoing investigation of the alleged illegal activity on the source of the funding consumed on Momo’s platform. There is no suspected or alleged wrongdoing on the part of our company.
The sales and marketing expenses of Momo decreased by 5.2% from RMB1,420.1 million in 2021 to RMB1,346.7 million (US$195.3 million) in 2022, primarily due to a decrease of RMB37.8 million (US$5.5 million) in the salaries and benefits for sales and marketing personnel, and a decrease of RMB10.3 million (US$1.5 million) in marketing and promotional expense due to our improving marketing efficiency of Momo, which was partially offset by an increased effort to promote our new apps. 2021 compared to 2020 .
The sales and marketing expenses of Momo decreased by 5.2% from RMB1,420.1 million in 2021 to RMB1,346.7 million in 2022, primarily due to a decrease of RMB37.8 million in the salaries and benefits for sales and marketing personnel, and a decrease of RMB10.3 million in marketing and promotional expense due to our improving marketing efficiency of Momo, which was partially offset by an increased effort to promote our new apps.
The cost of revenues of Momo decreased by 8.2% from RMB7,301.0 million in 2021 to RMB6,704.0 million (US$972.0 million) in 2022, primarily due to the decrease in revenue sharing from the decrease in live video service revenue, which was partially offset by an increase in revenue sharing from an increase in virtual gift service revenue.
Cost of revenues 2022 compared to 2021. The cost of revenues of Momo decreased by 8.2% from RMB7,301.0 million in 2021 to RMB6,704.0 million in 2022, primarily due to the decrease in revenue sharing from the decrease in live video service revenue, which was partially offset by an increase in revenue sharing from an increase in virtual gift service revenue.
If the fair value of the underlying equity and any of the assumptions used in the Black-Scholes valuation model or binomial tree pricing model changes significantly, share-based compensation expense for future awards may differ materially compared with the awards granted previously. 116 Table of Contents
If the fair value of the underlying equity and any of the assumptions used in the Black-Scholes valuation model or binomial tree pricing model changes significantly, share-based compensation expense for future awards may differ materially compared with the awards granted previously.
Any limitation on the ability of our mainland China subsidiaries to pay dividends to us could have a material adverse effect on our ability to conduct our business and to pay dividends to holders of the ADSs and our ordinary shares.” Furthermore, our investments made as registered capital and additional paid-in capital of our mainland China subsidiaries, consolidated affiliated entities and their subsidiaries are also subject to restrictions on their distribution and transfer according to mainland China laws and regulations.
Any limitation on the ability of our mainland China subsidiaries to pay dividends to us could have a material adverse effect on our ability to conduct our business and to pay dividends to holders of the ADSs and our ordinary shares.” Furthermore, our investments made as registered capital and additional paid-in capital of our mainland China subsidiaries, the VIEs and their subsidiaries are also subject to restrictions on their distribution and transfer according to mainland China laws and regulations.
The general and administrative expenses of Tantan increased by 280.6% from RMB(18.4) million in 2021 to RMB33.2 million (US$4.8 million) in 2022, which was mainly caused by less share-based compensation expenses charged in 2021, due to the fair value remeasurement of liability classified options granted to Tantan’s founders upon settlement in the second quarter of 2021. 2021 compared to 2020 .
The general and administrative expenses of Tantan increased by 280.6% from RMB(18.4) million in 2021 to RMB33.2 million in 2022, which was mainly caused by less share-based compensation expenses charged in 2021, due to the fair value remeasurement of liability classified options granted to Tantan’s founders upon settlement in the second quarter of 2021.
Notwithstanding the foregoing, our mainland China subsidiaries may use their own retained earnings (rather than RMB converted from foreign currency denominated capital) to provide financial support to the consolidated affiliated entities either through entrustment loans from our mainland China subsidiaries to the consolidated affiliated entities or direct loans to such consolidated affiliated entities’ nominee shareholders, which would be contributed to the consolidated variable entities as capital injections.
Notwithstanding the foregoing, our mainland China subsidiaries may use their own retained earnings (rather than RMB converted from foreign currency denominated capital) to provide financial support to the VIEs either through entrustment loans from our mainland China subsidiaries to the VIEs or direct loans to such VIEs’ nominee shareholders, which would be contributed to the consolidated variable entities as capital injections.
Tantan Cost and expenses of Tantan mainly consist of marketing and promotion expenses, labor costs, revenue sharing, commission fees, depreciation and other costs. Cost of revenues 2022 compared to 2021 .
Tantan Cost and expenses of Tantan mainly consist of marketing and promotion expenses, labor costs, revenue sharing, commission fees, depreciation and other costs. Cost of revenues 2023 compared to 2022.
Except for the withholding tax paid in 2021, we accrued additional withholding tax of RMB207.4 million on retained earnings generated in 2021 by Beijing Momo IT, because Beijing Momo IT’s earnings are to be remitted to Momo HK in the foreseeable future to fund its demand on US dollar in business operations, payments of dividends, potential investments, etc.
In 2021, we accrued withholding tax of RMB207.4 million on retained earnings generated in 2021 by Beijing Momo IT, because Beijing Momo IT’s earnings are to be remitted to Momo HK in the foreseeable future to fund its demand on US dollar in business operations, payments of dividends, potential investments, etc.
The mainland China tax authorities may require us to adjust our taxable income under the contractual arrangements that our mainland China subsidiaries currently have in place with the consolidated affiliated entities in a way that could materially and adversely affect the ability of our mainland China subsidiaries to pay dividends and make other distributions to us.
The mainland China tax authorities may require us to adjust our taxable income under the contractual arrangements that our mainland China subsidiaries currently have in place with the VIEs in a way that could materially and adversely affect the ability of our mainland China subsidiaries to pay dividends and make other distributions to us.
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.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events since December 31, 2023 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.
Our sales and marketing expenses decreased by 20.4% from RMB2,604.3 million in 2021 to RMB2,073.6 million (US$300.6 million) in 2022, primarily due to an RMB411.5 million (US$59.7 million) decrease in marketing and promotional expenses of Tantan as a result of our initiatives to control cost and optimize Tantan’s channel marketing strategy, an RMB61.2 million (US$8.9 million) decrease in salaries and benefits for our sales and marketing personnel primarily driven by our continuous optimization of personnel costs, and an RMB49.4 million (US$7.2 million) decrease in depreciation and amortization expenses associated with sales and marketing expenses.
Our sales and marketing expenses decreased by 20.4% from RMB2,604.3 million in 2021 to RMB2,073.6 million in 2022, primarily due to an RMB411.5 million decrease in marketing and promotional expenses of Tantan as a result of our initiatives to control cost and optimize Tantan’s channel marketing strategy, an RMB61.2 million decrease in salaries and benefits for our sales and marketing personnel primarily driven by our continuous optimization of personnel costs, and an RMB49.4 million decrease in depreciation and amortization expenses associated with sales and marketing expenses.
Revenues from live video service, value-added service and other services are presented net of value-added taxes and surcharges. Mobile marketing services are presented net of agency rebates, value-added taxes and surcharges. Mobile games revenues include revenues generated from self-developed mobile games and licensed mobile game.
Revenues from live video service, value-added service and other services are presented net of value-added taxes and surcharges. Mobile marketing services are presented net of agency rebates, value-added taxes and surcharges. Mobile games revenues include revenues generated from mobile games developed by ourselves and licensed mobile game.
Factors considered by us when determining whether an investment has been other-than-temporarily-impaired, includes, but are not limited to, the length of the time and the extent to which the market value has been less than cost, the financial condition and near-term prospects of the investee, and our intent and ability to retain the investment until the recovery of its carrying value.
Factors we consider when determining whether an investment has been other-than-temporarily-impaired, includes, but are not limited to, the length of the time and the extent to which the market value has been less than cost, the financial condition and near-term prospects of the investee, and our intent and ability to retain the investment until the recovery of its carrying value.
Under mainland China law, each of our mainland China subsidiaries and the consolidated affiliated entities is required to set aside 10% of their after-tax profits each year, if any, to fund a statutory common reserve until such reserve reaches 50% of their registered capital.
Under mainland China law, each of our mainland China subsidiaries and the VIEs is required to set aside 10% of their after-tax profits each year, if any, to fund a statutory common reserve until such reserve reaches 50% of their registered capital.
The increase was largely offset by the decrease in Tantan’s value-added service revenues caused by the negative impact of COVID-19 and reduction in channel investments, which put pressure on user traffic and paying conversion, as well as the demonetization process to improve user experience and retention, and to a less extent the decrease in Momo core’s value-added service revenue caused by the impact of the pandemic on traffic and users’ propensity to pay. 2021 compared to 2020 .
The increase was largely offset by the decrease in Tantan’s value-added service revenues caused by the negative impact of COVID-19 and reduction in channel marketing investment, which put pressure on user traffic and paying conversion, as well as the demonetization process to improve user experience and retention, and to a less extent the decrease in Momo core’s value-added service revenue caused by the impact of the pandemic on traffic and users’ propensity to pay.
Our future revenue growth will be affected by our ability to effectively execute our monetization strategies. Investment in Technology Infrastructure and Talent . Our technology infrastructure is critical for us to retain and attract users, customers and platform partners.
Our future revenue growth will be affected by our ability to effectively execute our monetization strategies. 97 Table of Contents Investment in Technology Infrastructure and Talent. Our technology infrastructure is critical for us to retain and attract users, customers and platform partners.
We may be subject to adverse tax consequences and our consolidated results of operations may be adversely affected if the mainland China tax authorities determine that the contractual arrangements among our mainland China subsidiaries, consolidated affiliated entities and their shareholders or their subsidiaries are not on an arm’s length basis and therefore constitute favorable transfer pricing. See “Item 3.
We may be subject to adverse tax consequences and our consolidated results of operations may be adversely affected if the mainland China tax authorities determine that the contractual arrangements among our mainland China subsidiaries, the VIEs and their shareholders or their subsidiaries are not on an arm’s length basis and therefore constitute favorable transfer pricing. See “Item 3. Key Information—D.
Net cash provided by investing activities amounted to RMB2,550.3 million in 2021, which was primarily due to cash received on maturity of short-term deposits, partially offset by the purchase of long-term deposits and short-term deposits and payment of long-term investments.
Net cash provided by investing activities amounted to RMB2,550.3 million in 2021, consisting primarily of cash received on maturity of short-term deposits, partially offset by the purchase of long-term deposits and short-term deposits and payment of long-term investments.
