Correspondence 0000950170-23-000301 from NaaS Technology Inc. (NAAS) (CIK 0001712178) (NAAS)
NaaS Technology Inc. (NAAS) (CIK 0001712178)
Date: Jan. 6, 2023 · CIK: 0001712178 · Accession: 0000950170-23-000301
AI Filing Summary & Sentiment
File numbers found in text: 001-38235
Referenced dates: December 21, 2022
Letter
Division of Corporation Finance Office of Trade & Services Securities and Exchange Commission VIA EDGAR Division of Corporation Finance Office of Trade & Services Securities and Exchange Commission NaaS Technology Inc. (the “Company”) Shell Company Report on Form 20-F Filed on June 16, 2022 File No. 001-38235
Dear Mr. Kim, Ms. Shenk, Ms. Beysolow and Mr. King,
This letter sets forth the Company’s responses to the comments contained in the letter dated December 21, 2022 from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) regarding the Company’s shell company report on Form 20-F filed with the Commission on June 16, 2022 (the “Shell Company Report”) and the Company’s response to the Staff’s comments regarding the Shell Company Report submitted on October 17, 2022. The Staff’s comments are repeated below in bold and are followed by the Company’s responses thereto. All capitalized terms used but not defined in this letter shall have the meaning ascribed to such terms in the Shell Company Report.
The Company respectfully advises the Staff that the Company is in the process of completing the work required for restating Dada Auto Inc.’s financial statements as of and for the two years ended December 31, 2020 and 2021 included in the Shell Company Report (the “Dada Auto Financial Statements”) to address the Staff’s comments and make other adjustments that the Company finds necessary in the process and undertakes to file an amendment to the Shell Company Report with such restated and reissued Dada Auto Financial Statements as soon as they are ready and the Company clears the Staff’s comments on the Shell Company Report. The Company needs more time to complete the restatement of Dada Auto Financial Statements, mainly due to the recent spread of COVID-19 in the area that the Company’s headquarter is located and the upcoming Chinese New Year holidays in
Division of Corporation Finance
Office of Trade & Services
Securities and Exchange Commission
January 6, 2023
Page 2
January 2023, and the Company currently expects that it will be able to complete the work required for the restatement around the end of February 2023. In addition, the Company believes that after the Staff’s review of and further commenting (if any) on its responses to the Staff’s other comments contained in this letter, it will be in a better position to prepare an amendment to the Shell Company Report that appropriately addresses the Staff’s comments.
The Company also respectfully advises the Staff that in addition to addressing the comments from the Staff on its financial statements included in the Shell Company Report, the Company expects to make certain other revisions to those financial statements as necessary and appropriate, as further described in its response to comment 7 below.
Shell Company Report on Form 20-F Filed June 16, 2022
Item 3. Key Information, page 6
1.We note your response to comment 3, including your proposed risk factor entitled “The PRC government has significant oversight over business operations conducted in China and may intervene or influence our operations at any time, which could result in a material adverse change in our operations and the value of our ADSs." In future filings, please revise to include risk factor disclosure, if material, about the laws and regulations in Hong Kong that are applicable to you and your operations, as well as the related risks and consequences given that you have operations and directors located in China.
In addition to the proposed disclosure in the Company’s response to prior comment 3, the Company respectfully proposes to revise the referenced disclosure as follows (page references are made to the Shell Company Report to illustrate the approximate location of the disclosure) in the proposed amendment to the Shell Company Report (including the restated and reissued Dada Auto Financial Statements) and its future Form 20-F filings, subject to updates and adjustments to be made in connection with any material development of the subject matter being disclosed including, to the extent material, addition risk factor disclosure about the laws and regulations in Hong Kong that will become applicable to it and its operations as well as the related risks and consequences. Deletions are shown as strike-through and additions are underlined, with additional changes made on top of the proposed disclosure in the Company’s prior response submitted on October 17, 2022 in bold or double-underlined.
Page 27 (Risk Factors section)
Risks Related to Doing Business in China
The PRC government has significant oversight over our business operations conducted in China which, if exercised, and may intervene or influence our operations at any time, which could result in a material adverse change in our operations and the value of our ADSs.
