April 13, 2022
| Division of Corporation Finance | |
| U.S. Securities & Exchange Commission | |
| 100 F Street, NE | |
| Washington, D.C. 20549 |
| Re: | 36Kr Holdings Inc. |
| Form 20-F for Fiscal Year Ended December 31, 2020 | |
| Response dated November 24, 2021 | |
| File No. 001-39117 |
| Attn: | Division of Corporation Finance |
| Office of Trade & Services |
VIA EDGAR
Dear Stephen Kim and Doug Jones:
This letter sets forth the responses of 36Kr Holdings Inc. (“36Kr” or the “Company”) to the comment (the “Comment”) the Company received from the Securities and Exchange Commission (the “Commission”) in a letter dated March 31, 2022.
For your convenience, we have included herein the comment in bold, and the Company’s responses are set forth immediately below the Comment.
Annual Report on Form 20-F for Fiscal Year Ended December 31, 2020
Item 3, Key Information, page 1
1. Please note your response to comment 1. Please disclose that your contractual arrangements with the VIE have not been tested in court. Additionally, please do not disclose or otherwise imply that the VIE structure is designed to replicate substantially the same economic benefits as would be provided by direct ownership. Instead, please clarify that this structure provides contractual exposure to foreign investment in such companies rather than replicating. Please revise your disclosure accordingly.
Response
In response to the Staff’s Comments, the Company respectfully advises the Staff that it intends to revise the proposed disclosure on page 1 of the 2020 Annual Report in its 2021 Annual Report as follows:
This
structure allows us to exercise effective control over the VIEs, and is designed to replicate substantially the same
economic benefits as would be provided by direct ownership be
considered the primary beneficiary of the VIEs, which serves the purpose of consolidating the VIEs’ operating results in our
financial statements under the U.S. GAAP. This structure also provides contractual exposure to foreign investment in such
companies. [As
of the date of this annual report, to the best knowledge of our Company, our directors and management, our VIE agreements have not
been tested in a court of law in the PRC.1] If
the PRC government deems that our contractual arrangements with the VIE do not comply with PRC regulatory restrictions on foreign
investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future,
we could be subject to material penalties or be forced to relinquish our interests in those operations or otherwise significantly
change our corporate structure. We and our investors face significant uncertainty about potential future actions by the PRC
government that could affect the legality and enforceability of the contractual arrangements with the VIE and, consequently,
significantly affect our ability to consolidate the financial results of the VIE and the financial performance of our company as a
whole. Our ADSs may decline in value or become worthless if we are unable to effectively enforce our contractual control rights over
the assets and operations of the VIE that conduct a significant portion of our business in China. See “Item 3. Key
Information—3.D. Risk Factor—Risks Related to Our Corporate Structure” for detailed discussion.
1 Note to the Staff: the Company respectfully advises the Staff that to the best knowledge of the Company, its directors and management, our VIE agreements have not been tested in a court of law in the PRC as of the date of this submission. The Company will re-confirm this statement as of the date of the 2021 Annual Report.
2. We note your response to comments 2 and 9. Please disclose whether your auditor is subject to the determinations announced by the PCAOB on December 16, 2021.
Response
In response to the Staff’s Comments, the Company intends to replace risk factors of “Item 3. Key Information—3.D. Risk Factor— Risks Related to Doing Business in China—The audit report included in this annual report is prepared by an auditor who is not inspected by the Public Company Accounting Oversight Board and as such, our investors are deprived of the benefits of such inspection” and “—The recent enactment of the Holding Foreign Companies Accountable Act, the SEC’s ongoing rulemaking with respect to such law, and other legislative developments in the United States may result in delisting of the ADSs” of the 2020 Annual Report in its 2021 Annual Report with the following risk factors:
The PCAOB is currently unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections over our auditor deprives our investors with the benefits of such inspections.
Our auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board (United States), or the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Since our auditor is located in China, a jurisdiction where the PCAOB has been unable to conduct inspections without the approval of the Chinese authorities, our auditor is not currently inspected by the PCAOB.