The general and administrative expenses of Momo decreased by 11.6% from RMB619.9 million in 2021 to RMB547.8 million (US$79.4 million) in 2022, primarily due to a decrease of RMB67.2 million (US$9.7 million) in salary expenses and share-based compensation expenses, due to our continuous optimization in personnel costs and the decreased fair value of the share options granted in 2022. 2021 compared to 2020 .
The general and administrative expenses of Momo decreased by 11.6% from RMB619.9 million in 2021 to RMB547.8 million in 2022, primarily due to a decrease of RMB67.2 million in salary expenses and share-based compensation expenses, due to our continuous optimization in personnel costs and the decreased fair value of the share options granted in 2022.
As a result, our mainland China subsidiaries, consolidated affiliated entities and their subsidiaries in mainland China are restricted in their ability to transfer their net assets to us in the form of cash dividends, loans or advances.
As a result, our mainland China subsidiaries, the VIEs and their subsidiaries in mainland China are restricted in their ability to transfer their net assets to us in the form of cash dividends, loans or advances.
QOOL revenues decreased from RMB5.3 million in 2021 to RMB1.2 million (US$0.2 million) in 2022, mainly due to less services rendered in respect of music production and copyright permission in 2022. 2021 compared to 2020 .
QOOL revenues decreased from RMB5.3 million in 2021 to RMB1.2 million in 2022, mainly due to less services rendered in respect of music production and copyright permission in 2022.
People’s Republic of China Pursuant to the EIT Law, which became effective on January 1, 2008, FIEs and domestic companies are subject to enterprise income tax at a uniform rate of 25%. Beijing Momo IT applied for the qualification of Key Software Enterprise (“KSE”) for calendar year 2019 and was approved in 2020.
People’s Republic of China Pursuant to the PRC Enterprise Income Tax Law, which became effective on January 1, 2008, foreign-invested enterprises and domestic companies are subject to enterprise income tax at a uniform rate of 25%. Beijing Momo IT applied for the qualification of Key Software Enterprise for calendar year 2019 and was approved in 2020.
Momo revenues decreased from RMB12,541.2 million in 2021 to RMB11,335.1 million (US$1,643.4 million) in 2022, primarily due to the decrease of RMB1,509.5 million (US$218.9 million) in net revenues from live video service caused by the macro headwinds and consumption softness as a result of COVID-19, and products adjustments to meet regulatory changes.
Momo revenues decreased from RMB12,541.2 million in 2021 to RMB11,335.1 million in 2022, primarily due to the decrease of RMB1,509.5 million in net revenues from live video service caused by the macro headwinds and consumption softness as a result of COVID-19, and products adjustments to meeet regulatory changes.
According to No. 23 announcement of the SAT of PRC in April 2018, Chengdu Momo was no longer required to submit the preferential tax rate application to the tax authority, but only required to keep the relevant materials for future tax inspection instead.
According to No. 23 announcement of the State Taxation Administration in April 2018, Chengdu Momo was no longer required to submit the preferential tax rate application to the tax authority, but only required to keep the relevant materials for future tax inspection instead.
Therefore, Beijing Momo IT was entitled to a preferential tax rate of 10% for the year 2019. Beijing Momo IT was qualified as “High and New Technology Enterprises” (“HNTEs”) in 2020 and was accordingly entitled to a preferential tax rate of 15% from 2020 to 2022.
Therefore, Beijing Momo IT was entitled to a preferential tax rate of 10% for the year 2019. Beijing Momo IT was qualified as “High and New Technology Enterprises” in 2020 and 2023, respectively, and was accordingly entitled to a preferential tax rate of 15% from 2020 to 2025.
The increase in working capital was primarily attributable to a decrease in deferred tax liabilities of RMB187.1 million (US$27.1 million), a decrease in other current liabilities of RMB182.7 million (US$26.5 million) and a decrease in accounts payable of RMB115.4 million (US$16.7 million), partially offset by a decrease in other non-current assets of RMB60.9 million (US$8.8 million).
The increase in working capital was primarily attributable to a decrease in deferred tax liabilities of RMB187.1 million, a decrease in other current liabilities of RMB182.7 million and a decrease in accounts payable of RMB115.4 million, partially offset by a decrease in other non-current assets of RMB60.9 million.
Both Momo and Tantan users can become members by paying membership fees per contract period, which ranges from one month to one year. Both Momo and Tantan members are entitled to additional functionalities and privileges on Momo and Tantan mobile applications, respectively. 2022 compared to 2021 .
Both Momo and Tantan users can become members by paying membership fees per contract period, which ranges from one month to one year. Both Momo and Tantan members are entitled to additional functionalities and privileges on Momo and Tantan mobile applications, respectively. 101 Table of Contents 2023 compared to 2022.
Tantan 2022 compared to 2021 . Tantan revenues decreased from RMB2,029.2 million in 2021 to RMB1,367.9 million (US$198.3 million) in 2022, which was driven by a decrease of RMB359.0 million (US$52.0 million) in its live video service revenues and a decrease of RMB302.3 million (US$43.8 million) in its value-added service revenues.
Tantan revenues decreased from RMB2,029.2 million in 2021 to RMB1,367.9 million in 2022, which was driven by a decrease of RMB359.0 million in its live video service revenues and a decrease of RMB302.3 million in its value-added service revenues.
Our mobile games revenues increased by 20.6% to RMB47.7 million in 2021 from RMB39.6 million in 2020, primarily due to the launch of a new mobile game in the second half year of 2021. Other services Our other services mainly include film and television series investment and distribution promotion business, music service and peripheral products. 2022 compared to 2021 .
Our mobile games revenues increased by 16.8% to RMB55.7 million in 2022 from RMB47.7 million in 2021, primarily due to the launch of a new mobile game in the second half year of 2021. Other services Our other services mainly include film and television series investment and distribution promotion business, music service and peripheral products. 2023 compared to 2022.
We recorded a RMB4,397.0 million goodwill and intangible assets impairment during the year ended December 31, 2021. Other operating income Other operating income mainly consisted of government incentives and additional input VAT deduction. 2022 compared to 2021 . Our other operating income decreased from RMB175.9 million in 2021 to RMB20.6 million (US$3.0 million) in 2022.
We recorded a RMB4,397.0 million goodwill and intangible assets impairment during the year ended December 31, 2021. Other operating income Other operating income mainly consisted of government incentives and additional input VAT deduction. 2023 compared to 2022. Our other operating income increased from RMB20.6 million in 2022 to RMB130.1 million (US$18.3 million) in 2023.
The sales and marketing expenses of Tantan decreased by 38.8% from RMB1,180.1 million in 2021 to RMB721.9 million (US$104.7 million) in 2022, which was primarily due to a decrease in marketing and promotional expenses, as a result of our initiatives to control cost and optimize Tantan’s channel marketing strategy in the second half of 2022. 107 Table of Contents 2021 compared to 2020 .
The sales and marketing expenses of Tantan decreased by 38.8% from RMB1,180.1 million in 2021 to RMB721.9 million in 2022, which was primarily due to a decrease in marketing and promotional expenses, as a result of our initiatives to control cost and optimize Tantan’s channel marketing strategy in the second half of 2022.
Changes in user engagement could affect our revenues and financial results. Active user engagement powered by diverse functionalities and rich contents is essential for our ability to generate revenues from the various services we offer to users, including our live video business, value-added service, among others. Monetization .
Active user engagement powered by diverse functionalities and rich contents is essential for our ability to generate revenues from the various services we offer to users, including our live video business and our value-added services, among others. Monetization.
On March 20, 2019, the MOF, the SAT and the General Administration of Customs jointly issued the Announcement on Relevant Policies for Deepening Value-added Tax Reform, or the Announcement 39, which took effect as of April 1, 2019.
On March 20, 2019, the Ministry of Finance, the State Taxation Administration and the General Administration of Customs jointly issued the Announcement on Relevant Policies for Deepening Value-Added Tax Reform, or the Announcement 39, which took effect as of April 1, 2019.
Primarily as a result of the foregoing, we have incurred a net income of RMB1,480.0 million (US$214.6 million) in 2022, compared to a net loss of RMB2,925.7 million in 2021. 2021 compared to 2020 .
As a result of the foregoing, we have incurred a net income of RMB1,480.0 million in 2022, compared to a net loss of RMB2,925.7 million in 2021.
The decrease in deferred tax liabilities was mainly because we paid withholding income tax of RMB360.0 million (US$52.2 million) in 2022, which was more than RMB164.3 million (US$23.8 million), the withholding income tax we accrued in 2022.
The decrease in deferred tax liabilities was mainly because we paid withholding income tax of RMB360.0 million in 2022, which was more than RMB164.3 million, the withholding income tax we accrued in 2022.
The research and development expenses of Tantan decreased by 11.3% from RMB303.1 million in 2021 to RMB268.8 million (US$39.0 million) in 2022, which was primarily due to a decrease in salaries and benefits for research and development personnel. 2021 compared to 2020 .
The research and development expenses of Tantan decreased by 11.3% from RMB303.1 million in 2021 to RMB268.8 million in 2022, which was primarily due to a decrease in salaries and benefits for research and development personnel. Sales and marketing expenses 2023 compared to 2022.
QOOL Costs and expenses of QOOL mainly consist of production costs in connection with television content and film music, and staff related costs. Cost of revenues 2022 compared to 2021 .
QOOL Costs and expenses of QOOL mainly consist of production costs in connection with television content and film music, and staff related costs. 108 Table of Contents Cost of revenues 2023 compared to 2022.
We have a large team of engineers and developers, which accounted for approximately 63.0% of our employees as of December 31, 2022. Most of our engineers and developers are based in our headquarters in Beijing.
We have a large team of engineers and developers, which accounted for approximately 62.5% of our employees as of December 31, 2023. Most of our engineers and developers are based in our headquarters in Beijing.
For the three years ended December 31, 2020, 2021 and 2022, our research and development expenditures, including share-based compensation expenses for research and development personnel, were RMB1,167.7 million, RMB1,131.8 million and RMB1,006.2 million (US$145.9 million), respectively. For the year ended December 31, 2022, our research and development expenditures represented 7.9% of our total net revenues.
