View:
United States securities and exchange commission logo
August 24, 2021
Mingjun Lin
Chief Executive Officer
Kaixin Auto Holdings
4/F, Tower D, Building 15
No.5 Jiangtai Road
Chaoyang District, Beijing 100015
People s Republic of China
Re: Kaixin Auto
Holdings
Registration
Statement on Form F-3
Filed August 4,
2021
File No. 333-258450
Dear Mr. Lin:
We have limited our review of your registration statement to
those issues we have
addressed in our comments. In some of our comments, we may ask you to
provide us with
information so we may better understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form F-3 Filed August 4, 2021
Prospectus Cover Page, page i
1. Please disclose
prominently on the prospectus cover page that you are not a Chinese
operating company but a
Cayman Islands holding company with operations conducted by
your subsidiaries and
through contractual arrangements with variable interest entities
(VIEs) based in China
and that this structure involves unique risks to investors. Explain
whether the VIE
structure is used to replicate foreign investment in Chinese-based
companies where Chinese
law prohibits direct foreign investment in the operating
companies, and disclose
that investors may never directly hold equity interests in the
Chinese operating
company. Your disclosure should acknowledge that Chinese regulatory
Mingjun Lin
FirstName
Kaixin AutoLastNameMingjun Lin
Holdings
Comapany
August 24, NameKaixin
2021 Auto Holdings
August
Page 2 24, 2021 Page 2
FirstName LastName
authorities could disallow this structure, which would likely result
in a material change in
your operations and/or value of your securities, including that it
could cause the value of
such securities to significantly decline or become worthless. Provide
a cross-reference to
your detailed discussion of risks facing the company and the offering
as a result of this
structure.
2. Provide prominent disclosure about the legal and operational risks
associated with being
based in or having the majority of the company s operations in
China. Your disclosure
should make clear whether these risks could result in a material
change in your operations
and/or the value of your securities or could significantly limit or
completely hinder your
ability to offer or continue to offer securities to investors and
cause the value of such
securities to significantly decline or be worthless. Your disclosure
should address how
recent statements and regulatory actions by China s government, such
as those related to
the use of variable interest entities and data security or
anti-monopoly concerns, has or
may impact the company s ability to conduct its business, accept
foreign investments, or
list on an U.S. or other foreign exchange. Your prospectus summary
should address, but
not necessarily be limited to, the risks highlighted on the prospectus
cover page.
3. Clearly disclose how you will refer to the holding company,
subsidiaries, and VIEs when
providing the disclosure throughout the document so that it is clear
to investors which
entity the disclosure is referencing and which subsidiaries or
entities are conducting the
business operations. Refrain from using terms such as we or
our when describing
activities or functions of the VIEs. Disclose clearly the entity
(including the domicile) in
which investors are purchasing their interest.
Our Company, page 1
4. Please revise to add a prospectus summary and address the following
comments in that
section.
5. Disclose clearly that the company uses a structure that involves VIEs
based in China and
what that entails and provide early in the summary a diagram of the
company s corporate
structure, including who the equity ownership interests are of each
entity. Describe all
contracts and arrangements through which you purport to obtain
economic rights and
exercise control that results in consolidation of the VIEs' operations
and financial results
into your financial statements. Identify clearly the entity in which
investors are
purchasing their interest and the entities in which the company s
operations are
conducted. Describe the relevant contractual agreements between the
entities and how
this type of corporate structure may affect investors and the value of
their investment,
including how and why the contractual arrangements may be less
effective than direct
ownership and that the company may incur substantial costs to enforce
the terms of the
arrangements. Disclose the uncertainties regarding the status of the
rights of the Cayman
Islands holding company with respect to its contractual arrangements
with the VIEs, its
founders and owners, and the challenges the company may face enforcing
these
contractual agreements due to uncertainties under Chinese law and
jurisdictional limits.
Mingjun Lin
FirstName
Kaixin AutoLastNameMingjun Lin
Holdings
Comapany
August 24, NameKaixin
2021 Auto Holdings
August
Page 3 24, 2021 Page 3
FirstName LastName
6. Please revise your disclosure to provide a summary of risk factors. In
your summary of
risk factors, disclose the risks that your corporate structure and
being based in or having
the majority of the company s operations in China poses to
investors. In particular,
describe the significant regulatory, liquidity, and enforcement risks
with cross-references
to the more detailed discussion of these risks in the prospectus. For
example, specifically
discuss risks arising from the legal system in China, including risks
and uncertainties
regarding the enforcement of laws and that rules and regulations in
China can change
quickly with little advance notice; and the risk that the Chinese
government may intervene
or influence your operations at any time, or may exert more control
over offerings
conducted overseas and/or foreign investment in China-based issuers,
which could result
in a material change in your operations and/or the value of your
securities. Acknowledge
any risks that any actions by the Chinese government to exert more
oversight and control
over offerings that are conducted overseas and/or foreign investment
in China-based
issuers could significantly limit or completely hinder your ability to
offer or continue to
offer securities to investors and cause the value of such securities
to significantly decline
or be worthless.