This lack of the PCAOB inspections in China prevents the PCAOB from fully evaluating audits and quality control procedures of our independent registered public accounting firm. As a result, we and investors are deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause investors and potential investors in our ADSs to lose confidence in our audit procedures and reported financial information and the quality of our financial statements.
Our ADSs may be delisted and our ADSs and Class A ordinary shares may be prohibited from trading in the over-the-counter market under the Holding Foreign Companies Accountable Act, or the HFCAA, if the PCAOB is unable to inspect or fully investigate auditors located in China. On December 16, 2021, PCAOB issued the HFCAA Determination Report, according to which our auditor is subject to the determinations that the PCAOB is unable to inspect or investigate completely. Under the current law, delisting and prohibition from over-the-counter trading in the U.S. could take place in 2024. If this happens there is no certainty that we will be able to list our ADSs or Class A ordinary shares on a non-U.S. exchange or that a market for our ADSs or Class A ordinary shares will develop outside of the U.S. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.
As part of a continued regulatory focus in the United States on access to audit and other information currently protected by national law, in particular China’s, the Holding Foreign Companies Accountable Act, or the HFCAA has been signed into law on December 18, 2020. The HFCAA states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection for the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our Class A ordinary shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the U.S. Accordingly, under the current law this could happen in 2024.
On December 2, 2021, the SEC adopted final amendments to its rules implementing the HFCAA (the “Final Amendments”). The Final Amendments include requirements to disclose information, including the auditor name and location, the percentage of shares of the issuer owned by governmental entities, whether governmental entities in the applicable foreign jurisdiction with respect to the auditor has a controlling financial interest with respect to the issuer, the name of each official of the Chinese Communist Party who is a member of the board of the issuer, and whether the articles of incorporation of the issuer contains any charter of the Chinese Communist Party. The Final Amendments also establish procedures the SEC will follow in identifying issuers and prohibiting trading by certain issuers under the HFCAA.
On December 16, 2021, PCAOB issued the HFCAA Determination Report, according to which our auditor is subject to the determinations that the PCAOB is unable to inspect or investigate completely. The HFCAA or other efforts to increase U.S. regulatory access to audit information could cause investor uncertainty for affected issuers, including us, and the market price of the ADSs could be adversely affected.
In March 2022, the SEC issued its first “Conclusive list of issuers identified under the HFCAA” indicating that those companies are now formally subject to the delisting provisions if they remain on the list for three consecutive years. We anticipate being added to the list shortly after the filing of this annual report. Additionally, whether the PCAOB will be able to conduct inspections of our auditor before the issuance of our financial statements on Form 20-F for the year ended December 31, 2023, which is due by April 30, 2024, or at all, is subject to substantial uncertainty and depends on factors out of our and our auditor’s control. If our auditor is unable to be inspected in time, we could be delisted from the NASDAQ and our ADSs will not be permitted for trading “over-the-counter” either. Such a delisting would substantially impair your ability to sell or purchase our ADSs when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our ADSs. Also, such a delisting would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects. If our ADS are delisted from the U.S. Exchange and are prohibited from trading in the over-the-counter market in the U.S. there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our shares will develop outside of the U.S.
The potential enactment of the Accelerating Holding Foreign Companies Accountable Act would decrease the number of non-inspection years from three years to two years, thus reducing the time period before our ADSs may be delisted or prohibited from over-the-counter trading. If this bill were enacted, our ADS could be delisted from the exchange and prohibited from over-the-counter trading in the U.S. in 2023.
On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, or the AHFCA Act, which, if enacted into law, would amend the HFCAA and require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years, instead of three consecutive years as currently enacted in the HFCAA.
