Correspondence 0001104659-23-002901 from Alibaba Group Holding Ltd (BABA)
Alibaba Group Holding Ltd
Date: Jan. 11, 2023 · CIK: 0001577552 · Accession: 0001104659-23-002901
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-36614
Referenced dates: December 12, 2022, September 7, 2022
Letter
Simpson Thacher & Bartlett
icbc tower, 35th floor
3 garden road, central
hong kong
____________
telephone: +852-2514-7600
facsimile: +852-2869-7694
Direct Dial Number
+852-2514-7660
E-mail Address
dfertig@stblaw.com
January 11,
VIA EDGAR
Division of Corporation Finance
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Attention: Nicholas Nalbantian
Donald Field
Re: Alibaba Group Holding Ltd
Form 20-F for the Fiscal Year Ended March 31, 2022
Response Dated October 3, 2022
File No. 001-36614
Ladies and Gentlemen:
On behalf of our client, Alibaba Group Holding Limited, a company organized under the laws of the Cayman Islands (together with its subsidiaries, the “Company” or “Alibaba”), we respond to the comments contained in the letter from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”), dated December 12, 2022 (the “December 12 Comment Letter”), relating to the Company’s response letter, dated October 3, 2022 (the “October 3 Response”), to the Commission’s comment letter dated September 7, 2022 regarding the Company’s annual report on Form 20-F for the fiscal year ended March 31, 2022 filed with the Commission on July 26, 2022 (the “2022 20-F”).
michael j.c.M. ceulen marjory j. ding daniel fertig adam C. furber YI GAO MAKIKO HARUNARI Ian C. Ho JONATHAN HWANG anthony d. king jin hYUK park christopher k.s. wong
resident partners
simpson thacher & bartlett, hong kong is an affiliate of simpson thacher & bartlett llp with offices in:
New York Beijing Brussels Houston LONDON Los Angeles Palo Alto SÃO PAULO TOKYO Washington, D.C.
Simpson Thacher & Bartlett
January 11, -2-
Set forth below are the Company’s responses to the Staff’s comments in the December 12 Comment Letter. The Staff’s comments are retyped below for ease of reference. In amending the proposed disclosure, the Company has also made certain additional clarifications and amendments. The Company respectfully advises the Staff that where the Company proposes to add or revise disclosure to its future filings on Form 20-F in response to the Staff’s comments, the changes to be made will be subject to relevant factual updates and changes in relevant laws or regulations, or in interpretations thereof.
* * * *
Item 3. Key Information, page 1
1. We note your response to comment 1 and reissue in part. Please refer to the proposed revised disclosure contained in Annex A and in the section captioned "Risks Related to the VIE Structure." Please revise to more clearly disclose that your VIE structure involves unique risks to investors. Additionally, please disclose more directly that investors may never hold equity interests in any Chinese operating companies.
The Company acknowledges the Staff’s comment and respectfully advises the Staff that the Company will revise its disclosure consistent with the changes set forth in the section captioned “Risks Related to the VIE Structure” in the revised Annex A, in its annual report on Form 20-F for the fiscal year ending March 31, 2023 (the “2023 20-F”).
2. We note your response to comment 5 and reissue in part. Please refer to the proposed revised disclosure contained in Annex A and in the section captioned "Cash Flows through Our Company." Please revise to provide cross-references to the condensed consolidating schedule and the consolidated financial statements.
The Company acknowledges the Staff’s comment and respectfully advises the Staff that the Company will revise its disclosure to provide cross-references consistent with the changes set forth in the section captioned “Cash Flows through Our Company” in the revised Annex A, in its 2023 20-F.
To make the cross-references more reader-friendly, the Company will also add notes to the cash flow tables consistent with the changes set forth in the section captioned “Variable Interest Entity Financial Information” in the revised Annex A.
Simpson Thacher & Bartlett
January 11, -3-
3. We note your response to comment 6 and reissue in part. Please refer to the proposed revised disclosures contained in Annex A and in the section captioned "Cash Flows through Our Company" and in Annex B. Please amend the proposed revised disclosures to state that, to the extent cash or assets in the business is in the PRC or a PRC entity, the funds or assets may not be available to fund operations or for other use outside of the PRC 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. In the section captioned "Cash Flows through Our Company," provide cross references to other discussions of this issue in the annual report.