For the three years ended December 31, 2021, 2022 and 2023, our research and development expenditures, including share-based compensation expenses for research and development personnel, were RMB1,131.8 million, RMB1,006.2 million and RMB884.6 million (US$124.6 million), respectively. For the year ended December 31, 2023, our research and development expenditures represented 7.4% of our total net revenues.
The numbers of Momo MAUs, quarterly paying users for our live video service and value-added services on our Momo application, without double counting the overlap (Momo Paying Users), the numbers of Tantan MAUs and the numbers of quarterly paying users on our Tantan application (Tantan Paying Users) are presented by the charts below for the periods indicated.
The numbers of Momo quarterly paying users for our live video service and value-added services on our Momo application, without double counting the overlap (Momo Paying Users) are presented by the charts below for the periods indicated. 96 Table of Contents Tantan. We monitor both MAUs and number of paying users of our Tantan app.
The decrease was primarily due to the negative impact of COVID-19 as well as marketing investment reduction and the strategy to lower Tantan’s monetization level in the second half of 2021. 105 Table of Contents 2021 compared to 2020 .
The decrease was primarily due to the negative impact of COVID-19 as well as marketing investment reduction and the strategy to lower Tantan’s monetization level in the second half of 2021. QOOL 2023 compared to 2022.
Revenues from our value-added service increased by 0.6% to RMB6,007.0 million (US$870.9 million) in 2022 from RMB5,971.8 million in 2021, primarily due to the rapid revenue growth from our standalone apps, such as Soulchill, Hertz and Duidui.
The decrease was partially offset by the rapid revenue growth from the new standalone apps. 2022 compared to 2021. Revenues from our value-added service increased by 0.6% to RMB6,007.0 million in 2022 from RMB5,971.8 million in 2021, primarily due to the rapid revenue growth from our standalone apps, such as Soulchill, Hertz and Duidui.
The decrease was partially offset by the increase of RMB337.6 million (US$48.9 million) in net revenues from value-added service generated by our standalone apps, such as Soulchill, Hertz and Duidui. 2021 compared to 2020 .
The decrease was partially offset by the increase of RMB337.6 million in net revenues from value-added service generated by our standalone apps, such as Soulchill, Hertz and Duidui. Tantan 2023 compared to 2022.
Research and development expense 2022 compared to 2021 . The research and development expenses of Momo decreased by 11.0% from RMB828.7 million in 2021 to RMB737.4 million (US$106.9 million) in 2022, primarily due to a decrease in salaries and benefits for research and development personnel. 2021 compared to 2020 .
The research and development expenses of Momo decreased by 11.0% from RMB828.7 million in 2021 to RMB737.4 million in 2022, primarily due to a decrease in salaries and benefits for research and development personnel. Sales and marketing expenses 2023 compared to 2022.
The cost of revenues of QOOL were RMB2.5 million (US$0.4 million) in 2022, and RMB37.5 million in 2021, which consisted primarily of personnel related costs. 2021 compared to 2020 . The cost of revenues of QOOL were RMB37.5 million in 2021, and RMB22.1 million in 2020, which consisted primarily of production costs in connection with television content and film music.
The cost of revenues of QOOL were RMB22.0 million (US$3.1 million) in 2023, and RMB2.5 million in 2022, which consisted primarily of production costs in connection with television series in 2023. 2022 compared to 2021. The cost of revenues of QOOL were RMB2.5 million in 2022, and RMB37.5 million in 2021, which consisted primarily of personnel related costs.
We accrue for these benefits based on certain percentages of the employees’ salaries. The total provisions for such employee benefits were RMB209.9 million, RMB241.7 million and RMB228.1 million (US$33.1 million) in 2020, 2021 and 2022, respectively.
We accrue for these benefits based on certain percentages of the employees’ salaries. The total provisions for such employee benefits were RMB241.7 million, RMB228.1 million and RMB206.5 million (US$29.1 million) in 2021, 2022 and 2023, respectively.
Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—Contractual arrangements we have entered into with the consolidated affiliated entities may be subject to scrutiny by the mainland China tax authorities.
Risk Factors—Risks Related to Our Corporate Structure—Contractual arrangements we have entered into with the VIEs may be subject to scrutiny by the mainland China tax authorities.
The general and administrative expenses of QOOL were RMB15.0 million (US$2.2 million) in 2022, and RMB23.2 million in 2021, which consisted primarily of personnel related costs. 2021 compared to 2020 . The general and administrative expenses of QOOL were RMB23.2 million in 2021, and RMB25.7 million in 2020, which consisted primarily of personnel related costs.
The general and administrative expenses of QOOL were RMB8.5 million (US$1.2 million) in 2023, and RMB15.0 million in 2022, which consisted primarily of personnel related costs. 2022 compared to 2021. The general and administrative expenses of QOOL were RMB15.0 million in 2022, and RMB23.2 million in 2021, which consisted primarily of personnel related costs.
General and administrative expense 2022 compared to 2021 .
General and administrative expense 2023 compared to 2022.
As of December 31, 2022, the amount of the restricted net assets, which represents registered capital and additional paid-in capital cumulative appropriations made to statutory reserves, was RMB1,509.1 million (US$218.8 million).
As of December 31, 2023, the amount of the restricted net assets, which represents registered capital and additional paid-in capital cumulative appropriations made to statutory reserves, was RMB1,509.1million (US$212.6 million).
The cost of revenues of Tantan decreased by 31.6% from RMB1,044.9 million in 2021 to RMB714.9 million (US$103.7 million) in 2022, which was primarily due to a decrease in revenue sharing from a decrease in live video service revenue. 2021 compared to 2020 .
The cost of revenues of Tantan decreased by 31.6% from RMB1,044.9 million in 2021 to RMB714.9 million in 2022, which was primarily due to a decrease in revenue sharing from a decrease in live video service revenue. Research and development expenses 2023 compared to 2022.
We must continue to upgrade and expand our technology infrastructure to keep pace with the growth of our business, to develop new features and services for our platform and to further enhance our big data analytical capabilities.
We must continue to upgrade our technology infrastructure to keep pace with technological innovations, to develop new features and services for our platform and to further enhance our big data analytical capabilities.
Share-based Compensation Share-based payment transactions with employees, executives and consultants are measured based on the grant date fair value of the equity instrument issued and recognized as compensation expense net of a forfeiture rate on a straight-line basis, over the requisite service period, with a corresponding impact reflected in additional paid-in capital.
Changes to this determination can significantly affect the results of the impairment test. 115 Table of Contents Share-Based Compensation Share-based payment transactions with employees, executives and consultants are measured based on the grant date fair value of the equity instrument issued and recognized as compensation expense net of a forfeiture rate on a straight-line basis, over the requisite service period, with a corresponding impact reflected in additional paid-in capital.
According to the implementation circulars released by the MOF and the SAT on the VAT Pilot Program, the “modern service industries” include research, development and technology services, information technology services, cultural innovation services, logistics support, lease of corporeal properties, attestation and consulting services.
According to the implementation circulars released by the Ministry of Finance and the State Taxation Administration on the program, the “modern service industries” include research, development and technology services, information technology services, cultural innovation services, logistics support, lease of corporeal properties, attestation and consulting services.
Labor costs consist of salaries and benefits, including share-based compensation expenses, for our employees involved in the operation of our platform. Depreciation mainly consists of depreciation cost on our servers, computers and other equipment.
Labor costs consist of salaries and benefits, including share-based compensation expenses, for our employees involved in the operation of our platform. Depreciation mainly consists of depreciation cost on our servers, computers and other equipment. Other costs mainly consist of office rental expenses and professional fees related to live video service.
Cost of revenues Cost of revenues 2022 compared to 2021 .
Cost of revenues Cost of revenues 2023 compared to 2022.
The following table sets forth a summary of our cash flows for the periods indicated: Year Ended December 31, 2020 2021 2022 (in RMB thousands) Net cash provided by operating activities 3,080,889 1,559,198 1,226,891 Net cash (used in) provided by investing activities (748,466 ) 2,550,342 1,715,845 Net cash used in financing activities (1,498,150 ) (1,786,909 ) (3,432,559 ) Effect of exchange rate changes (80,944 ) (41,669 ) 41,390 Net increase (decrease) in cash and cash equivalents 753,329 2,280,962 (448,433 ) Cash and cash equivalents and restricted cash at beginning of period 2,612,743 3,366,072 5,647,034 Cash and cash equivalents and restricted cash at end of period 3,366,072 5,647,034 5,198,601 Anticipated Use of Cash We intend to continue to invest in our research and development capabilities to grow our user base and enhance user experience.
The following table sets forth a summary of our cash flows for the periods indicated: 110 Table of Contents Year Ended December 31, 2021 2022 2023 (in RMB thousands) Net cash provided by operating activities 1,559,198 1,226,891 2,277,161 Net cash provided by investing activities 2,550,342 1,715,845 2,413,069 Net cash used in financing activities (1,786,909 ) (3,432,559 ) (1,699,907 ) Effect of exchange rate changes (41,669 ) 41,390 93,988 Net increase (decrease) in cash and cash equivalents 2,280,962 (448,433 ) 3,084,311 Cash and cash equivalents and restricted cash at beginning of year 3,366,072 5,647,034 5,198,601 Cash and cash equivalents and restricted cash at end of year 5,647,034 5,198,601 8,282,912 Anticipated Use of Cash We intend to continue to invest in our research and development capabilities to grow our user base and enhance user experience.
We monitor our MAU and number of paying users on quarterly basis, as they are, among other things, metrics to help us ensure that our business is on the right track.
We monitor certain metrics of our Momo and Tantan apps on a quarterly basis, as they are, among other things, metrics to help us ensure that our business is on the right track. Momo.
Changes to this determination can significantly affect the results of the quantitative assessments. 115 Table of Contents Impairment Assessment on Equity method investments We evaluate the equity method investments for impairment at each reporting date, or more frequently if events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable.
Impairment Assessment on Equity Method Investments We evaluate the equity method investments for impairment at each reporting date, or more frequently if events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable.
In 2021, Momo HK received special dividends of RMB1,300.0 million from Beijing Momo IT. Withholding taxes of RMB130.0 million in connection with the dividends were fully paid during the year ended December 31, 2021.
Momo HK received special dividends of RMB1,300.0 million from Beijing Momo IT in 2021. Withholding taxes of RMB130.0 million in connection with the dividends were fully paid during the year ended December 31, 2021. In 2022, we accrued withholding tax of RMB164.3 million on retained earnings generated in 2022 by Beijing Momo IT.