Division of Corporation Finance
Office of Trade & Services
Securities and Exchange Commission
January 6, 2023
Page 3
The PRC government has significant oversight over the conduct of our business operations conducted in mainland China, Hong Kong and Macau, and the PRC government may intervene and influence our operations at any time, which could result in a material adverse change in our operation and the value of our ADSs. Specifically, the operational risks associated with being based in and having operations in mainland China also apply to operations in Hong Kong and Macau. While entities and businesses in Hong Kong and Macau operate under different sets of laws from mainland China, the legal risks associated with being based in and having operations in mainland China could apply to operations in Hong Kong and Macau, if the laws applicable to mainland China become applicable to entities and businesses in Hong Kong and Macau in the future. As of the date of this Shell Company Report, we have no material operations in Hong Kong and we are of the view that there is currently no laws or regulations in Hong Kong that has a material impact on us.
Also, the PRC government has recently indicated that it may exert more oversight and control over offerings that are conducted overseas by or foreign investment in China-based issuers which may significantly limit or completely hinder our ability to offer or continue to offer securities and cause the value of such securities to significantly decline or be worthless. For example, on July 6, 2021, the relevant PRC government authorities published the Opinions on Strictly Scrutinizing Illegal Securities Activities in Accordance with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by 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 China-based overseas-listed companies. On November 14, 2021, the CAC released the Administrative Regulation on Network Data Security for public comments through December 13, 2021, or the Draft Administrative Regulation on Network Data Security, for public comments, which stipulates, among others, that a prior cybersecurity review is required for the overseas listing of data processors who process over one million users’ personal information, and the listing of data processors in Hong Kong which affects or may affect national security. On December 28, 2021, the Chinese government promulgated the 2022 Cybersecurity Review Measures, which came into effect on February 15, 2022. According to the 2022 Cybersecurity Review Measures, (i) critical information infrastructure operators that purchase network products and services and internet platform operators that conduct data processing activities shall be subject to cybersecurity review in accordance with the 2022 Cybersecurity Review Measures if such activities affect or may affect national security; and (ii) internet platform operators holding personal information of more than one million users and seeking to have their securities listed on a stock exchange in a foreign country are required to file for cybersecurity review with the Cybersecurity Review Office.
Division of Corporation Finance
Office of Trade & Services
Securities and Exchange Commission
January 6, 2023
Page 4
2.We note your response to comment 4. Your discussion of the limitations on cash transfers appears to discuss solely those in the PRC. In future filings, please revise to also discuss limitations applicable to Hong Kong, given your Hong Kong subsidiary. Please make consistent revisions throughout the document.
In response to the Staff’s comment, the Company respectfully proposes to revise the relevant disclosures in the proposed amendment to the Shell Company Report (including the restated and reissued Dada Auto Financial Statements) and its future Form 20-F filings as set out in its response to the Staff’s comment 3 below.
3.We note your response to comment 5. Please expand your disclosure related to the risks associated with cash transfers to encompass Hong Kong . Provide prominent disclosure here, in the summary risk factors and risk factors sections to state that, to the extent cash in the business is in PRC/Hong Kong or a PRC/Hong Kong entity, the funds may not be available to fund operations or for other use outside of PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of you and your subsidiaries by the government to transfer cash. Acknowledge the limitations upon transfer and tax obligations imposed by Hong Kong laws.
In addition to the proposed disclosure in the Company’s response to prior comments 4 and 5, the Company respectfully proposes to revise the referenced disclosure as follows (page references are made to the Shell Company Report to illustrate the approximate location of the disclosure) in the proposed amendment to the Shell Company Report (including the restated and reissued Dada Auto Financial Statements) and its future Form 20-F filings subject to updates and adjustments to be made in connection with any material development of the subject matter being disclosed. Deletions are shown as strike-through and additions are underlined, with additional changes made on top of the proposed disclosure in the Company’s prior response submitted on October 17, 2022 in bold.
Page 3 (Summary of Risk Factors section):
Risks Related to Doing Business in China
•We are a holding company and we may rely on dividends and other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements. The funds in mainland China or in our PRC subsidiaries may not be available to fund operations or for other use outside of mainland China due to interventions in or the imposition of restrictions and limitations on our and our subsidiaries’ ability by the PRC government to transfer cash. Any limitation on the ability of our PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business. Although currently there are no equivalent or similar restrictions or limitations in Hong Kong on cash transfers in, or
Division of Corporation Finance
Office of Trade & Services
Securities and Exchange Commission
January 6, 2023
Page 5
out of, Hong Kong or our Hong Kong subsidiaries, if certain restrictions or limitations in mainland China were to become applicable to cash transfers in and out of Hong Kong or our Hong Kong subsidiaries in the future, the funds in Hong Kong or in our Hong Kong subsidiaries, likewise, may not be available to fund operations or for other use outside of Hong Kong. Cash transfers from our Hong Kong subsidiaries to NaaS Technology Inc. or our offshore subsidiaries are subject to tax obligations imposed by Hong Kong laws to the extent applicable. Uncertainties also exist as to our ability to provide prompt financial support to our PRC subsidiaries when needed and if we fail to complete such registrations or record-filings, our ability to use foreign currency, and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from making loans to our PRC subsidiaries or making additional capital contributions to our wholly foreign-owned subsidiaries in China, which could materially and adversely affect our liquidity and our ability to fund and expand our business.”