The Company acknowledges the Staff’s comment and respectfully advises the Staff that the Company will revise its disclosure consistent with the changes set forth in the revised Annex A, under the section captioned “Cash Flows through Our Company,” and revised Annex B in its 2023 20-F.
The Company further advises the Staff that the requested disclosure regarding the addition of relevant cross-references to the section captioned “Cash Flows through Our Company” has been addressed in the proposed revised disclosure. For details, see the end of the third paragraph under the section captioned “Cash Flows through Our Company.”
4. We note your response to comment 10 and reissue in part. Please refer to the proposed revised disclosure contained in Annex A and in the section captioned "Permissions and Approvals Required to be Obtained from PRC Authorities for our Business Operations." We note your disclosure that you "believe that [your] consolidated subsidiaries and the VIEs in China have received the material licenses, permissions and approvals from the PRC authorities as are necessary for [your] business operations in China." The disclosure here should not be qualified by materiality. Please make appropriate revisions to your proposed revised disclosure.
The Company acknowledges the Staff’s comment and respectfully advises the Staff that the Company will revise its disclosure to remove the materiality qualification, consistent with the changes set forth in the section captioned “Permissions and Approvals Required to be Obtained from PRC Authorities for our Business Operations” in the revised Annex A in its 2023 20-F.
Simpson Thacher & Bartlett
January 11, -4-
5. We note your response to comment 16 and reissue in part. Please refer to the proposed revised disclosure contained in Annex A and in the section captioned "Permissions and Approvals Required to be Obtained from PRC Authorities for our Business Operations." With respect to the proposed revised disclosure, 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 additional permissions and approvals to operate your business and your response which indicates that the company believes that obtaining an opinion of counsel would be excessively burdensome for the purpose of an annual report. Please revise the proposed revise disclosure in the referenced section to disclose that an opinion was not obtained and explain why such an opinion was not obtained.
The Company acknowledges the Staff’s comment and respectfully advises the Staff that the Company will revise its disclosure consistent with the changes set forth in the section captioned “Permissions and Approvals Required to be Obtained from PRC Authorities for our Business Operations” in the revised Annex A in its 2023 20-F.
To support the statement that the Company believes that its consolidated subsidiaries and the variable interest entities in China have received the requisite licenses, permissions and approvals from the PRC authorities as are necessary for its business operations in China, the Company plans to obtain a legal opinion from PRC legal counsel that its consolidated subsidiaries and the variable interest entities in China have obtained all major licenses, permissions and approval from the competent PRC authorities that are necessary to the operations of the Company’s China commerce and cloud businesses, which account for a significant majority of the Company’s revenue. This will be in addition to the Company’s own internal compliance procedures and processes that also help to ensure that the Company obtains the licenses, permissions and approvals necessary for its business operations in China.
D. Risk Factors
Summary of Risk Factors, page 1
6. We note your response to comment 12 and reissue in part. Please refer to the proposed revised disclosure contained in Annex B. Please revise to specifically discuss risks arising from the legal system in China, including that rules and regulations in China can change quickly with little advance notice. Additionally, please revise to 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 result in a material change in your operations and 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. Lastly, please revise to include specific cross-references (titles and page numbers) to the more detailed discussion of these risks in the annual report.
The Company acknowledges the Staff’s comment and respectfully advises the Staff that the Company will revise its disclosure consistent with the changes set forth in the revised Annex B in its 2023 20-F.
Simpson Thacher & Bartlett
January 11, -5-
Our business is subject to complex and evolving domestic and international laws and regulations regarding privacy and data protection, page 23
7. We note your response to comment 13 and acknowledge the substantial uncertainties of these new or proposed laws and regulations and how they will impact the company. However, in light of recent events indicating greater oversight by the Cyberspace Administration of China (CAC) over data security, please revise your risk factor disclosure to explain in greater detail how you believe this oversight impacts the company and its business 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 that the revised risk factor continues to generally describe the new or proposed laws and regulations but doesn't evaluate how the company will actually be impacted by the new or proposed laws and regulations. Revise to clarify and specifically address if you believe you will be subject to a cybersecurity review. To the extent you do not believe you will be subject to a cybersecurity review, discuss how you came to that conclusion including the underlying facts and circumstances which support that determination. For example, the third paragraph discusses operators of critical information infrastructure, network platform operators and data processors but doesn't provide any analysis regarding whether the company will be captured by these new or proposed laws and regulations based upon the company's number of users or the type of data that the company collects. Please revise as applicable so investors can clearly understand how these new or proposed laws and regulations will impact the company and its business and any future offerings. Lastly, please revise the company's permissions and approvals discussions, as applicable.