The non-cash items primarily include RMB401.5 million (US$58.2 million) in share-based compensation expenses and RMB107.0 million (US$15.5 million) in depreciation of property and equipment, partially offset by RMB129.6 million (US$18.8 million) in gain from repurchase of convertible note.
The non-cash items primarily include RMB401.5 million in share-based compensation expenses and RMB107.0 million in depreciation of property and equipment, partially offset by RMB129.6 million in gain on repurchase of convertible senior notes.
Sales and marketing expenses 2022 compared to 2021 . The sales and marketing expenses of QOOL were RMB5.0 million (US$0.7 million) in 2022, and RMB4.0 million in 2021. 2021 compared to 2020 . The sales and marketing expenses of QOOL were RMB4.0 million in 2021, and RMB90,000 in 2020. General and administrative expenses 2022 compared to 2021 .
Sales and marketing expenses 2023 compared to 2022. The sales and marketing expenses of QOOL were RMB7.8 million (US$1.1 million) in 2023, and RMB5.0 million in 2022. 2022 compared to 2021. The sales and marketing expenses of QOOL were RMB5.0 million in 2022, and RMB4.0 million in 2021. General and administrative expenses 2023 compared to 2022.
Judgment is required to determine key assumptions adopted in the cash flow projections, such as internal forecasts, estimation of the long-term rate of growth for our business and determination of our weighted average cost of capital, and changes to key assumptions can significantly affect these cash flow projections and the results of the impairment tests. 114 Table of Contents Impairment of Goodwill Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations.
Judgment is required to determine key assumptions adopted in the cash flow projections, such as internal forecasts, estimation of the long-term rate of growth for our business and determination of our weighted average cost of capital, and changes to key assumptions can significantly affect these cash flow projections and the results of the impairment tests.
Our research and development headcount decreased from 1,274 as of December 31, 2021 to 1,071 as of December 31, 2022. 2021 compared to 2020 . Our research and development expenses decreased by 3.1% from RMB1,167.7 million in 2020 to RMB1,131.8 million in 2021.
Our research and development headcount decreased from 1,071 as of December 31, 2022 to 864 as of December 31, 2023. 2022 compared to 2021. Our research and development expenses decreased by 11.1% from RMB1,131.8 million in 2021 to RMB1,006.2 million in 2022.
Segment Cost and Expenses The following table sets forth our costs and expenses by segment and year-over-year change rate for the periods indicated: Year ended December 31, 2020 2021 2022 RMB YoY% RMB YoY% RMB US$ YoY% (in thousands, except percentages) Costs and Expenses: Momo 9,829,243 (11 ) 10,169,788 3 9,335,890 1,353,577 (8 ) Tantan 2,844,395 4 2,509,690 (12 ) 1,738,898 252,117 (31 ) QOOL 47,892 (9 ) 64,743 35 22,473 3,258 (65 ) Unallocated — — 4,397,012 100 — — (100 ) Momo Costs and expenses of Momo mainly consist of revenue sharing, salaries and benefits, marketing and promotion expenses, bandwidth costs, professional fees and commission fees.
Segment Cost and Expenses The following table sets forth our costs and expenses by segment and year-over-year change rate for the periods indicated: 106 Table of Contents Year ended December 31, 2021 2022 2023 RMB YoY% RMB YoY% RMB US$ YoY% (in thousands, except percentages) Costs and Expenses: Momo 10,169,788 3 9,335,890 (8 ) 8,674,424 1,221,767 (7 ) Tantan 2,509,690 (12 ) 1,738,898 (31 ) 1,114,732 157,007 (36 ) QOOL 64,743 35 22,473 (65 ) 38,256 5,388 70 Unallocated 4,397,012 100 — (100 ) — — — Momo Costs and expenses of Momo mainly consist of revenue sharing, salaries and benefits, marketing and promotion expenses, bandwidth costs, professional fees and commission fees.
Mobile marketing services revenues decreased by 21.4% to RMB125.0 million (US$18.1 million) in 2022 from RMB159.0 million in 2021, primarily due to the negative impact of macro headwind on clients’ advertising budget, and our products adjustment to address new regulation requirement in 2021. 2021 compared to 2020 .
Mobile marketing services revenues decreased by 21.4% to RMB125.0 million in 2022 from RMB159.0 million in 2021, primarily due to the negative impact of macro headwind on clients’ advertising budget, and our products adjustment to address new regulation requirement in 2021. Mobile games As of December 31, 2023, we had mobile game developed on our own and licensed mobile game.

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Biggest changeName Class A Ordinary Shares Underlying Outstanding Options Exercise Price (US$/Share) Date of Grant Date of Expiration Yan Tang * 0.1404 October 10, 2013 October 9, 2023 * 0.0002 October 29, 2014 October 28, 2024 * 0.0002 April 22, 2015 April 21, 2025 * 0.0002 March 31, 2016 March 30, 2026 * 0.0002 December 30, 2016 December 29, 2026 * 0.0002 March 7, 2017 March 6, 2027 * 0.0002 May 2, 2018 May 1, 2028 * 0.0002 April 15, 2019 April 14, 2029 * 0.0002 April 15, 2020 April 14, 2030 * 0.0002 April 15, 2021 April 14, 2031 * 0.0002 April 15, 2022 April 14, 2032 Li Wang * 0.0002 October 29, 2014 October 28, 2024 * 0.0002 April 22, 2015 April 21, 2025 * 0.0002 March 31, 2016 March 30, 2026 * 0.0002 December 30, 2016 December 29, 2026 * 0.0002 March 7, 2017 March 6, 2027 * 0.0002 May 2, 2018 May 1, 2028 * 0.0002 April 15, 2019 April 14, 2029 * 0.0002 April 15, 2020 April 14, 2030 * 0.0002 April 15, 2021 April 14, 2031 * 0.0002 April 15, 2022 April 14, 2032 Cathy Hui Peng * 0.0002 April 22, 2015 April 21, 2025 * 0.0002 June 16, 2016 June 15, 2026 * 0.0002 May 17, 2017 May 16, 2027 * 0.0002 December 5, 2017 December 4, 2027 120 Table of Contents Name Class A Ordinary Shares Underlying Outstanding Options Exercise Price (US$/Share) Date of Grant Date of Expiration * 0.0002 May 17, 2019 May 16, 2029 * 0.0002 May 28, 2020 May 27, 2030 * 0.0002 July 1, 2021 June 30, 2031 * 0.0002 April 15, 2022 April 14, 2032 Other individuals as a group * 0.0327 November 1, 2012 October 31, 2022 * 0.1404 October 10, 2013 October 9, 2023 * 0.1404 March 1, 2014 February 28, 2024 * 0.0002 October 29, 2014 October 28, 2024 * 0.0002 April 22, 2015 April 21, 2025 * 0.0002 May 4, 2015 May 3, 2025 * 0.0002 August 13, 2015 August 12, 2025 * 0.0002 October 15, 2015 October 14, 2025 * 0.0002 November 13, 2015 November 12, 2025 * 0.0002 March 31, 2016 March 30, 2026 * 0.0002 June 16, 2016 June 15, 2026 * 0.0002 July 6, 2016 July 5, 2026 * 0.0002 October 15, 2016 October 14, 2026 * 0.0002 December 30, 2016 December 29, 2026 * 0.0002 January 3, 2017 January 2, 2027 * 0.0002 April 13, 2017 April 12, 2027 * 0.0002 May 17, 2017 May 16, 2027 * 0.0002 July 13, 2017 July 12, 2027 * 0.0002 September 1, 2017 August 31, 2027 * 0.0002 October 13, 2017 October 12, 2027 * 0.0002 December 5, 2017 December 4, 2027 * 0.0002 December 29, 2017 December 28, 2027 * 0.0002 April 13, 2018 April 12, 2028 * 0.0002 May 2, 2018 May 1, 2028 * 0.0002 July 13, 2018 July 12, 2028 * 0.0002 October 15, 2018 October 14, 2028 * 0.0002 December 29, 2018 December 28, 2028 * 0.0002 April 15, 2019 April 14, 2029 * 0.0002 May 17, 2019 May 16, 2029 * 0.0002 July 12, 2019 July 11, 2029 * 0.0002 October 15, 2019 October 14, 2029 * 0.0002 December 26, 2019 December 25, 2029 * 0.0002 April 15, 2020 April 14, 2030 * 0.0002 May 28, 2020 May 27, 2030 * 0.0002 July 8, 2020 July 7, 2030 * 0.0002 October 15, 2020 October 14, 2030 * 0.0002 December 30, 2020 December 29, 2030 * 0.0002 April 15, 2021 April 14, 2031 * 0.0002 July 1, 2021 June 30, 2031 * 0.0002 October 15, 2021 October 14, 2031 * 0.0002 November 1, 2021 October 31, 2031 * 0.0002 December 7, 2021 December 6, 2031 * 0.0002 January 7, 2022 January 6, 2032 * 0.0002 April 15, 2022 April 14, 2032 * 0.0002 July 1, 2022 June 30, 2032 * 0.0002 October 14, 2022 October 13, 2032 * 0.0002 December 28, 2022 December 27, 2032 * 0.0002 January 5, 2023 January 4, 2033 Total 27,368,589 * Aggregate number of shares represented by all outstanding options granted to the person account for less than 1% of our total outstanding ordinary shares on an as-converted basis. 121 Table of Contents The following table summarizes, as of March 31, 2023, the outstanding restricted share units granted to certain directors under the 2014 Plan.
Biggest changeName Class A Ordinary Shares Underlying Outstanding Options Exercise Price (US$/ Share) Date of Grant Date of Expiration Yan Tang * 0.0002 Various dates between April 15, 2020 and April 6, 2023 Various dates between April 15, 2030 and April 6, 2033 119 Table of Contents Name Class A Ordinary Shares Underlying Outstanding Options Exercise Price (US$/ Share) Date of Grant Date of Expiration Li Wang * 0.0002 Various dates between April 15, 2020 and April 6, 2023 Various dates between April 15, 2030 and April 6, 2033 Cathy Hui Peng * 0.0002 Various dates between May 28, 2020 and April 6, 2023 Various dates between May 28, 2030 and April 6, 2033 Jianhua Wen * 0.0002 January 5, 2024 January 5, 2034 Other individuals as a group * 0.0002 Various dates between April 15, 2020 and January 5, 2024 Various dates between April 15, 2030 and January 5, 2034 Total 28,599,225 * Aggregate number of shares represented by all outstanding options granted to the person account for less than 1% of our total outstanding ordinary shares on an as-converted basis.