On February 4, 2022, the U.S. House of Representatives passed the America Competes Act of 2022 which includes the exact same amendments as the bill passed by the Senate. The America Competes Act however includes a broader range of legislation not related to the HFCAA in response to the U.S. Innovation and Competition Act passed by the Senate in 2021. The U.S. House of Representatives and U.S. Senate will need to agree on amendments to these respective bills to align the legislation and pass their amended bills before the President can sign into law. It is unclear when the U.S. Senate and U.S. House of Representatives will resolve the differences in the U.S. Innovation and Competition Act and the America Competes Act of 2022 bills currently passed, or when the U.S. President will sign on the bill to make the amendment into law, or at all. In the case that the bill becomes the law, it will reduce the time period before our ADSs could be delisted from the exchange and prohibited from over-the-counter trading in the U.S. from 2024 to 2023.
The Company also intends to revise the proposed disclosure on page 51 of the 2020 Annual Report in its 2021 Annual Report as follows:
Implication of the Holding Foreign Companies Accountable Act
The
Holding Foreign Companies Accountable Act, or the HFCA ActHFCAA,
was enacted on December 18, 2020. The HFCA ActHFCAA
states if the SEC determines that we have filed audit
reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years
beginning in 2021, the SEC shall prohibit our shares or ADSs from being traded on a national securities exchange or in the over-the-counter
trading market in the United States. On
December 16, 2021, PCAOB issued the HFCAA Determination Report,
according to which our auditors are subject to the determinations. Our
auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this annual report, as
an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the
United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.
Since our auditor is located in China, a jurisdiction where the PCAOB has been unable to conduct inspections without the approval of
the PRC authorities, our auditor is currently not inspected by the PCAOB. The delisting of the ADSs, or the threat of their being delisted,
may materially and adversely affect the value of your investment. The PCAOB is currently unable to inspect our auditors in relation to
their audit work performed for our financial statements and inability of the PCAOB to conduct inspections over our auditors deprives
our investors with the benefits of such inspections. For the details of the risks associated with the enactment of the HFCA ActHFCAA,
see “Risk Factors – Risks
Related to Doing Business in China – Our ADSs
may be delisted and our ADSs and shares
prohibited from trading in the over-the-counter market under
the Holding Foreign Companies Accountable Act,
or the HFCAA, if the PCAOB is unable to inspect or
fully investigate auditors who are
located in China. On December 16,
2021, PCAOB issued the HFCAA Determination Report, according to which our auditor is subject to the determinations that the PCAOB is
unable to inspect or investigate completely. Under the current law, delisting and prohibition from over-the-counter trading in the U.S.
could take place in 2024. If this happens there is no certainty that we will be able to list our ADS or shares on a non-U.S. exchange
or that a market for our shares will develop outside of the U.S. The
delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally,
the inability of the PCAOB to conduct inspections deprives our investors with the benefits of such inspections.
3. We note your response to comment 6. Please disclose the consequences to you and your investors if you, your subsidiaries, or the VIEs: (i) do not receive or maintain required permissions or approvals, (ii) inadvertently conclude that certain permissions or approvals are not required, or (iii) applicable laws, regulations, or interpretations change and you are required to obtain such permissions or approvals in the future.
Response
In response to the Staff’s Comments, the Company intends to revise the proposed disclosure on page 51 of the 2020 Annual Report in its 2021 Annual Report:
Material Licenses and Permits
Our PRC subsidiaries and the VIE have obtained all material licenses and approvals required for our operations in China, excepts as disclosed in “Item 3. Key Information-3.D. Risk Factors- Risk Related to Our Business and Industry- Lack of Internet news information license may expose us to administrative sanctions, which would materially and adversely affect our business, results of operations and financial condition”, “Item 3. Key Information-3.D. Risk Factors- Risk Related to Our Business and Industry- Lack of Internet audio-visual program transmission license may expose us to administrative sanctions, which would materially and adversely affect our business, results of operations and financial condition.” and “Item 3. Key Information-3.D. Risk Factors- Risk Related to Our Business and Industry- Lack of Internet publishing license may expose us to administrative sanctions, which would materially and adversely affect our business, results of operations and financial condition.” If we or our VIE is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits, approvals or filings, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. We may be deemed to provide certain services or conduct certain activities and thus be subject to certain licenses, approvals, permits, registrations and filings due to the lack of official interpretations of certain terms under internet related PRC regulations and laws. Failures to obtain or update such license may subject us to fines and other regulatory, civil or criminal liabilities, and we may be ordered by the competent government authorities to suspend relevant operations, which will materially and adversely affect our business operation. In addition, there can be no assurance that we will be able to maintain our existing licenses, approvals, registrations, permits or filings necessary to provide our current online services in China, renew any of them when their current term expires, or update existing licenses or obtain additional licenses, approvals, permits, registrations or filings necessary for our business expansion from time to time. If we fail to do so, our business, financial condition and operational results may be materially and adversely affected. For risks relating to licenses and approvals required for our operations in China, see “Item 3. Key Information—3.D. Risk Factors—Risks Related to Our Business and Industry.”
