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United States securities and exchange commission logo
September 20, 2021
John Fei Zeng
Chief Financial Officer
UP Fintech Holding Ltd
18/F, Grandyvic Building, No. 1 Building
No. 16 Taiyanggong Middle Road, Chaoyang District
Beijing, 100020 PRC
Re: UP Fintech Holding
Ltd
20-F filed April
28, 2021
File No. 001-38833
Dear Mr. Zeng:
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 filed April 28, 2021
Part I, page 5
1. At the onset of Part I,
please revise to 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 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 the offering as a result of this
John Fei Zeng
FirstName
UP FintechLastNameJohn
Holding Ltd Fei Zeng
Comapany 20,
September NameUP
2021 Fintech Holding Ltd
September
Page 2 20, 2021 Page 2
FirstName LastName
structure.
2. At the onset of Part I, please review to 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 of the Company section should address, but not necessarily
be limited to, the
risks highlighted in Part I.
Item 3. Key Information, page 6
3. At the onset of Item 3, please revise to disclose clearly that the
company uses a structure
that involves a VIE based in China and what that entails and provide
early in the summary
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
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.
4. At the onset of Item 3, please revise to 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 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
John Fei Zeng
FirstName
UP FintechLastNameJohn
Holding Ltd Fei Zeng
Comapany 20,
September NameUP
2021 Fintech Holding Ltd
September
Page 3 20, 2021 Page 3
FirstName LastName
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.
5. Please revise to 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.
6. Please revise to 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.
7. We note that the consolidated VIEs constitute a material part of your
consolidated
financial statements. Please revise to 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.
8. Please revise to 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.
Item 3.D. Risk Factors, page 6
John Fei Zeng
UP Fintech Holding Ltd
September 20, 2021
Page 4
9. 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.
10. 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 Lory Empie at 202-551-3714 or Michael Henderson at
202-551-3364
with any questions.
FirstName LastNameJohn Fei Zeng Sincerely,
Comapany NameUP Fintech Holding Ltd
Division of
Corporation Finance
September 20, 2021 Page 4 Office of
Finance
FirstName LastName