Prior to that, she worked for several public and private companies in technology, media and telecom space where she served various roles in accounting, financial planning and analysis, mergers and acquisitions and corporate communications. Ms. Peng started her career in auditing at Ernst &Young in 2001. Ms. Peng received her bachelor degree in Economics from Peking University in 2001. B.
Prior to that, she worked for several public and private companies in technology, media and telecom space where she served various roles in accounting, financial planning and analysis, mergers and acquisitions and corporate communications. Ms. Peng started her career in auditing at Ernst &Young in 2001. Ms. Peng received her bachelor degree in Economics from Peking University in 2001. Mr.
The compensation committee is responsible for, among other things: • reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers; • reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors; • reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and • selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management.
The compensation committee is responsible for, among other things: 122 Table of Contents • reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers; • reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors; • reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and • selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management.
The functions and powers of our board of directors include, among others: • convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings; • declaring dividends and distributions; • appointing officers and determining the term of office of the officers; • exercising the borrowing powers of our company and mortgaging the property of our company; and • approving the transfer of shares in our company, including the registration of such shares in our share register.
The functions and powers of our board of directors include, among others: • convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings; • declaring dividends and distributions; 123 Table of Contents • appointing officers and determining the term of office of the officers; • exercising the borrowing powers of our company and mortgaging the property of our company; and • approving the transfer of shares in our company, including the registration of such shares in our share register.
The following table summarizes, as of March 31, 2023, the outstanding options under the 2012 Plan and 2014 Plan granted to certain officers, directors, employees and consultants.
The following table summarizes, as of March 31, 2024, the outstanding options under the 2012 Plan and 2014 Plan granted to certain officers, directors, employees and consultants.
A shareholder may in certain circumstances have rights to damages if a duty owed by the directors is breached. 125 Table of Contents Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs.
A shareholder may in certain circumstances have rights to damages if a duty owed by the directors is breached. Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs.
As a result, the board of directors of Tantan approved the amended and restated 2015 share incentive plan (“Amended and Restated 2015 Plan”) and adjusted the maximum aggregate number of shares that may be issued under the Tantan 2015 Plan to 9,039,035 shares.
As a result, the board of directors of Tantan approved the amended and restated 2015 share incentive plan, or the Amended and Restated 2015 Plan, and adjusted the maximum aggregate number of shares that may be issued under the Tantan 2015 Plan to 9,039,035 shares.
Prior to joining Fidelity Growth Partners Asia, Mr. Tam was a partner of Electra Partners Asia from 1998 to 2002, and was the founding director of Hellman & Friedman Asia from 1992 to 1998. Mr. Tam worked in M&A corporate finance at S.G. Warburg from 1989 to 1992. Mr. Tam has been a Chartered Accountant since 1989. Mr.
Tam was a partner of Electra Partners Asia from 1998 to 2002, and was the founding director of Hellman & Friedman Asia from 1992 to 1998. Mr. Tam worked in M&A corporate finance at S.G. Warburg from 1989 to 1992. Mr. Tam has been a Chartered Accountant since 1989. Mr.
As of March 31, 2023, options to purchase 955,998 ordinary shares of Tantan (adjusted retrospectively for share split and excluding those already forfeited or redeemed) granted under the Tantan 2015 Plan remained outstanding. 122 Table of Contents Tantan 2018 Plan In July 2018, Tantan adopted the 2018 Share Incentive Plan, pursuant to which the maximum aggregate number of ordinary shares to be issued was initially 5,963,674, plus the number of ordinary shares authorized for issuance under the Tantan 2015 Plan, in an amount equal to (i) the number of ordinary shares that were not granted pursuant to the Tantan 2015 Plan, plus (ii) the number of ordinary shares that were granted pursuant to the Tantan 2015 Plan that have expired without having been exercised in full or have otherwise become not exercisable.
As of March 31, 2024, options to purchase 860,058 ordinary shares of Tantan (adjusted retrospectively for share split and excluding those already forfeited or redeemed) granted under the Tantan 2015 Plan remained outstanding. 120 Table of Contents Tantan 2018 Plan In July 2018, Tantan adopted the 2018 Share Incentive Plan, pursuant to which the maximum aggregate number of ordinary shares to be issued was initially 5,963,674, plus the number of ordinary shares authorized for issuance under the Tantan 2015 Plan, in an amount equal to (i) the number of ordinary shares that were not granted pursuant to the Tantan 2015 Plan, plus (ii) the number of ordinary shares that were granted pursuant to the Tantan 2015 Plan that have expired without having been exercised in full or have otherwise become not exercisable.
The following table sets forth the numbers of our employees categorized by function as of December 31, 2022.
The following table sets forth the numbers of our employees categorized by function as of December 31, 2023.
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. 124 Table of Contents Compensation Committee Our compensation committee consists of Benson Bing Chung Tam and Dr.
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.
Dave Daqing Qi. We have determined that each member satisfies the “independence” requirements of the Nasdaq Stock Market Rules. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers.
Compensation Committee Our compensation committee consists of Benson Bing Chung Tam and Dr. Dave Daqing Qi. We have determined that each member satisfies the “independence” requirements of the Nasdaq Stock Market Rules. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers.
Specifically, each executive officer has agreed not to (i) approach our suppliers, clients, customers or contacts or other persons or entities introduced to the executive officer in his or her capacity as a representative of us for the purpose of doing business with such persons or entities that will harm our business relationships with these persons or entities; (ii) assume employment with or provide services to any of our competitors, or engage, whether as principal, partner, licensor or otherwise, any of our competitors, without our express consent; or (iii) seek directly or indirectly, to solicit the services of any of our employees who is employed by us on or after the date of the executive officer’s termination, or in the year preceding such termination, without our express consent.
Specifically, each executive officer has agreed not to (i) approach our suppliers, clients, customers or contacts or other persons or entities introduced to the executive officer in his or her capacity as a representative of us for the purpose of doing business with such persons or entities that will harm our business relationships with these persons or entities; (ii) assume employment with or provide services to any of our competitors, or engage, whether as principal, partner, licensor or otherwise, any of our competitors, without our express consent; or (iii) seek directly or indirectly, to solicit the services of any of our employees who is employed by us on or after the date of the executive officer’s termination, or in the year preceding such termination, without our express consent. 121 Table of Contents We have also entered into indemnification agreements with each of our directors and executive officers.
Awards may not be transferred in any manner by the recipient, save for certain exceptions including transfers to our company, transfers by gift to an affiliate or an immediately family member, transfer by will or the laws of descent and distribution, and other exceptions provided for by the plan administrator. Amendment and Termination of the 2012 Plan.
Awards may not be transferred in any manner by the recipient, save for certain exceptions including transfers to our company, transfers by gift to an affiliate or an immediately family member, transfer by will or the laws of descent and distribution, and other exceptions provided for by the plan administrator. 2014 Plan We adopted the 2014 Plan in November 2014.
Board Diversity Matrix Board Diversity Matrix (As of March 31, 2023) Country of Principal Executive Offices Beijing Foreign Private Issuer Yes Disclosure Prohibited Under Home Country Law No Total Number of Directors 7 Female Male Non-Binary Did Not Disclose Gender Part I: Gender Identity Directors 1 6 0 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction 0 LGBTQ+ 0 Did Not Disclose Demographic Background 0 126 Table of Contents D.
Board Diversity Matrix Board Diversity Matrix (As of March 31, 2024) Country of Principal Executive Offices Beijing Foreign Private Issuer Yes Disclosure Prohibited Under Home Country Law No Total Number of Directors 5 Female Male Non-Binary Did Not Disclose Gender Part I: Gender Identity Directors 1 4 0 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction 0 LGBTQ+ 0 Did Not Disclose Demographic Background 0 D.
As of March 31, 2023, options to purchase 3,073,826 ordinary shares of Tantan (adjusted retrospectively for share split and excluding those already forfeited or redeemed) granted under the Tantan 2018 Plan remained outstanding. Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers.
As of March 31, 2024, options to purchase 2,928,678 ordinary shares of Tantan (adjusted retrospectively for share split and excluding those already forfeited or redeemed) granted under the Tantan 2018 Plan remained outstanding. Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers.
As a result, the maximum aggregate number of shares which may be issued pursuant to all awards under the 2014 Plan has been increased to 56,071,439 Class A ordinary shares.
As a result, the maximum aggregate number of shares which may be issued pursuant to all awards under the 2014 Plan has been increased to 61,697,717 Class A ordinary shares.
Compensation For the fiscal year ended December 31, 2022, we paid an aggregate of RMB48.1 million (US$7.0 million) in cash to our executive officers, and we paid an aggregate of RMB0.6 million (US$90,000) in cash to our non-executive directors.
B. Compensation For the fiscal year ended December 31, 2023, we paid an aggregate of RMB56.8 million (US$8.0 million) in cash to our executive officers, and we paid an aggregate of RMB0.6 million (US$90,000) in cash to our non-executive directors.
A director who is in any way, whether directly or indirectly, interested in a contract or transaction or proposed contract or transaction with our company must declare the nature of his or her interest at a meeting of the directors.
A director is not required to hold any shares in our company to qualify to serve as a director. A director who is in any way, whether directly or indirectly, interested in a contract or transaction or proposed contract or transaction with our company must declare the nature of his or her interest at a meeting of the directors.
Qi is a professor of accounting and the former associate dean of the Cheung Kong Graduate School of Business. He began teaching at the Cheung Kong Graduate School of Business in 2002 and was the founding director of the Executive MBA program. Prior to that, Dr.
He began teaching at the Cheung Kong Graduate School of Business in 2002 and was the founding director of the Executive MBA program. Prior to that, Dr. Qi was an associate professor at the School of Accounting of the Chinese University of Hong Kong. Dr.
He received his Ph.D. degree in accounting from the Eli Broad Graduate School of management of Michigan State University in 1996, MBA degree from the University of Hawaii at Manoa in 1992 and bachelor of science and bachelor of arts degrees from Fudan University in 1985 and 1987, respectively. Mr. Yongming Wu has been our independent director since December 2018.
