UPLOAD Filing
SOS Ltd
Date: Sept. 20, 2021 · CIK: 0001346610 · Accession: 0000000000-21-011366
AI Filing Summary & Sentiment
File numbers found in text: 001-38051
Letter
United States securities and exchange commission logo September 20, 2021 Yandai Wang Chief Executive Officer SOS Limited Building 6, East Seaview Park 298 Haijing Road, Yinzhu Street West Coast New District, Qingdoa City Shandong Province 266400 People's Republic of China Re:SOS Limited Form 20-F for the fiscal period ending December 31, 2020 Filed May 5, 2021 File No. 001-38051 Dear Mr. Wang: We have limited our review of your filing to the financial statements and related disclosures 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 these comments within ten business days by providing the requested information or advise us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response. After reviewing your response to these comments, we may have additional comments. Form 20-F for the fiscal period ending December 31, 2020 Part 1, page 1 1.At the onset of Part I, please disclose prominently 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 a variable interest entity (VIE) 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 authorities could disallow this structure, which would likely result in a material change in your operations
FirstName LastNameYandai Wang Comapany NameSOS Limited September 20, 2021 Page 2 FirstName LastNameYandai Wang SOS Limited September 20, 2021 Page 2 and/or value of your ADSs, 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 investors as a result of this structure. 2.At the onset of Part I, 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 ADSs 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 Information on the Company section should address, but not necessarily be limited to the risks highlighted in Part I. 3.At the onset of Part I, 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 a VIE. Disclose clearly the entity (including the domicile) in which investors hold their interest. Item 3. Key Information, page 1 4.At the onset of Item 3, disclose clearly that the company uses a structure that involves a VIE based in China and what that entails. Describe all contracts and arrangements through which you purport to obtain economic rights and exercise control that results in consolidation of the VIE’s operations and financial results into your financial statements. Identify clearly the entity in which investors hold their interest and the entity(ies) 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 VIE, its founders and owners, and the challenges the company may face enforcing these contractual agreements due to uncertainties under Chinese law and jurisdictional limits. 5.At the onset of Item 3, 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 your risk factor disclosure. For
FirstName LastNameYandai Wang Comapany NameSOS Limited September 20, 2021 Page 3 FirstName LastNameYandai Wang SOS Limited September 20, 2021 Page 3 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 ADSs. 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. 6.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 VIE’s operations, and state affirmatively whether you have received all requisite permissions and whether any permissions have been denied. 7.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 VIE 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. 8.We note that the consolidated VIEs constitute a material part of your consolidated financial statements. Please provide in tabular form 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 entity and parent, so an investor may evaluate the nature of assets held by, and the operations of, entities apart from the variable interest entity, which includes the cash held and transferred among entities. 9.Disclose that trading in your securities may be prohibited under the Holding Foreign Companies Accountable Act if the PCAOB determines it cannot inspect or fully investigate your auditor, and that as a result an exchange may determine to delist your
FirstName LastNameYandai Wang Comapany NameSOS Limited September 20, 2021 Page 4 FirstName LastName Yandai Wang SOS Limited September 20, 2021 Page 4 securities. If the PCAOB has been or is currently unable to inspect your auditor, revise your disclosure to so state. D. Risk Factors, page 3 10.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 shares 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. 11.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 ADSs. 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. 12.In light of recent events indicating greater oversight by the Cyberspace Administration of China over data security, particularly for companies seeking to list on a foreign exchange, 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. In closing, 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. You may contact Michelle Miller at 202-551-3368 or Sharon Blume at 202-551-3474 with any questions. Sincerely, Division of Corporation Finance Office of Finance
Show Raw Text
United States securities and exchange commission logo
September 20, 2021
Yandai Wang
Chief Executive Officer
SOS Limited
Building 6, East Seaview Park
298 Haijing Road, Yinzhu Street
West Coast New District, Qingdoa City
Shandong Province 266400
People's Republic of China
Re:SOS Limited
Form 20-F for the fiscal period ending December 31, 2020
Filed May 5, 2021
File No. 001-38051
Dear Mr. Wang:
We have limited our review of your filing to the financial statements and related
disclosures 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 these comments within ten business days by providing the requested
information or advise us as soon as possible when you will respond. If you do not believe our
comments apply to your facts and circumstances, please tell us why in your response.
After reviewing your response to these comments, we may have additional comments.
Form 20-F for the fiscal period ending December 31, 2020
Part 1, page 1
1.At the onset of Part I, please disclose prominently 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 a variable interest entity (VIE)
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 authorities could
disallow this structure, which would likely result in a material change in your operations
FirstName LastNameYandai Wang
Comapany NameSOS Limited
September 20, 2021 Page 2
FirstName LastNameYandai Wang
SOS Limited
September 20, 2021
Page 2
and/or value of your ADSs, 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 investors as a result of this structure.
2.At the onset of Part I, 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 ADSs 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 Information on the
Company section should address, but not necessarily be limited to the risks highlighted in
Part I.
3.At the onset of Part I, 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 a VIE. Disclose clearly the entity
(including the domicile) in which investors hold their interest.
Item 3. Key Information, page 1
4.At the onset of Item 3, disclose clearly that the company uses a structure that involves a
VIE based in China and what that entails. Describe all contracts and arrangements
through which you purport to obtain economic rights and exercise control that results in
consolidation of the VIE’s operations and financial results into your financial statements.
Identify clearly the entity in which investors hold their interest and the entity(ies) 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 VIE, its founders and owners, and the challenges the company may
face enforcing these contractual agreements due to uncertainties under Chinese law and
jurisdictional limits.
5.At the onset of Item 3, 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 your risk factor disclosure. For
FirstName LastNameYandai Wang
Comapany NameSOS Limited
September 20, 2021 Page 3
FirstName LastNameYandai Wang
SOS Limited
September 20, 2021
Page 3
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 ADSs. 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.
6.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 VIE’s operations, and
state affirmatively whether you have received all requisite permissions and whether any
permissions have been denied.
7.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 VIE 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.
8.We note that the consolidated VIEs constitute a material part of your consolidated
financial statements. Please provide in tabular form 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 entity and parent, so an investor may evaluate the nature of assets held
by, and the operations of, entities apart from the variable interest entity, which includes
the cash held and transferred among entities.
9.Disclose that trading in your securities may be prohibited under the Holding Foreign
Companies Accountable Act if the PCAOB determines it cannot inspect or fully
investigate your auditor, and that as a result an exchange may determine to delist your
FirstName LastNameYandai Wang
Comapany NameSOS Limited
September 20, 2021 Page 4
FirstName LastName
Yandai Wang
SOS Limited
September 20, 2021
Page 4
securities. If the PCAOB has been or is currently unable to inspect your auditor, revise
your disclosure to so state.
D. Risk Factors, page 3
10.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
shares 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.
11.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 ADSs. 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.
12.In light of recent events indicating greater oversight by the Cyberspace Administration of
China over data security, particularly for companies seeking to list on a foreign exchange,
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.
In closing, 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.
You may contact Michelle Miller at 202-551-3368 or Sharon Blume at 202-551-3474
with any questions.
Sincerely,
Division of Corporation Finance
Office of Finance