4. Please note we continue to evaluate the consolidating financial information you proposed in response to comment 8.
Response
The Company acknowledges the Staff’s comments.
Item 3D. Risk Factors, page 5
5. We note your response to comment 12. Please disclose to what extent you believe that you are compliant with the regulations or policies that have been issued by the CAC to date. Additionally, please also update your disclosure to clarify whether you will be subject to the cybersecurity regulations that have since went into effect on February 15 requiring internet companies holding the data of more than 1 million users to undergo a network security review before listing overseas.
Response
In response to the Staff’s comments, the Company intends to further revise the risk factors under “Item 3. Key Information—3.D. Risk Factor—Risks Related to Our Business and Industry—The approval, filing or other requirements of the China Securities Regulatory Commission or other PRC government authorities may be required under PRC law in connection with our issuance of securities overseas.” of the 2020 Annual Report in its 2021 Annual Report as follows:
The approval, filing or other requirements of the China Securities Regulatory Commission or other PRC government authorities may be required under PRC law in connection with our issuance of securities overseas, or maintenance of the listing status of our ADSs, and the PRC government’s oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs.
The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, purport to require offshore special purpose vehicles that are controlled by PRC companies or individuals and that have been formed for the purpose of seeking a public listing on an overseas stock exchange through acquisitions of PRC domestic companies or assets to obtain CSRC approval prior to publicly listing their securities on an overseas stock exchange. The interpretation and application of the regulations remain unclear. If CSRC approval under the M&A Rules is required, it is uncertain whether it would be possible for us to obtain the approval, and any failure to obtain or delay in obtaining CSRC approval for our future issuance of securities overseas would subject us to sanctions imposed by the CSRC and other PRC regulatory agencies.
Furthermore,
the recently issued Opinions on Strictly Cracking Down on Illegal Securities Activities we
conduct our business primarily through our PRC subsidiaries and our VIEs in China. Our operations in China are governed by PRC laws and
regulations. The PRC government has significant oversight and discretion over the operation of our business, and it may influence our
operations, which could result in a material adverse change in our operation and the value of our ADSs. The PRC government has recently
indicated an intent to exert more oversight over overseas offerings and/or foreign investment in China-based issuers like us. For example,
on July 6, 2021, relevant PRC government authorities promulgated the Opinions on Strictly Cracking Down on Illegal Securities Activities,
which 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, although such opinions did not specify the definition of “illegal securities activities.” Such
opinions further provided that the special provisions of the State Council on overseas offerings and listings by those companies limited
by shares will be revised and therefore the duties of domestic industry competent authorities and regulatory agencies will be clarified.
As
these opinions were newly issued and there are no further explanations or detailed rules and regulations with respect to such opinions,
there are still uncertainties regarding the interpretation and implementation of such opinions. In addition, new rules or regulations
promulgated in the future could impose additional requirements on us,
and it is uncertain how the new rules or regulations will be enacted, interpreted or implemented and how they will affect us.