He received his Ph.D. degree in accounting from the Eli Broad Graduate School of management of Michigan State University in 1996, MBA degree from the University of Hawaii at Manoa in 1992 and bachelor of science and bachelor of arts degrees from Fudan University in 1985 and 1987, respectively. Mr.
Wang was the managing director of Laoluo English Training School, a start-up education service business from November 2008 to May 2011. He was the general administration staff at NEC China Co., Ltd. from April 2005 to April 2007. Mr. Wang received a bachelor’s degree in management from Beijing University of Aeronautics and Astronautics in China in 2004. Mr.
Wang was the managing director of Laoluo English Training School, a start-up education service business from November 2008 to May 2011. He was the general administration staff at NEC China Co., Ltd. from April 2005 to April 2007. Mr.
We have also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company. 123 Table of Contents C.
Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company. C. Board Practices Board of Directors Our board of directors consists of six directors.
Name Restricted Share Units for Class A Ordinary Shares Date of Grant Benson Bing Chung Tam * May 17, 2016 * March 7, 2017 * May 2, 2018 * April 15, 2019 * April 15, 2020 * April 15, 2021 * April 15, 2022 Dave Daqing Qi * May 17, 2016 * March 7, 2017 * May 2, 2018 * April 15, 2019 * April 15, 2020 * April 15, 2021 * April 15, 2022 Yongming Wu * April 15, 2019 * April 15, 2020 * April 15, 2021 * April 15, 2022 Total 251,875 * Aggregate number of shares represented by all restricted share units granted to the person account for less than 1% of our total outstanding ordinary shares on an as-converted basis.
Name Restricted Share Units for Class A Ordinary Shares Date of Grant Benson Bing Chung Tam * April 15, 2020 * April 15, 2021 * April 15, 2022 * April 6, 2023 Dave Daqing Qi * April 15, 2020 * April 15, 2021 * April 15, 2022 * April 6, 2023 Total 193,750 * Aggregate number of shares represented by all restricted share units granted to the person account for less than 1% of our total outstanding ordinary shares on an as-converted basis.
Qi was an associate professor at the School of Accounting of the Chinese University of Hong Kong. Dr. Qi also serves as director of a number of public companies, such as Sohu.com (Nasdaq: SOHU), Yunfeng Financial Group Limited (HKEx: 0376), Sinomedia Holding Limited (HKEx: 0623), Boison Finance Group Limited (HKEx: 0888) and Dalian Haidao International Holding Limited (HKEx: 6862).
Qi also serves as director of a number of public companies, such as Sohu.com (Nasdaq: SOHU), Yunfeng Financial Group Limited (HKEx: 0376), Sinomedia Holding Limited (HKEx: 0623), Boison Finance Group Limited (HKEx: 0888) and Dalian Haidao International Holding Limited (HKEx: 6862).
The committee or the full board of directors, as applicable, will determine the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each grant.
Our board of directors or one or more committees consisting solely of directors designated by our board will administer the 2012 Plan. The committee or the full board of directors, as applicable, will determine the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each grant.
However, we may grant options that are intended to qualify as incentive share options only to our employees and employees of our parent companies and subsidiaries. Acceleration of Awards upon Change in Control.
We may grant awards to our employees, directors, consultants, or other individuals as determined, authorized and approved by the plan administrator. However, we may grant options that are intended to qualify as incentive share options only to our employees and employees of our parent companies and subsidiaries. Acceleration of Awards upon Change in Control.
In accordance with the mainland China law, our mainland China subsidiaries and consolidated affiliated entities and their subsidiaries 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, maternity insurance, work-related injury insurance and a housing provident fund.
In accordance with the mainland China law, our mainland China subsidiaries and the VIEs and their subsidiaries 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, maternity insurance, work-related injury insurance and a housing provident fund. 117 Table of Contents Share Incentive Plans 2012 Plan In November 2012, we adopted the 2012 Plan, which was amended and restated in October 2013.
As of December 31, 2022 Function: Research and development 1,071 Customer service, sales and marketing 205 Operations and cost 199 General administration 230 Total 1,705 In addition to our employees, we used 1,173 contract workers dispatched to us by staffing agencies as of December 31, 2022.
As of December 31, 2023 Function: Research and development 864 Customer service, sales and marketing 148 Operations and cost 157 General administration 213 Total 1,382 124 Table of Contents In addition to our employees, we used 957 contract workers dispatched to us by staffing agencies as of December 31, 2023.
Employees We had 2,394, 2,051 and 1,705 employees as of December 31, 2020, 2021 and 2022, respectively. Geographically, as of December 31, 2022, we had 1,636 employees in Beijing, 35 employees in Chengdu, three employees in Hong Kong, eight employees in Guangzhou, 16 employees in Tianjin and seven employees in Hainan.
Employees We had 2,051, 1,705 and 1,382 employees as of December 31, 2021, 2022 and 2023, respectively. Geographically, as of December 31, 2023, we had 1,328 employees in Beijing, 24 employees in Chengdu, 11 employees in Hong Kong, six employees in Guangzhou, 10 employees in Tianjin and three employees in Hainan.
Directors and Executive Officers Age Position/Title Yan Tang 44 Chairman and Chief Executive Officer Li Wang 39 Executive Director and President Ho Kee Harry Man 46 Director Sichuan Zhang 39 Director and Chief Operating Officer Benson Bing Chung Tam 59 Independent Director Dave Daqing Qi 59 Independent Director Yongming Wu 48 Independent Director Cathy Hui Peng 44 Chief Financial Officer Mr.
Directors and Executive Officers Age Position/Title Yan Tang 45 Chairman and Chief Executive Officer Li Wang 40 Executive Director and President Sichuan Zhang 40 Director and Chief Operating Officer Dave Daqing Qi 60 Independent Director Benson Bing Chung Tam 60 Independent Director Cathy Hui Peng 45 Chief Financial Officer Jianhua Wen 34 Chief Technology Officer Mr.
As of March 31, 2023, we have granted options to purchase 44,919,207 Class A ordinary shares (excluding those that have been forfeited and canceled) and 960,001 restricted share units under our 2014 Plan, of which options to purchase an aggregate of 23,842,913 Class A ordinary shares remained outstanding and 251,875 restricted share units remained outstanding.
As of March 31, 2024, we have granted options to purchase 52,027,897 Class A ordinary shares (excluding those already forfeited and canceled) and 1,015,001 restricted share units (excluding those that have been forfeited) under our 2014 Plan, of which options to purchase an aggregate of 25,713,001 Class A ordinary shares remained outstanding and 193,750 restricted share units remained outstanding.
Tam currently also serves as a director of certain privately held companies. Mr. Tam received his master’s degree in computer science from Oxford University in 1986 and his bachelor’s degree in civil engineering from Imperial College of London University in 1984. Dr. Dave Daqing Qi has served as our independent director since December 2014. Dr.
Tam currently also serves as a director of certain privately held companies. Mr. Tam received his master’s degree in computer science from Oxford University in 1986 and his bachelor’s degree in civil engineering from Imperial College of London University in 1984. Ms. Cathy Hui Peng has been our chief financial officer since July 2022. Prior to the current role, Ms.
Share Incentive Plans 2012 Plan In November 2012, we adopted the 2012 Plan, which was amended and restated in October 2013. The maximum aggregate number of shares which may be issued pursuant to all awards under the 2012 Plan is 44,758,220 Class A ordinary shares.
The maximum aggregate number of shares which may be issued pursuant to all awards under the 2012 Plan is 44,758,220 Class A ordinary shares. With the adoption of our 2014 Plan, we no longer issue incentive shares under the 2012 Plan. The 2012 Plan has expired in November 2022.
The following paragraphs summarize the terms of the 2014 Plan. Types of Awards. The 2014 Plan permits the awards of options, restricted shares and restricted share units. Plan Administration. Our board or a committee of one or more members of our board duly authorized for the purpose of the 2014 Plan can act as the plan administrator. Award Agreement.
Our board or a committee of one or more members of our board duly authorized for the purpose of the 2014 Plan can act as the plan administrator. Award Agreement. Options, restricted shares or restricted share units granted under the 2014 Plan are evidenced by an award agreement that sets forth the terms, conditions and limitations for each grant. Eligibility.
Tam founded Venturous Group, a global CEO network based in Beijing, and has been serving as its chairman since then. From 2002 to February 2012, Mr. Tam was a partner and head of technology investments at Fidelity Growth Partners Asia (formerly named Fidelity Asia Ventures), where he led a team of five professionals focused on technology investment.
Tam was a partner and head of technology investments at Fidelity Growth Partners Asia (formerly named Fidelity Asia Ventures), where he led a team of five professionals focused on technology investment. Prior to joining Fidelity Growth Partners Asia, Mr.
Ms. Zhang is the spouse of Mr. Yan Tang, our co-founder, chairman and Chief Executive Officer. 117 Table of Contents Mr. Benson Bing Chung Tam has served as our independent director since December 2014. Mr. Tam is a chartered accountant. In March 2012, Mr.
Ms. Zhang is the spouse of Mr. Yan Tang, our co-founder, chairman and Chief Executive Officer. Dr. Dave Daqing Qi has served as our independent director since December 2014. Dr. Qi is a professor of accounting and the former associate dean of the Cheung Kong Graduate School of Business.
With the adoption of our 2014 Plan, we no longer issue incentive shares under the 2012 Plan. As of March 31, 2023, options to purchase 28,731,914 Class A ordinary shares (excluding those that have been forfeited) had been granted under the 2012 Plan, of which options to purchase an aggregate of 3,525,676 Class A ordinary shares remained outstanding.
As of March 31, 2024, options to purchase 28,706,914 Class A ordinary shares (excluding those already forfeited and expired) had been granted under the 2012 Plan, of which options to purchase an aggregate of 2,886,224 Class A ordinary shares remained outstanding. The following paragraphs summarize the principal terms of the 2012 Plan. Plan Administration.
Man led investments in Momo (Nasdaq: MOMO), XPENG (US: XPEV), 21Vianet (Nasdaq: VNET), iKang (Nasdaq: KANG), Sungy Mobile (Nasdaq: GOMO), Editgrid (sold to Apple), Career International (SZ: 300662), Didi Chuxing. Ms. Sichuan Zhang has been our director and chief operating officer since March 2023. She previously served as our director from April 2012 to November 2017. Ms.