Page 3 (Key Information section)
Cash and Asset Flows through Our Organization
NaaS
NaaS Technology Inc. is a holding company with no operations of its own. We conduct our operations in China primarily through our PRC subsidiaries. As a result, although other means are available for us to obtain financing at the holding company level, NaaS Technology Inc.’s ability to pay dividends to the shareholders and to service any debt it may incur may depend upon dividends paid by our PRC subsidiaries. If any of our subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends to NaaS Technology Inc. Under PRC laws and regulations, our PRC subsidiaries are subject to certain restrictions with respect to payment of dividends or otherwise transfers of any of their net assets to us. Our PRC subsidiaries are permitted to pay dividends only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. PRC laws also require foreign-invested enterprises to set aside at least 10% of its after-tax profits as the statutory
Division of Corporation Finance
Office of Trade & Services
Securities and Exchange Commission
January 6, 2023
Page 6
common reserve fund until the cumulative amount of the statutory common reserve fund reaches 50% or more of such enterprises’ registered capital, if any, to fund its statutory common reserves, which are not available for distribution as cash dividends. Remittance of dividends by a wholly foreign-owned enterprise out of China is also subject to examination by the banks designated by the PRC State Administration of Foreign Exchange, or SAFE. These restrictions are benchmarked against the paid-up capital and the statutory reserve funds of our PRC subsidiaries. To the extent cash in our business is in China or in an entity in mainland China, the funds may not be available to fund operations or for other use outside of China due to interventions in or the imposition of restrictions and limitations by the PRC government on o
Show Raw Text
CORRESP
1
filename1.htm
CORRESP
Division of Corporation Finance
Office of Trade & Services
Securities and Exchange Commission
January 6, 2023
Page 1
NaaS Technology Inc.
Newlink Center, Area G, Building 7, Huitong Times Square
No.1 Yaojiayuan South Road, Chaoyang District, Beijing, 100024
People’s Republic of China
January 6, 2023
VIA EDGAR
Mr. Stephen Kim
Ms. Lyn Shenk
Ms. Jennie Beysolow
Mr. Dietrich King
Division of Corporation Finance
Office of Trade & Services
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re:
NaaS Technology Inc. (the “Company”)
Shell Company Report on Form 20-F
Filed on June 16, 2022
File No. 001-38235
Dear Mr. Kim, Ms. Shenk, Ms. Beysolow and Mr. King,
This letter sets forth the Company’s responses to the comments contained in the letter dated December 21, 2022 from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) regarding the Company’s shell company report on Form 20-F filed with the Commission on June 16, 2022 (the “Shell Company Report”) and the Company’s response to the Staff’s comments regarding the Shell Company Report submitted on October 17, 2022. The Staff’s comments are repeated below in bold and are followed by the Company’s responses thereto. All capitalized terms used but not defined in this letter shall have the meaning ascribed to such terms in the Shell Company Report.
The Company respectfully advises the Staff that the Company is in the process of completing the work required for restating Dada Auto Inc.’s financial statements as of and for the two years ended December 31, 2020 and 2021 included in the Shell Company Report (the “Dada Auto Financial Statements”) to address the Staff’s comments and make other adjustments that the Company finds necessary in the process and undertakes to file an amendment to the Shell Company Report with such restated and reissued Dada Auto Financial Statements as soon as they are ready and the Company clears the Staff’s comments on the Shell Company Report. The Company needs more time to complete the restatement of Dada Auto Financial Statements, mainly due to the recent spread of COVID-19 in the area that the Company’s headquarter is located and the upcoming Chinese New Year holidays in
Division of Corporation Finance
Office of Trade & Services
Securities and Exchange Commission
January 6, 2023
Page 2
January 2023, and the Company currently expects that it will be able to complete the work required for the restatement around the end of February 2023. In addition, the Company believes that after the Staff’s review of and further commenting (if any) on its responses to the Staff’s other comments contained in this letter, it will be in a better position to prepare an amendment to the Shell Company Report that appropriately addresses the Staff’s comments.
