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United States securities and exchange commission logo
August 12, 2022
Mingjun Lin
Chief Executive Officer
Kaixin Auto Holdings
9/F, Tower A, Dongjin International Center
Huagong Road
Chaoyang District, Beijing 100015
People s Republic of China
Re: Kaixin Auto
Holdings
Amendment No. 1 to
Registration Statement on Form F-3
Filed July 18, 2022
File No. 333-258450
Dear Mr. Lin:
We have reviewed your amended registration statement and have the
following
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.
Unless we note
otherwise, our references to prior comments are to comments in our
August 24, 2021 letter.
Registration Statement on Form F-3
Cover Page
1. We note your amended
disclosure in response to comment 2 and reissue in part. Please
discuss the impact
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, may have on
the company's ability to conduct business, accept foreign
investments, or list on
a U.S. or other foreign exchange. In this regard, we note your
disclosure that "[i]t
is highly uncertain what future impact such modified or new laws and
regulations will have
on our daily business operations, the ability to accept foreign
Mingjun Lin
FirstName
Kaixin AutoLastNameMingjun Lin
Holdings
Comapany
August 12, NameKaixin
2022 Auto Holdings
August
Page 2 12, 2022 Page 2
FirstName LastName
investments and our continued listing on the Nasdaq Stock Market."
Please also provide a
cross-reference to the relevant risk factor(s).
2. Please disclose, if true, that your subsidiaries and/or the VIEs
conduct operations in
China, that the VIEs are consolidated for accounting purposes but are
not entities in which
you own equity, and that the holding company does not conduct
operations.
3. Please provide a description of how cash is transferred through your
organization and
disclose your intentions to distribute earnings or settle amounts owed
under the VIE
agreements. State whether any transfers, dividends, or distributions
have been made to
date between the holding company, its subsidiaries, and the
consolidated VIEs, or to
investors, and quantify the amounts where applicable. Please provide
cross-references to
the condensed consolidating schedule and the consolidated financial
statements.
4. To the extent you have cash management policies that dictate how funds
are transferred
between you, your subsidiaries, the consolidated VIEs or investors,
summarize the
policies on your cover page and in the prospectus summary, and
disclose the source of
such policies (e.g., whether they are contractual in nature, pursuant
to regulations, etc.);
alternatively, state on the cover page and in the prospectus summary
that you have no
such cash management policies that dictate how funds are transferred.
Provide a cross-
reference on the cover page to the discussion of this issue in the
prospectus summary.
5. Please amend your disclosure here and in the summary risk factors and
risk factors
sections to state that, to the extent cash or assets in the business
are in the PRC/Hong
Kong or a PRC/Hong Kong entity, the funds or assets may not be
available to fund
operations or for other use outside of the PRC/Hong Kong due to
interventions in or the
imposition of restrictions and limitations on the ability of you, your
subsidiaries, or the
consolidated VIEs by the PRC government to transfer cash or assets. On
the cover page,
provide cross-references to these other discussions.
6. We note your response to comment 3 and we reissue the comment in part.
Please refrain
from using terms such as "we" or "our" when describing activities or
functions of a VIE.
In this regard, we note references to "our VIEs" throughout the
registration statement.
Please revise.
7. Discuss whether there are limitations on your ability to transfer cash
between you, your
subsidiaries, the consolidated VIEs or investors. Provide a
cross-reference to your
discussion of this issue in your summary, summary risk factors, and
risk factors sections,
as well.
Prospectus Summary, page 1
8. Please revise your graphics on pages 2 and 3 so that the text is
legible.
9. We note your disclosure that the Cayman Islands holding company
controls and receives
the economic benefits of the VIEs' business operations through
contractual agreements
between the VIEs and your Wholly Foreign-Owned Enterprises (WFOEs) and
that those
Mingjun Lin
FirstName
Kaixin AutoLastNameMingjun Lin
Holdings
Comapany
August 12, NameKaixin
2022 Auto Holdings
August
Page 3 12, 2022 Page 3
FirstName LastName
agreements are designed to provide your WFOEs with the power, rights,
and obligations
equivalent in all material respects to those they would possess as the
principal equity
holder of the VIE. We also note your disclosure that the VIE structure
is used to replicate
foreign investment in China-based companies. However, neither the
investors in the
holding company nor the holding company itself have an equity
ownership in, direct
foreign investment in, or control of, through such ownership or
investment, the
VIEs. Accordingly, please refrain from implying that the contractual
agreements are
equivalent to equity ownership in the business of the VIEs. Any
references to control or
benefits that accrue to you because of the VIEs should be limited to a
clear description of
the conditions you have satisfied for consolidation of the VIEs under
U.S. GAAP.