Wang received a bachelor’s degree in management from Beijing University of Aeronautics and Astronautics in China in 2004. 116 Table of Contents Ms. Sichuan Zhang has been our director and chief operating officer since March 2023. She previously served as our director from April 2012 to November 2017. Ms.
Removed
Ho Kee Harry Man has been our director since June 2021 and had served as our director from October 2013 to December 2014. Mr. Man joined Matrix Partners China as a founding member of the team with a focus on investments in the mobile internet sector in 2008. Prior to Matrix, Mr.
Added
Benson Bing Chung Tam has served as our independent director since December 2014. Mr. Tam is a chartered accountant. In March 2012, Mr. Tam founded Venturous Group, a global CEO network based in Beijing, and has been serving as its chairman since then. From 2002 to February 2012, Mr.
Removed
Man was Partner at WI Harper Group and led investments in their China office in the TMT sector. Before WI Harper, Mr. Man led the corporate development teams of two US listed internet and mobile companies, and helped Linktone Ltd. (Nasdaq: LTON) and chinadotcom (Nasdaq: CHINA) in their investments in various sectors respectively. Mr.
Added
Jianhua Wen has been our chief technology officer since April 15, 2024. Mr. Wen joined us in August 2011 and held various positions, including development engineer, technical director and vice president of technology, overseeing our app development and AI department. Prior to joining us, from July 2010 to June 2011, Mr. Wen worked as a development engineer at Huawen Group.
Removed
Man started his career as a management consultant with Arthur Andersen in 1998. Mr. Man has been investing in China since 2000, and always focuses on early stage internet and mobile sectors. During the past 15 years, Mr.
Added
The following paragraphs summarize the terms of the 2014 Plan. 118 Table of Contents Types of Awards. The 2014 Plan permits the awards of options, restricted shares and restricted share units. Plan Administration.
Removed
Mr. Wu is also a director and founding partner of Vision Plus Capital and a co-founder of Alibaba Group. Mr. Wu founded Vision Plus Capital in 2015 and has led several key business segments of Alibaba Group. Ms. Cathy Hui Peng has been our chief financial officer since July 2022. Prior to the current role, Ms.
Added
The following table summarizes, as of March 31, 2024, the outstanding restricted share units granted to certain directors under the 2014 Plan.
Removed
The following paragraphs summarize the principal terms of the 2012 Plan. 118 Table of Contents Plan Administration. Our board of directors or one or more committees consisting solely of directors designated by our board will administer the 2012 Plan.
Removed
Subject to any shareholder approval, our board of directors may, at any time, terminate or, from time to time, amend, modify or suspend this 2012 Plan. Unless terminated earlier, the 2012 Plan will terminate at the close of business on October 31, 2022. 2014 Plan We adopted the 2014 Plan in November 2014.
Removed
Options, restricted shares or restricted share units granted under the 2014 Plan are evidenced by an award agreement that sets forth the terms, conditions and limitations for each grant. 119 Table of Contents Eligibility. We may grant awards to our employees, directors, consultants, or other individuals as determined, authorized and approved by the plan administrator.
Removed
Board Practices Board of Directors Our board of directors consists of seven directors. A director is not required to hold any shares in our company to qualify to serve as a director.

Item 7. Management's Discussion & Analysis

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

22 edited+2 added−7 removed9 unchanged
Biggest changeShares Beneficially Owned Ordinary Shares Beneficially Owned Voting Power Directors and executive officers**: Class A Ordinary Shares Class B Ordinary Shares %(1) %(2) Yan Tang (3) 8,161,576 80,364,466 22.9 73.2 Li Wang (4) * — * * Ho Kee Harry Man (5) * — * * Sichuan Zhang (6) 8,161,576 80,364,466 22.9 73.2 Benson Bing Chung Tam (7) * — * * Dave Daqing Qi (8) * — * * Cathy Hui Peng (9) * — * * Yongming Wu (10) * — * * All directors and executive officers as a group 11,375,994 80,364,466 23.6 73.3 Principal Shareholders: Gallant Future Holdings Limited (11) — 72,364,466 19.2 65.7 J O Hambro Capital Management Limited (12) 23,260,894 — 6.2 2.1 Renaissance Technologies LLC (13) 19,794,796 — 5.2 1.8 Invesco Ltd.
Biggest changeThese shares, however, are not included in the computation of the percentage ownership of any other person. 125 Table of Contents Shares Beneficially Owned Ordinary Shares Beneficially Owned Voting Power Directors and executive officers**: Class A Ordinary Shares Class B Ordinary Shares % (1) % (2) Yan Tang (3) 9,625,850 80,364,466 24.3 74.3 Li Wang (4) * — * * Sichuan Zhang (5) 9,625,850 80,364,466 24.3 74.3 Dave Daqing Qi (6) * — * * Benson Bing Chung Tam (7) * — * * Cathy Hui Peng (8) * — * * Jianhua Wen — — — — All directors and executive officers as a group 12,133,751 80,364,466 24.9 74.5 Principal Shareholders: Gallant Future Holdings Limited (9) — 72,364,466 19.5 66.2 J O Hambro Capital Management Limited (10) 23,260,894 — 6.3 2.1 Renaissance Technologies LLC (11) 18,870,276 — 5.1 1.7 Invesco Ltd.
As a result, we operate our relevant business through contractual arrangements among our mainland China subsidiaries, the consolidated affiliated entities and the shareholders of the consolidated affiliated entities. For a description of these contractual arrangements, see “Item 4. Information on the Company—C.
As a result, we operate our relevant business through contractual arrangements among our mainland China subsidiaries, the VIEs and the shareholders of the VIEs. For a description of these contractual arrangements, see “Item 4. Information on the Company—C.
(3) Represent (i) 72,364,466 Class B ordinary shares held by Gallant Future Holdings Limited, (ii) 8,000,000 Class B ordinary shares held by New Heritage Global Limited, and (iii) 8,161,576 Class A ordinary shares that Mr. Tang is entitled to acquire within 60 days from March 31, 2023 upon exercise of share options held by him under our share incentive plans.
(3) Represent (i) 72,364,466 Class B ordinary shares held by Gallant Future Holdings Limited, (ii) 8,000,000 Class B ordinary shares held by New Heritage Global Limited, and (iii) 9,625,850 Class A ordinary shares that Mr. Tang is entitled to acquire within 60 days from March 31, 2024 upon exercise of share options held by him under our share incentive plans.
(13) Represents 19,794,796 Class A ordinary shares represented by American depositary receipts held by Renaissance Technologies Holdings Corporation, a company incorporated in Delaware with its business address at 800 Third Avenue, New York, New York 10022, United States and majority-owned by Renaissance Technologies LLC, based on a Schedule 13G/A jointly filed by the two entities on February 13, 2023.
(11) Represents 18,870,276 Class A ordinary shares represented by American depositary receipts held by Renaissance Technologies Holdings Corporation, a company incorporated in Delaware with its business address at 800 Third Avenue, New York, New York 10022, United States and majority-owned by Renaissance Technologies LLC, based on a Schedule 13G/A jointly filed by the two entities on February 13, 2024.
(1) Percentage ownership is calculated by dividing the number of Class A and Class B ordinary shares beneficially owned by a given person or group by the sum of (i) 377,655,265 ordinary shares and (ii) 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.
(1) Percentage ownership is calculated by dividing the number of Class A and Class B ordinary shares beneficially owned by a given person or group by the sum of (i) 370,162,906 ordinary shares and (ii) 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.
Tam is Room 1-4-2503, No. 2 East Xibahe, Chaoyang District, Beijing, China. (8) Represents 420,903 Class A ordinary shares and ADSs held by Mr. Qi and 21,875 Class A ordinary shares that Mr. Qi is entitled to acquire within 60 days from March 31, 2022 upon the exercise of share options held by Mr. Qi under our share incentive plans.
Tam and Class A ordinary shares that Mr. Tam is entitled to acquire within 60 days from March 31, 2022 upon the exercise of share options held by Mr. Tam under our share incentive plans. The business address of Mr. Tam is Room 1-4-2503, No. 2 East Xibahe, Chaoyang District, Beijing, China. (8) Represents Class A ordinary shares that Ms.
The business address of Dr. Qi is Room 332, Tower E3, Oriental Plaza, 1 East Chang An Avenue, Dong Cheng District, Beijing 100738, China. (9) Represents 197,626 Class A ordinary shares that Ms. Peng is entitled to acquire within 60 days from March 31, 2023 upon exercise of share options held by her under our share incentive plans.
Qi is entitled to acquire within 60 days from March 31, 2022 upon the exercise of share options held by Mr. Qi under our share incentive plans. The business address of Dr. Qi is Room 332, Tower E3, Oriental Plaza, 1 East Chang An Avenue, Dong Cheng District, Beijing 100738, China. (7) Represents Class A ordinary shares held by Mr.
(6) Includes (i) 72,364,466 Class B ordinary shares held by Gallant Future Holdings Limited, (ii) 8,000,000 Class B ordinary shares held by New Heritage Global Limited, and (iii) 8,161,576 Class A ordinary shares that Mr. Tang is entitled to acquire within 60 days from March 31, 2023 upon exercise of share options held by him under our share incentive plans.
Wang is entitled to acquire within 60 days from March 31, 2024 upon exercise of share options held by him under our share incentive plans. (5) Includes (i) 72,364,466 Class B ordinary shares held by Gallant Future Holdings Limited, (ii) 8,000,000 Class B ordinary shares held by New Heritage Global Limited, and (iii) 9,625,850 Class A ordinary shares that Mr.
Gallant Future Holdings Limited is incorporated in the British Virgin Islands and is wholly-owned by a family trust controlled by Mr. Tang. New Heritage Global Limited is a limited company incorporated in the British Virgin Islands and is wholly beneficially owned by Mr.
Gallant Future Holdings Limited is incorporated in the British Virgin Islands and is wholly-owned by a family trust controlled by Mr. Tang. New Heritage Global Limited is a limited company incorporated in the British Virgin Islands and is wholly beneficially owned by Mr. Tang through a family trust. (4) Represents Class A ordinary shares that Mr.
Yongming Wu, the business address for our executive officers and directors is 20 th Floor, Block B, Tower 2, Wangjing SOHO, No. 1 Futongdong Street, Chaoyang District, Beijing 100102, People’s Republic of China.