The Company also respectfully advises the Staff that in addition to addressing the comments from the Staff on its financial statements included in the Shell Company Report, the Company expects to make certain other revisions to those financial statements as necessary and appropriate, as further described in its response to comment 7 below.
Shell Company Report on Form 20-F Filed June 16, 2022
Item 3. Key Information, page 6
1.We note your response to comment 3, including your proposed risk factor entitled “The PRC government has significant oversight over business operations conducted in China and may intervene or influence our operations at any time, which could result in a material adverse change in our operations and the value of our ADSs." In future filings, please revise to include risk factor disclosure, if material, about the laws and regulations in Hong Kong that are applicable to you and your operations, as well as the related risks and consequences given that you have operations and directors located in China.
In addition to the proposed disclosure in the Company’s response to prior comment 3, the Company respectfully proposes to revise the referenced disclosure as follows (page references are made to the Shell Company Report to illustrate the approximate location of the disclosure) in the proposed amendment to the Shell Company Report (including the restated and reissued Dada Auto Financial Statements) and its future Form 20-F filings, subject to updates and adjustments to be made in connection with any material development of the subject matter being disclosed including, to the extent material, addition risk factor disclosure about the laws and regulations in Hong Kong that will become applicable to it and its operations as well as the related risks and consequences. Deletions are shown as strike-through and additions are underlined, with additional changes made on top of the proposed disclosure in the Company’s prior response submitted on October 17, 2022 in bold or double-underlined.
Page 27 (Risk Factors section)
Risks Related to Doing Business in China
The PRC government has significant oversight over our business operations conducted in China which, if exercised, and may intervene or influence our operations at any time, which could result in a material adverse change in our operations and the value of our ADSs.
Division of Corporation Finance
Office of Trade & Services
Securities and Exchange Commission
January 6, 2023
Page 3
The PRC government has significant oversight over the conduct of our business operations conducted in mainland China, Hong Kong and Macau, and the PRC government may intervene and influence our operations at any time, which could result in a material adverse change in our operation and the value of our ADSs. Specifically, the operational risks associated with being based in and having operations in mainland China also apply to operations in Hong Kong and Macau. While entities and businesses in Hong Kong and Macau operate under different sets of laws from mainland China, the legal risks associated with being based in and having operations in mainland China could apply to operations in Hong Kong and Macau, if the laws applicable to mainland China become applicable to entities and businesses in Hong Kong and Macau in the future. As of the date of this Shell Company Report, we have no material operations in Hong Kong and we are of the view that there is currently no laws or regulations in Hong Kong that has a material impact on us.
Also, the PRC government has recently indicated that it may exert more oversight and control over offerings that are conducted overseas by or foreign investment in China-based issuers which may significantly limit or completely hinder our ability to offer or continue to offer securities and cause the value of such securities to significantly decline or be worthless. For example, on July 6, 2021, the relevant PRC government authorities published the Opinions on Strictly Scrutinizing Illegal Securities Activities in Accordance with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by 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 China-based overseas-listed companies. On November 14, 2021, the CAC released the Administrative Regulation on Network Data Security for public comments through December 13, 2021, or the Draft Administrative Regulation on Network Data Security, for public comments, which stipulates, among others, that a prior cybersecurity review is required for the overseas listing of data processors who process over one million users’ personal information, and the listing of data processors in Hong Kong which affects or may affect national security. On December 28, 2021, the Chinese government promulgated the 2022 Cybersecurity Review Measures, which came into effect on February 15, 2022. According to the 2022 Cybersecurity Review Measures, (i) critical information infrastructure operators that purchase network products and services and internet platform operators that conduct data processing activities shall be subject to cybersecurity review in accordance with the 2022 Cybersecurity Review Measures if such activities affect or may affect national security; and (ii) internet platform operators holding personal information of more than one million users and seeking to have their securities listed on a stock exchange in a foreign country are required to file for cybersecurity review with the Cybersecurity Review Office.
Division of Corporation Finance
Office of Trade & Services
Securities and Exchange Commission
January 6, 2023
Page 4
2.We note your response to comment 4. Your discussion of the limitations on cash transfers appears to discuss solely those in the PRC. In future filings, please revise to also discuss limitations applicable to Hong Kong, given your Hong Kong subsidiary. Please make consistent revisions throughout the document.