The Company acknowledges the Staff’s comment and respectfully advises the Staff that the Company will revise its disclosure consistent with the changes set forth in the revised Annex C in its 2023 20-F.
Risks Related to Doing Business in China
If our auditor is sanctioned or otherwise penalized by the PCAOB or the SEC as a result of failure to comply with inspection or..., page 48
8. We note your response to comment 14 and reissue in part. Please supplementally provide us with your proposed revised risk factor
The Company acknowledges the Staff’s comment and respectfully advises the Staff that the Company will revise its disclosure consistent with the changes set forth in the section captioned “Holding Foreign Companies Accountable Act” in the revised Annex A and will add the requested risk factor consistent with the changes set forth in the revised Annex D in its 2023 20-F.
* * * *
Simpson Thacher & Bartlett
January 11, -6-
If you have any question regarding the responses contained in this letter, please do not hesitate to contact me at +852-2514-7660 or dfertig@stblaw.com.
Very truly yours,
/s/ Daniel Fertig
Show Raw Text
CORRESP
1
filename1.htm
Simpson
Thacher & Bartlett
icbc
tower, 35th floor
3 garden
road, central
hong
kong
____________
telephone:
+852-2514-7600
facsimile:
+852-2869-7694
Direct Dial Number
+852-2514-7660
E-mail Address
dfertig@stblaw.com
January 11,
2023
VIA EDGAR
Division of Corporation Finance
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Attention:
Nicholas Nalbantian
Donald Field
Re: Alibaba Group Holding Ltd
Form 20-F
for the Fiscal Year Ended March 31, 2022
Response Dated October 3, 2022
File No. 001-36614
Ladies and Gentlemen:
On
behalf of our client, Alibaba Group Holding Limited, a company organized under the laws of the Cayman Islands (together with its
subsidiaries, the “Company” or “Alibaba”), we respond to the comments contained in the letter from
the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”), dated December 12,
2022 (the “December 12 Comment Letter”), relating to the Company’s response letter, dated October 3,
2022 (the “October 3 Response”), to the Commission’s comment letter dated September 7, 2022 regarding
the Company’s annual report on Form 20-F for the fiscal year ended March 31, 2022 filed with the Commission on July 26,
2022 (the “2022 20-F”).
michael
j.c.M. ceulen
marjory
j. ding
daniel
fertig
adam
C. furber
YI
GAO
MAKIKO
HARUNARI
Ian
C. Ho
JONATHAN
HWANG
anthony
d. king
jin
hYUK park
christopher
k.s. wong
resident
partners
simpson
thacher & bartlett, hong kong is an affiliate of simpson thacher & bartlett llp with offices in:
New
York
Beijing
Brussels
Houston
LONDON
Los
Angeles
Palo
Alto
SÃO
PAULO
TOKYO
Washington,
D.C.
Simpson Thacher &
Bartlett
January 11,
2023
-2-
Set forth below are the Company’s responses
to the Staff’s comments in the December 12 Comment Letter. The Staff’s comments are retyped below for ease of reference.
In amending the proposed disclosure, the Company has also made certain additional clarifications and amendments. The Company respectfully
advises the Staff that where the Company proposes to add or revise disclosure to its future filings on Form 20-F in response to
the Staff’s comments, the changes to be made will be subject to relevant factual updates and changes in relevant laws or regulations,
or in interpretations thereof.
* * * *
Item 3. Key Information, page 1
1. We note your response to comment 1 and reissue
in part. Please refer to the proposed revised disclosure contained in Annex A and in the
section captioned "Risks Related to the VIE Structure." Please revise to more clearly
disclose that your VIE structure involves unique risks to investors. Additionally, please
disclose more directly that investors may never hold equity interests in any Chinese operating
companies.