Dave Daqing Qi, the business address for our executive officers and directors is 20th Floor, Block B, Tower 2, Wangjing SOHO, No. 1 Futongdong Street, Chaoyang District, Beijing 100102, People’s Republic of China.
(12) Represents 23,260,894 Class A ordinary shares represented by American depositary receipts held by J O Hambro Capital Management Limited, a company incorporated in England and Wales with its business address at Level 3, 1 St James’s Market, London SW1Y 4AH, United Kingdom, based on a Schedule 13G filed by J O Hambro Capital Management Limited on February 11, 2020.
Box 905, Quasticky Building, Road Town, Tortola, British Virgin Islands. 126 Table of Contents (10) Represents 23,260,894 Class A ordinary shares represented by American depositary receipts held by J O Hambro Capital Management Limited, a company incorporated in England and Wales with its business address at Level 3, 1 St James’s Market, London SW1Y 4AH, United Kingdom, based on a Schedule 13G filed by J O Hambro Capital Management Limited on February 11, 2020.
In addition, we owed RMB19.5 million, RMB5.0 million and RMB9.2 million (US$$1.3 million) in unpaid revenue sharing of live video service to Hunan Qindao Network Media Technology Co., Ltd. as of December 31, 2020, 2021 and 2022, respectively. In 2020, we paid RMB164,169 to Beijing Shiyue Haofeng Media Co.
In addition, we owed RMB5.0 million, RMB9.2 million and RMB4.3 million (US$0.6 million) in unpaid revenue sharing of live video service to Hunan Qindao Network Media Technology Co., Ltd. as of December 31, 2021, 2022 and 2023, respectively.
Tang has sole power to direct the voting and disposition of shares of our company directly or indirectly held by Gallant Future Holdings Limited. The registered address of Gallant Future Holdings Limited is Sertus Chambers, P.O. Box 905, Quasticky Building, Road Town, Tortola, British Virgin Islands.
Yan Tang. Mr. Tang has sole power to direct the voting and disposition of shares of our company directly or indirectly held by Gallant Future Holdings Limited. The registered address of Gallant Future Holdings Limited is Sertus Chambers, P.O.
(14) 18,859,080 — 5.0 1.7 Notes: * Less than 1% of our total outstanding Class A and Class B ordinary shares. ** Except for Mr. Benson Bing Chung Tam, Mr. Dave Daqing Qi and Mr.
(12) 18,731,890 — 5.1 1.7 Notes: * Less than 1% of our total outstanding Class A and Class B ordinary shares. ** Except for Mr. Benson Bing Chung Tam and Dr.
(14) Represents 18,859,080 Class A ordinary shares represented by American depositary receipts held by Invesco Ltd., a company incorporated in Bermuda with its business address at 1555 Peachtree Street NE, Suite 1800, Atlanta, GA 30309, based on a Schedule 13G filed by Invesco Ltd. on February 2, 2023.
(12) Represents 18,731,890 Class A ordinary shares represented by American depositary receipts held by Invesco Ltd., a company incorporated in Bermuda with its business address at 1331 Spring Street NW, Suite 2500, Atlanta, GA 30309, based on a Schedule 13G/A filed by Invesco Ltd. on February 1, 2024.
In connection with revenue sharing with talent agencies of live video service, we paid RMB354.3 million, RMB253.7 million and RMB176.7 million (US$25.6 million) to Hunan Qindao Network Media Technology Co., Ltd. in 2020, 2021 and 2022, respectively.
Organizational Structure—Contractual Arrangements with the VIEs and Their Respective Shareholders.” Transactions with Certain Related Parties In connection with revenue sharing with talent agencies of live video service, we paid RMB253.7 million, RMB176.7 million and RMB179.0 million (US$25.2 million) to Hunan Qindao Network Media Technology Co., Ltd. in 2021, 2022 and 2023, respectively.
Gallant Future Holdings Limited is incorporated in the British Virgin Islands and is wholly-owned by a family trust controlled by Ms. Zhang’s husband, Mr. Yan Tang. New Heritage Global Limited is a limited company incorporated in the British Virgin Islands and is wholly beneficially owned by Mr. Tang through a family trust.
New Heritage Global Limited is a limited company incorporated in the British Virgin Islands and is wholly beneficially owned by Mr. Tang through a family trust. (6) Represents Class A ordinary shares and ADSs held by Mr. Qi and Class A ordinary shares that Mr.
To our knowledge, on the same basis of calculation as above, 91.9% of our total issued and outstanding Class A ordinary shares were held by one record shareholder in the United States, namely, Deutsche Bank Trust Company Americas, the depositary of our ADS program, which held 347,118,720 Class A ordinary shares represented by 173,559,360 ADSs, including 5,454,480 Class A ordinary shares underlying 2,727,240 ADSs that it held on reserve for our company for the purposes of future issuances upon the exercise or vesting of awards granted under our share incentive plans.
To our knowledge, as of March 31, 2024, 316,786,606 of our Class A ordinary shares represented by 158,393,303 ADSs were held by one record shareholder in the United States, namely, Deutsche Bank Trust Company Americas, the depositary of our ADS program, including 1,488,292 Class A ordinary shares underlying 744,146 ADSs that it held on reserve for our company for the purposes of future issuances upon the exercise or vesting of awards granted under our share incentive plans.
We sold our entire equity interests in Beijing Santi Cloud Union Technology Co., Ltd. in November 2020. Employment Agreements and Indemnification Agreements See “Item 6. Directors, Senior Management and Employees—B. Compensation—Employment Agreements and Indemnification Agreements.” Share Incentive Plans See “Item 6. Directors, Senior Management and Employees—B. Compensation—Share Incentive Plans.” C. Interests of Experts and Counsel Not applicable.
Compensation—Employment Agreements and Indemnification Agreements.” Share Incentive Plans See “Item 6. Directors, Senior Management and Employees—B. Compensation—Share Incentive Plans.” C. Interests of Experts and Counsel Not applicable. 127 Table of Contents
(11) Represents 72,364,466 Class B ordinary shares held by Gallant Future Holdings Limited. Gallant Future Holdings Limited is a company incorporated in the British Virgin Islands and wholly-owned by a family trust controlled by Mr. Yan Tang. Mr.
Peng is entitled to acquire within 60 days from March 31, 2024 upon exercise of share options held by her under our share incentive plans. (9) Represents 72,364,466 Class B ordinary shares held by Gallant Future Holdings Limited. Gallant Future Holdings Limited is a company incorporated in the British Virgin Islands and wholly-owned by a family trust controlled by Mr.
Major Shareholders The following table sets forth information with respect to the beneficial ownership of our shares as of March 31, 2023 by: • each of our current directors and executive officers; and • each person known to us to own beneficially 5% or more of our total outstanding ordinary shares. 127 Table of Contents Percentage of beneficial ownership is based on a total of 377,655,265 outstanding ordinary shares of our company as of the date of March 31, 2023, comprising (i) 297,290,799 Class A ordinary shares, excluding the 5,454,480 Class A ordinary shares issued to our depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards granted under our share incentive plans, and (ii) 80,364,466 Class B ordinary shares.
Percentage of beneficial ownership is based on a total of 370,162,906 outstanding ordinary shares of our company as of the date of March 31, 2024, comprising (i) 289,798,440 Class A ordinary shares, excluding the 1,488,292 Class A ordinary shares issued to our depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards granted under our share incentive plans, and (ii) 80,364,466 Class B ordinary shares.
Tang through a family trust. 128 Table of Contents (4) Represents 2,151,790 Class A ordinary shares that Mr. Wang is entitled to acquire within 60 days from March 31, 2023 upon exercise of share options held by him under our share incentive plans.
Tang is entitled to acquire within 60 days from March 31, 2024 upon exercise of share options held by him under our share incentive plans. Gallant Future Holdings Limited is incorporated in the British Virgin Islands and is wholly-owned by a family trust controlled by Ms. Zhang’s husband, Mr. Yan Tang.
Removed
Item 7. Major Shareholders and Related Party Transactions A.
Added
Item 7. Major Shareholders and Related Party Transactions A. Major Shareholders The following table sets forth information with respect to the beneficial ownership of our shares as of March 31, 2024 by: • each of our current directors and executive officers; and • each person known to us to own beneficially 5% or more of our total outstanding ordinary shares.
Removed
These shares, however, are not included in the computation of the percentage ownership of any other person.
Added
We also provided a revenue sharing in advance of RMB27.3 million (US$3.8 million) as of December 31, 2023 to Hunan Qindao Network Media Technology Co. to support its business development, which should be deducted from the amount of revenue sharing to be paid in following years. Employment Agreements and Indemnification Agreements See “Item 6. Directors, Senior Management and Employees—B.
Removed
(5) Represents 1 Class A ordinary share held by Matrix Partners China II Hong Kong Limited, as reported on the Amendment No. 8 to the Schedule 13D filed by Matrix Partners China II Hong Kong Limited, among others, on March 21, 2018.
Removed
(7) Represents 325,348 Class A ordinary shares held by Mr. Tam and 21,875 Class A ordinary shares that Mr. Tam is entitled to acquire within 60 days from March 31, 2022 upon the exercise of share options held by Mr. Tam under our share incentive plans. The business address of Mr.
Removed
(10) Represents 61,875 Class A ordinary shares held by Mr. Wu and 13,125 Class A ordinary shares that Mr. Wu is entitled to acquire within 60 days from March 31, 2023 upon exercise of share options held by him under our share incentive plans. The business address of Mr. Wu is 8 Shenton Way, AXA Tower, #45-01, Singapore 068811.
Removed
Organizational Structure— Contractual Arrangements with the Consolidated Affiliated Entities and Their Respective Shareholders.” 129 Table of Contents Transactions with Certain Related Parties We provided RMB5.6 million for mobile marketing services in 2020 to Hunan Qindao Network Media Technology Co., Ltd., which is a subsidiary of Hunan Qindao Cultural Spread Ltd., a company in which we own 26.4% of its equity interest.
Removed
Ltd., a company in which we own 30.0% of its equity interests, in connection with revenue sharing with talent agencies of live video service. For the period from April to November 2020, we purchased bandwidth service for RMB8.9 million from Beijing Santi Cloud Union Technology Co., Ltd. and its wholly-owned subsidiary, Beijing Santi Cloud Time Technology.

Other MOMO 10-K year-over-year comparisons