7. Disclose each permission that you, your subsidiaries or your VIEs are
required to obtain
from Chinese authorities to operate and issue these securities to
foreign investors. State
whether you, your subsidiaries, or VIEs are covered by permissions
requirements from the
CSRC, CAC or any other entity that is required to approve of the VIEs'
operations, and
state affirmatively whether you have received all requisite
permissions and whether any
permissions have been denied.
8. Provide a clear description of how cash is transferred through your
organization. Disclose
your intentions to distribute earnings or settle amounts owed under
the VIE agreements.
Quantify any cash flows and transfers of other assets by type that
have occurred between
the holding company, its subsidiaries, and consolidated VIEs, and
direction of transfer.
Quantify any dividends or distributions that a subsidiary or
consolidated VIEs have made
to the holding company and which entity made such transfer, and their
tax consequences.
Similarly quantify dividends or distributions made to U.S. investors,
the source, and their
tax consequences. Describe any restrictions on foreign exchange and
your ability to
transfer cash between entities, across borders, and to U.S. investors.
Describe any
restrictions and limitations on your ability to distribute earnings
from your businesses,
including subsidiaries and/or consolidated VIEs, to the parent company
and U.S. investors
as well as the ability to settle amounts owed under the VIE
agreements.
9. We note that the consolidated VIEs constitute a material part of your
consolidated
financial statements. Please provide in tabular form the condensed
consolidating schedule
- depicting the financial position, cash flows and results of
operations for the parent, the
consolidated variable interest entities, and any eliminating
adjustments separately - as of
the same dates and for the same periods for which audited consolidated
financial
statements are required. Highlight the financial statement information
related to the
variable interest entities and parent, so an investor may evaluate the
nature of assets held
Mingjun Lin
FirstName
Kaixin AutoLastNameMingjun Lin
Holdings
Comapany
August 24, NameKaixin
2021 Auto Holdings
August
Page 4 24, 2021 Page 4
FirstName LastName
by, and the operations of, entities apart from the variable interest
entities, which includes
the cash held and transferred among entities.
10. Disclose that trading in your securities may be prohibited under the
Holding Foreign
Companies Accountable Act if the PCAOB determines that it cannot
inspect or fully
investigate your auditor, and that as a result an exchange may
determine to delist your
securities. If the PCAOB has been or is currently unable to inspect
your auditor, revise
your disclosure to so state.
Risk Factors, page 3
11. Revise your risk factors to acknowledge that if the PRC government
determines that the
contractual arrangements constituting part of your VIE structure do
not comply with PRC
regulations, or if these regulations change or are interpreted
differently in the future, your
securities may decline in value or become worthless if you are unable
to assert your
contractual control rights over the assets of your PRC subsidiaries
that conduct all or
substantially all of your operations.
12. Given the Chinese government s significant oversight and discretion
over the conduct of
your business, please revise to separately highlight the risk that the
Chinese government
may intervene or influence your operations at any time, which could
result in a material
change in your operations and/or the value of your securities. Also,
given recent
statements by the Chinese government indicating an intent to exert
more oversight and
control over offerings that are conducted overseas and/or foreign
investment in China-
based issuers, acknowledge the risk that any such action could
significantly limit or
completely hinder your ability to offer or continue to offer
securities to investors and
cause the value of such securities to significantly decline or be
worthless.
13. In light of recent events indicating greater oversight by the
Cyberspace Administration of
China over data security, please revise your disclosure to explain how
this oversight
impacts your business and your offering and to what extent you believe
that you are
compliant with the regulations or policies that have been issued by
the CAC to date.
14. Please add a risk factor to provide additional detail that addresses
limitations on the ability
of U.S. regulators, such as the Department of Justice, the SEC, and
other authorities, to
conduct investigations and inspections within China. Please ensure
that you acknowledge
Article 177 of PRC Securities Law effective March 2020, possibly
further limiting an
overseas regulator from conducting investigations or from collecting
evidence within
China. Refer to CF Disclosure Guidance Topic No. 10.
15. Please revise your disclosure to more specifically discuss the risks
related to the
following:
whether and how your audit committee has taken the lack of
PCAOB inspection into
account in connection with the oversight of the outside audit
firm and its procedures;
and
Mingjun Lin
Kaixin Auto Holdings
August 24, 2021
Page 5
how Chinese governmental authorities have significant
discretion that can be used to
influence how the company conducts its business operations.
Refer to CF Disclosure Guidance Topic No. 10.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Scott Anderegg at 202-551-3342 or Jennifer L pez at
202-551-
3792 with any questions.
FirstName LastNameMingjun Lin Sincerely,
Comapany NameKaixin Auto Holdings
Division of
Corporation Finance
August 24, 2021 Page 5 Office of Trade &
Services
FirstName LastName