For example, it was reported that the CSRC may issue new rules requiring China-based companies to seek approval before going public
outside of China, including in the U.S. Furthermore, on July 10, 2021, the CAC issued a revised draft of the Cybersecurity Review
Measures for public comments, according to which, among others, an “operator of critical information infrastructure” or a
“data processing operator,” who has personal information of more than one million users and is seeking to list its securities
on a foreign stock exchange, must apply to the relevant cybersecurity review office for a cybersecurity review. On 29 October 2021,
the CAC has publicly solicited opinions on the Measures for the Security Assessment of Data Cross-border Transfer for public comments,
which requires that any data processor providing important data collected and generated during operations within the territory of the
PRC or personal information that should be subject to security assessment according to law to an overseas recipient shall conduct security
assessment. On 14 November 2021, the CAC publicly solicited opinions on the Regulations on the Administration of Cyber Data Security
for public comments (“Draft Data Security Regulations”).
According
to the Draft Data Security Regulations, data processors shall, in accordance with relevant state provisions, apply for cyber security
review when carrying out the following activities:(1) the merger, reorganization or separation of Internet platform operators that
have acquired a large number of data resources related to national security, economic development or public interests, which affects
or may affect national security; (2) data processors that handle the personal information of more than one million people intends
to be listed abroad; (3) the data processor intends to be listed in Hong Kong, which affects or may affect national security; (4) other
data processing activities that affect or may affect national security.
As
such aforementioned draft measures and regulations have not been adopted and it remains unclear whether the formal version to be adopted
in the future will have any further material changes, it is uncertain how the measures will be enacted, interpreted or implemented and
how they will affect us.
On December 24, 2021, the CSRC issued the Provisions of the State Council on the Administration of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments) and the Administrative Measures for the Filing of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments), collectively the Draft Overseas Listing Regulations, for public comments, which require, among others, that PRC domestic companies that seek to offer and list securities in overseas markets, either in direct or indirect means, are required to file the required documents with the CSRC within three working days after its application for overseas listing is submitted. [As of the date of this annual report], the Draft Overseas Listing Regulations were released for public comments only and the final version and effective date of such regulations are subject to change with substantial uncertainty.
In
addition, on January 4, 2022, the CAC published the Revised Cybersecurity Review Measures, which became effective on
February 15, 2022. The Revised Cybersecurity Review Measures provide that a critical information infrastructure operator
purchasing network products and services, and platform operators carrying out data processing activities, which affect or may affect
national security, shall apply for cybersecurity review and that a platform operator with more than one million users’
personal information aiming to list abroad must apply for cybersecurity review. There are substantial uncertainties as to the
interpretation, application, and enforcement of the Revised Cybersecurity Review Measures. Under the Revised Cybersecurity Review
Measures, we face potential risks if we are deemed as a “critical information infrastructure operator” or
“platform operator” under the PRC cybersecurity laws and regulations, and would be required to follow cybersecurity
review procedures. During such review, we may be required to suspend providing any existing or new services to our customers and/or
experience other disruptions of our operations, and such review could also result in negative publicity with respect to our Company
and diversion of our managerial and financial resources. In addition, we cannot guarantee that new rules or regulations
promulgated in the future will not impose any additional requirement on us or otherwise tightening the regulations on companies with
a VIE structure. If the CSRC or other relevant PRC regulatory agencies subsequently determine that prior approval
is required for any of our future offerings of securities overseas or to maintain maintenance
of the listing status of our ADSs, we cannot guarantee that we will be able to obtain such approval in a timely
manner, or at all. The CSRC or other PRC regulatory agencies also may take actions requiring us, or making it advisable for us, not
to proceed with such offering or maintain the listing status of our ADSs. If we proceed with any of such offering or maintain the
listing status of our ADSs without obtaining the CSRC’s or
other PRC regulatory agencies’approval to the extent it is required, or if we are unable to comply with any
new approval requirements which might be adopted for offerings that we have completed prior to the publication of the above-
referenced opinions, we may face regulatory actions or other sanctions from the CSRC or other PRC regulatory agencies. These
regulatory agencies may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China,
limit our operating privileges in China, delay or restrict the repatriation of the proceeds from offering of securities overseas
into China or take other actions that could have a material adverse effect on our business, financial condition, results of
operations and prospects, as well as the trading price of the ADSs.