In response to the Staff’s comment, the Company respectfully proposes to revise the relevant disclosures in the proposed amendment to the Shell Company Report (including the restated and reissued Dada Auto Financial Statements) and its future Form 20-F filings as set out in its response to the Staff’s comment 3 below.
3.We note your response to comment 5. Please expand your disclosure related to the risks associated with cash transfers to encompass Hong Kong . Provide prominent disclosure here, in the summary risk factors and risk factors sections to state that, to the extent cash in the business is in PRC/Hong Kong or a PRC/Hong Kong entity, the funds may not be available to fund operations or for other use outside of PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of you and your subsidiaries by the government to transfer cash. Acknowledge the limitations upon transfer and tax obligations imposed by Hong Kong laws.
In addition to the proposed disclosure in the Company’s response to prior comments 4 and 5, the Company respectfully proposes to revise the referenced disclosure as follows (page references are made to the Shell Company Report to illustrate the approximate location of the disclosure) in the proposed amendment to the Shell Company Report (including the restated and reissued Dada Auto Financial Statements) and its future Form 20-F filings subject to updates and adjustments to be made in connection with any material development of the subject matter being disclosed. Deletions are shown as strike-through and additions are underlined, with additional changes made on top of the proposed disclosure in the Company’s prior response submitted on October 17, 2022 in bold.
Page 3 (Summary of Risk Factors section):
Risks Related to Doing Business in China
•We are a holding company and we may rely on dividends and other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements. The funds in mainland China or in our PRC subsidiaries may not be available to fund operations or for other use outside of mainland China due to interventions in or the imposition of restrictions and limitations on our and our subsidiaries’ ability by the PRC government to transfer cash. Any limitation on the ability of our PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business. Although currently there are no equivalent or similar restrictions or limitations in Hong Kong on cash transfers in, or
Division of Corporation Finance
Office of Trade & Services
Securities and Exchange Commission
January 6, 2023
Page 5
out of, Hong Kong or our Hong Kong subsidiaries, if certain restrictions or limitations in mainland China were to become applicable to cash transfers in and out of Hong Kong or our Hong Kong subsidiaries in the future, the funds in Hong Kong or in our Hong Kong subsidiaries, likewise, may not be available to fund operations or for other use outside of Hong Kong. Cash transfers from our Hong Kong subsidiaries to NaaS Technology Inc. or our offshore subsidiaries are subject to tax obligations imposed by Hong Kong laws to the extent applicable. Uncertainties also exist as to our ability to provide prompt financial support to our PRC subsidiaries when needed and if we fail to complete such registrations or record-filings, our ability to use foreign currency, and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from making loans to our PRC subsidiaries or making additional capital contributions to our wholly foreign-owned subsidiaries in China, which could materially and adversely affect our liquidity and our ability to fund and expand our business.”
Page 3 (Key Information section)
Cash and Asset Flows through Our Organization
NaaS
NaaS Technology Inc. is a holding company with no operations of its own. We conduct our operations in China primarily through our PRC subsidiaries. As a result, although other means are available for us to obtain financing at the holding company level, NaaS Technology Inc.’s ability to pay dividends to the shareholders and to service any debt it may incur may depend upon dividends paid by our PRC subsidiaries. If any of our subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends to NaaS Technology Inc. Under PRC laws and regulations, our PRC subsidiaries are subject to certain restrictions with respect to payment of dividends or otherwise transfers of any of their net assets to us. Our PRC subsidiaries are permitted to pay dividends only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. PRC laws also require foreign-invested enterprises to set aside at least 10% of its after-tax profits as the statutory
Division of Corporation Finance
Office of Trade & Services
Securities and Exchange Commission
January 6, 2023
Page 6
common reserve fund until the cumulative amount of the statutory common reserve fund reaches 50% or more of such enterprises’ registered capital, if any, to fund its statutory common reserves, which are not available for distribution as cash dividends. Remittance of dividends by a wholly foreign-owned enterprise out of China is also subject to examination by the banks designated by the PRC State Administration of Foreign Exchange, or SAFE. These restrictions are benchmarked against the paid-up capital and the statutory reserve funds of our PRC subsidiaries. To the extent cash in our business is in China or in an entity in mainland China, the funds may not be available to fund operations or for other use outside of China due to interventions in or the imposition of restrictions and limitations by the PRC government on o