SecProbe.io

United States securities and exchange commission logo
September 20, 2021
Tao Xu
Chief Financial Officer
KE Holdings Inc.
Oriental Electronic Technology Building
No. 2 Chuangye Road, Haidian District
Beijing 1000086
People's Republic of China
Re:KE Holdings Inc.
Form 20-F for the Fiscal Year Ended December 31, 2020
Filed April 6, 2021
File No. 001-39436
Dear Mr. Xu:
            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 YEAR ENDED DECEMBER 31, 2020
Item 3. Key Information, page 4
1.Disclose clearly that the company uses a structure that involves a VIE based in China and
what that entails and provide early in Item 3, 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 VIE’s 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

 FirstName LastNameTao Xu
 Comapany NameKE Holdings Inc.
 September 20, 2021 Page 2
 FirstName LastNameTao Xu
KE Holdings Inc.
September 20, 2021
Page 2
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.
2.At the outset 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 annual report.  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 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.
3.At the outset of Item 3, 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.
4.At the outset of Item 3, 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.
5.We note that the consolidated VIEs constitute a material part of your consolidated
financial statements.  Early in your Item 3 disclosure, please provide in tabular form

 FirstName LastNameTao Xu
 Comapany NameKE Holdings Inc.
 September 20, 2021 Page 3
 FirstName LastNameTao Xu
KE Holdings Inc.
September 20, 2021
Page 3
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.
6.Early in your Item 3 disclosure, 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.
Part I, page 4
7.At the outset of Part I, please include an Explanatory Note that discloses 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 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 as a result of this
structure.
8.At the outset 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 and Hong Kong.  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 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
Business Overview in Item 4 should address, but not necessarily be limited to, the risks
highlighted in Part I.
9.At the outset 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

 FirstName LastNameTao Xu
 Comapany NameKE Holdings Inc.
 September 20, 2021 Page 4
 FirstName LastName
Tao Xu
KE Holdings Inc.
September 20, 2021
Page 4
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 have purchased their interest.
D. Risk Factors, page 8
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 acknowledge the risk that
any action 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.
12.Please revise your disclosure to explain how the Cyberspace Administration of China
oversight impacts your 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 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 Babette Cooper, Staff Accountant, at 202-551-3396 Wilson Lee, Staff
Accountant, at 202-551-3468 with any questions.
Sincerely,
Division of Corporation Finance
Office of Real Estate & Construction