The
Company acknowledges the Staff’s comment and respectfully advises the Staff that the Company will revise its disclosure
consistent with the changes set forth in the section captioned “Risks Related to the VIE Structure” in the revised Annex
A, in its annual report on Form 20-F for the fiscal year ending March 31, 2023 (the “2023 20-F”).
2. We note your response to comment 5 and reissue
in part. Please refer to the proposed revised disclosure contained in Annex A and in the
section captioned "Cash Flows through Our Company." Please revise to provide cross-references
to the condensed consolidating schedule and the consolidated financial statements.
The
Company acknowledges the Staff’s comment and respectfully advises the Staff that the Company will revise its disclosure
to provide cross-references consistent with the changes set forth in the section captioned “Cash Flows through Our Company”
in the revised Annex A, in its 2023 20-F.
To make the cross-references more reader-friendly, the
Company will also add notes to the cash flow tables consistent with the changes set forth in the section captioned “Variable Interest
Entity Financial Information” in the revised Annex A.
Simpson Thacher &
Bartlett
January 11,
2023
-3-
3. We note your response to comment 6 and reissue
in part. Please refer to the proposed revised disclosures contained in Annex A and in the
section captioned "Cash Flows through Our Company" and in Annex B. Please amend
the proposed revised disclosures to state that, to the extent cash or assets in the business
is in the PRC or a PRC entity, the funds or assets may not be available to fund operations
or for other use outside of the PRC 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. In the section captioned "Cash Flows through
Our Company," provide cross references to other discussions of this issue in the annual
report.
The
Company acknowledges the Staff’s comment and respectfully advises the Staff that the Company will revise its disclosure consistent
with the changes set forth in the revised Annex A, under the section captioned “Cash Flows through Our Company,”
and revised Annex B in its 2023 20-F.
The Company further advises the Staff that the requested
disclosure regarding the addition of relevant cross-references to the section captioned “Cash Flows through Our Company”
has been addressed in the proposed revised disclosure. For details, see the end of the third paragraph under the section captioned “Cash
Flows through Our Company.”
4. We note your response to comment 10 and reissue
in part. Please refer to the proposed revised disclosure contained in Annex A and in the
section captioned "Permissions and Approvals Required to be Obtained from PRC Authorities
for our Business Operations." We note your disclosure that you "believe that [your]
consolidated subsidiaries and the VIEs in China have received the material licenses, permissions
and approvals from the PRC authorities as are necessary for [your] business operations in
China." The disclosure here should not be qualified by materiality. Please make appropriate
revisions to your proposed revised disclosure.
The Company acknowledges the Staff’s comment and
respectfully advises the Staff that the Company will revise its disclosure to remove the materiality qualification, consistent with the
changes set forth in the section captioned “Permissions and Approvals Required to be Obtained from PRC Authorities for our Business
Operations” in the revised Annex A in its 2023 20-F.
Simpson Thacher &
Bartlett
January 11,
2023
-4-
5. We note your response to comment 16 and reissue
in part. Please refer to the proposed revised disclosure contained in Annex A and in the
section captioned "Permissions and Approvals Required to be Obtained from PRC Authorities
for our Business Operations." With respect to the proposed revised disclosure, 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 additional permissions and approvals
to operate your business and your response which indicates that the company believes that obtaining an opinion of counsel would be excessively
burdensome for the purpose of an annual report. Please revise the proposed revise disclosure in the referenced section to disclose that
an opinion was not obtained and explain why such an opinion was not obtained.
The Company acknowledges the Staff’s comment and
respectfully advises the Staff that the Company will revise its disclosure consistent with the changes set forth in the section captioned
“Permissions and Approvals Required to be Obtained from PRC Authorities for our Business Operations” in the revised Annex
A in its 2023 20-F.
To support the statement that the Company believes that
its consolidated subsidiaries and the variable interest entities in China have received the requisite licenses, permissions and approvals
from the PRC authorities as are necessary for its business operations in China, the Company plans to obtain a legal opinion from PRC
legal counsel that its consolidated subsidiaries and the variable interest entities in China have obtained all major licenses, permissions
and approval from the competent PRC authorities that are necessary to the operations of the Company’s China commerce and cloud
businesses, which account for a significant majority of the Company’s revenue. This will be in addition to the Company’s
own internal compliance procedures and processes that also help to ensure that the Company obtains the licenses, permissions and approvals
necessary for its business operations in China.