Furthermore, if there are any other approvals, filings and/or other administration procedures to be obtained from or completed with the CSRC or other PRC regulatory agencies as required by any new laws and regulations for any of our future proposed offering of securities overseas or the listing of the ADSs, we cannot assure you that we can obtain the required approval or complete the required filings or other regulatory procedures in a timely manner, or at all. Any failure to obtain the relevant approvals or complete the filings and other relevant regulatory procedures may subject us to regulatory actions or other sanctions from the CSRC or other PRC regulatory agencies, which may have a material adverse effect on our business, financial condition or results of operations. In addition, implementation of industry-wide regulations affecting our operations could cause the value of our securities to significantly decline. Therefore, investors of our company and our business face potential uncertainty from actions taken by the PRC government affecting our business.
The Company also intends to revise the proposed additional disclosures under “Item 3. Key Information—3.D. Risk Factor—Risk Factors – We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of Internet businesses and companies, including limitations on our ability to own key assets such as our platform.” on page 11 of the 2020 Annual Report in its 2021 Annual Report as follows:
On
August 17, 2021, the State Council promulgated the Regulations on Key Information Infrastructure Security Protection, which has
become effective on September 1, 2021 In
addition, the PRC regulatory authorities have recently taken steps to strengthen the regulation on cybersecurity and data protection.
On June 10, 2021, the Standing Committee of the National People’s Congress promulgated the PRC Data Security Law, effective
on September 1, 2021. On August 20, 2021, the Standing Committee of the National People’s Congress promulgated the PRC
Personal Information Protection Law, which will come into effect has
become effective on November 1, 2021. On
January 4, 2022, the CAC published the Revised Cybersecurity Review Measures, effective on February 15, 2022 and repeal the
Cybersecurity Review Measures promulgated on April 13, 2020. Such Measures further restate and expand the applicable scope of the
cybersecurity review. Pursuant to the Cybersecurity Review Measures, critical information infrastructure operators that procure internet
products and services, and network platform operators engaging in data processing activities, must be subject to the cybersecurity review
if their activities affect or may affect national security. In addition, network platform operators holding over one million users’
personal information shall apply with the Cybersecurity Review Office for a cybersecurity review before conducting any public offering
in a foreign country. On August 17, 2021, the state council promulgated the Regulations on Protection of Critical Information Infrastructure,
which became effective on September 1, 2021. On January 4, 2022, the CAC published the Administrative Provisions on Internet
Information Service Algorithm Recommendation on its website, effective on March 1, 2022. These
newly promulgated laws and regulations reflect PRC government further attempts to strengthen the legal protection for the national network
security, data security, the security of key information infrastructure and the security of personal information protection. See
“Item 4. Information on the Company—4.B. Business Overview—Regulation— Regulation on Cybersecurity and Censorship”
for details on regulations over data protection and privacy in the PRC.
Furthermore,
certain PRC regulatory authorities recently issued the Opinions on Strictly Cracking Down on Illegal Securities Activities. These opinions
call for strengthened regulation over illegal securities activities and supervision of overseas listings by China-based companies and
propose to take effective measures. [As of the date of this annual report], no official guidance or related implementation rules have
been issued in relation to such opinions and as a result, the interpretation and implementation of these opinions remain unclear at this
stage. We cannot assure you that we will not be required to obtain the pre-approval of the CSRC and potentially other regulatory authorities
to pursue an offering of securities overseas or to maintain the listing status of our ADSs on the NYSE. See also “–The approval,
filing or other requirements of the China Securities Regulatory Commission or other PRC government authorities may be required under
PRC law in connection with our issuance of securities overseas.”