Additionally, your disclosure should clarify that you are the primary
beneficiary of the
VIEs for accounting purposes.
10. We note your disclosure that "our consolidated affiliated Chinese
entities do not have to
obtain any requisite licenses and permits from the PRC government
authorities that are
material for the business operations of our holding company, our
subsidiaries and the
VIEs in China." Please revise to clarify whether you, your
subsidiaries, or VIEs are
covered by permissions requirements from the China Securities
Regulatory Commission
(CSRC), Cyberspace Administration of China (CAC) or any other
governmental agency
that is required to approve the VIE's operations and state
affirmatively whether you have
received all requisite permissions or approvals and whether any
permissions or approvals
have been denied. Please also describe the consequences to you and
your investors if you,
your subsidiaries, or the VIEs: (i) do not receive or maintain
requisite permissions or
approvals, (ii) inadvertently conclude that such permissions or
approvals are not required,
or (iii) applicable laws, regulations, or interpretations change and
you are required to
obtain such permissions or approvals in the future. The disclosure
here should not be
qualified by materiality. Please make appropriate revisions to your
disclosure.
11. As a related matter, please expand your disclosure to discuss how the
Cyberspace
Administration of China 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. In this regard, we note your disclosure on
page 19 that you
"are not contrary to the prohibitive provisions stipulated in the
currently effective
regulations and policies issued by Cyberspace Administration of China
to date." Please
expand your discussion to include all applicable provisions instead of
just the prohibitive
provisions.
12. We note that you do not appear to have relied upon an opinion of
counsel with respect to
your conclusions that you do not need any permissions and approvals to
operate your
business and to offer securities to investors. If true, state as much
and explain why such
an opinion was not obtained.
13. Please disclose your intentions to settle amounts owed under the VIE
agreements. Please
also describe any restrictions and limitations on your ability to
settle amounts under the
VIE agreements. Provide cross-references to the consolidated financial
statements.
Mingjun Lin
Kaixin Auto Holdings
August 12, 2022
Page 4
Risk Factors, page 18
14. We note your risk factor in your Annual Report on Form 20-F that "[t]he
Chinese
regulatory authorities could disallow [y]our structure, which could
result in a material
change in [y]our operations and the value of [y]our securities could
decline or become
worthless." Revise your risk factors to acknowledge that if the PRC
government
determines that the contractual arrangements constituting part of the
VIE structure do not
comply with PRC regulations, or if these regulations change or are
interpreted differently
in the future, the securities you are registering may decline in value
or become worthless
if the determinations, changes, or interpretations result in your
inability to assert
contractual control over the assets of your PRC subsidiaries or the VIEs
that conduct all or
substantially all of your operations.
15. We note your risk factor disclosure on page 41 of your Annual Report on
Form 20-F that
"PRC government may intervene or influence" your operations. Given the
Chinese
government's significant oversight and discretion over the conduct of
your business,
please revise to highlight separately 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 the securities you are registering.
Enforceability of Civil Liabilities, page 51
16. Please identify if any of your officers or members of senior management
are located in the
PRC/Hong Kong and identify the relevant individuals. Please also expand
your risk factor
addressing the challenges of bringing actions and enforcing
judgments/liabilities against
such individuals.
Please contact Alyssa Wall at 202-551-8106 or Jennifer L pez Molina at
202-551-3792
with any other questions.
Sincerely,
FirstName LastNameMingjun Lin
Division of
Corporation Finance
Comapany NameKaixin Auto Holdings
Office of Trade &
Services
August 12, 2022 Page 4
cc: Ying Li
FirstName LastName