D. Risk Factors
Summary of Risk Factors, page 1
6. We note your response to comment 12 and reissue
in part. Please refer to the proposed revised disclosure contained in Annex B. Please revise
to specifically discuss risks arising from the legal system in China, including that rules and
regulations in China can change quickly with little advance notice. Additionally, please
revise to 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 result in a material change in your operations and 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. Lastly,
please revise to include specific cross-references (titles and page numbers) to the
more detailed discussion of these risks in the annual report.
The Company acknowledges the Staff’s comment and
respectfully advises the Staff that the Company will revise its disclosure consistent with the changes set forth in the revised Annex
B in its 2023 20-F.
Simpson Thacher &
Bartlett
January 11,
2023
-5-
Our business is subject to complex and evolving domestic and
international laws and regulations regarding privacy and data protection, page 23
7.
We note your response to comment 13 and acknowledge the substantial uncertainties of these new or proposed laws and regulations and how they will impact the company. However, in light of recent events indicating greater oversight by the Cyberspace Administration of China (CAC) over data security, please revise your risk factor disclosure to explain in greater detail how you believe this oversight impacts the company and its business 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 that the revised risk factor continues to generally describe the new or proposed laws and regulations but doesn't evaluate how the company will actually be impacted by the new or proposed laws and regulations. Revise to clarify and specifically address if you believe you will be subject to a cybersecurity review. To the extent you do not believe you will be subject to a cybersecurity review, discuss how you came to that conclusion including the underlying facts and circumstances which support that determination. For example, the third paragraph discusses operators of critical information infrastructure, network platform operators and data processors but doesn't provide any analysis regarding whether the company will be captured by these new or proposed laws and regulations based upon the company's number of users or the type of data that the company collects. Please revise as applicable so investors can clearly understand how these new or proposed laws and regulations will impact the company and its business and any future offerings. Lastly, please revise the company's permissions and approvals discussions, as applicable.
The Company acknowledges the Staff’s comment and
respectfully advises the Staff that the Company will revise its disclosure consistent with the changes set forth in the revised Annex
C in its 2023 20-F.
Risks Related to Doing Business in China
If our auditor is sanctioned or otherwise penalized by the PCAOB
or the SEC as a result of failure to comply with inspection or..., page 48
8. We note your response to comment 14 and reissue
in part. Please supplementally provide us with your proposed revised risk factor
The Company acknowledges the Staff’s
comment and respectfully advises the Staff that the Company will revise its disclosure consistent with the changes set forth in the section
captioned “Holding Foreign Companies Accountable Act” in the revised Annex A and will add the requested risk factor
consistent with the changes set forth in the revised Annex D in its 2023 20-F.
* * * *
Simpson Thacher &
Bartlett
January 11,
2023
-6-
If you have any question regarding the responses
contained in this letter, please do not hesitate to contact me at +852-2514-7660 or dfertig@stblaw.com.
Very truly yours,
/s/ Daniel Fertig
Daniel Fertig
Enclosures
cc:
Daniel Yong Zhang,
Chief Executive Officer
Toby Hong Xu, Chief Financial
Officer
Sara Siying Yu, General Counsel
Alibaba Group Holding Limited
Ricky Shin, Partner
Daniel Chan, Partner
Cynthia Ning, Partner
PricewaterhouseCoopers
Annex A
To be added to Item 3. “Key Information” before “B.
Capitalization and Indebtedness” in the 2023 20-F:
The VIE Structure Adopted by Our Company
Risks Related to the VIE Structure
Alibaba Group Holding Limited is a Cayman Islands holding
company. It does not directly engage in business operations itself. Due to PRC legal restrictions on foreign ownership and investment
in certain industries, we, similar to all other entities with foreign-incorporated holding company structures operating in our industry
in China, operate through VIEs our Internet businesses and other businesses in which foreign investment is restricted
or prohibited in the PRC through variable interest entities, or VIEs. The VIEs are incorporated and owned by PRC