We have been taking and will continue to take reasonable measures to comply with such laws, regulations, announcement, provisions and inspection requirements; however, as such laws, regulations, announcement and provisions are relatively new, it remains uncertain how these announcements and provisions will be implemented. We cannot assure you we can adapt our operations to it in a timely manner. Evolving interpretations of such laws, regulations, announcements and provisions or any future regulatory changes might impose additional restrictions on us generating and processing personal and behavioral data. We may be subject to additional regulations, laws and policies adopted by the PRC government to apply more stringent social and ethical standards in data privacy resulting from the increased global focus on this area. To the extent that we need to alter our business model or practices to adapt to these announcement and provisions and future regulations, laws and policies, we could incur additional expenses.
The Company also intends to revise the proposed disclosure on page 51 of the 2020 Annual Report in its 2021 Annual Report as follows:
Recent Regulatory Development
Draft
Revised Cybersecurity
Measures
On
July 10, 2021, the Cyberspace Administration of China, or the CAC, issued a revised draft of January 4,
2022, the CAC published the Revised Cybersecurity Review Measures, which became effective on February 15, 2022 and repealed
the Cybersecurity Review Measures for public comments, which require
that, in addition to “operator of promulgated
on April 13, 2020. The Revised Cybersecurity Review Measures provide that a critical
information infrastructure,” any “data processing operator” purchasing
network products and services, and platform operators carrying
out data processing activities that,
which affect or may affect national security and
any “operator of critical information infrastructure” or “data processing operator” which has personal information
of, shall apply for cybersecurity
review and that a platform operator with more than one
million users and is going to be listed abroad should also be subject to a’
personal information aiming to list abroad must apply for cybersecurity
review. As advised by our PRC legal counsel, the draft measures have not been adopted and it remains unclear whether the formal
version adopted in the future will have any further material changes, it is uncertain how the measures will be enacted, interpreted or
implemented and how they will affect us. We cannot predict the impact of the draft measures, if any, at this stage, and we will closely
monitor and assess any development in the rule-making process.
Under
the Revised Cybersecurity Review Measures, we In anticipation of the strengthened implementation of cybersecurity laws
and regulations and the continued expansion of our business, we face potential risks if we are deemed as a “critical
information infrastructure operator” or “data processing platform
operator”
under the PRC cybersecurity laws and regulations once
the draft measures take effect, and would be required to follow cybersecurity review procedures. During such review,
we may be required to suspend providing any existing or new services to our customers and/or experience other disruptions of our operations,
and such review could also result in negative publicity with respect to our Company and diversion of our managerial and financial resources.
If
the CSRC, CAC or other regulatory agencies later require that we obtain their approvals for our future offshore offerings, we may be
unable to obtain such approvals in a timely manner, or at all, and such approvals may be rescinded even if obtained. Any such circumstance
could significantly limit or completely hinder our ability to continue to offer securities to investors and cause the value of such securities
to significantly decline or be worthless. In addition, implementation of industry-wide regulations affecting our operations could limit
our ability to attract new customers and/or users and cause the value of our securities to significantly decline. Therefore, investors
of our company and our business face potential uncertainty from actions taken by the PRC government affecting our business.
As of the date of this annual report, we have not been involved in any investigations or become subject to a cybersecurity review initiated by the CAC based on the Cybersecurity Review Measures, and we have not received any inquiry, notice, warning, sanctions in such respect or any regulatory objections to our listing status from the CAC.
If you have further questions or comments regarding, or require further information or clarification of, any of the responses provided in this letter or if the Commission has any questions with respect to 36Kr Holdings Inc.’s Annual Report on Form 20-F, please contact the undersigned or Li He (Tel: +852-2533-3306) and Ran Li (Tel: +86-10-8567-5013) of Davis Polk & Wardwell LLP.
| Sincerely yours, | ||
| 36Kr Holdings Inc. | ||
| By: | /s/ Dagang Feng | |
| Name: Dagang Feng | ||
| Title: Chief Executive Officer | ||
| cc: | Li He |
| Davis Polk & Wardwell LLP |