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United States securities and exchange commission logo
August 19, 2021
Chengcai Qu
Chief Executive Officer
Q&K INTERNATIONAL GROUP Ltd
Suite 1607, Building A
No.596 Middle Longhua Road
Xuhui District, Shanghai, 200032
People s Republic of China
Re: Q&K INTERNATIONAL
GROUP Ltd
Registration
Statement on Form F-3
Filed July 27, 2021
File No. 333-258187
Dear Mr. Qu:
We have limited our review of your registration statement to
those issues we have
addressed in our 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 this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form F-3 filed July 27, 2021
Cover Page
1. Please disclose
prominently on the prospectus cover page 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
Chengcai Qu
FirstName LastNameChengcai Qu Ltd
Q&K INTERNATIONAL GROUP
Comapany
August 19, NameQ&K
2021 INTERNATIONAL GROUP Ltd
August
Page 2 19, 2021 Page 2
FirstName LastName
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
structure
2. 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, have
impacted 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
prospectus summary
should address, but not necessarily be limited to, the risks
highlighted on the prospectus
cover page.
3. Clearly disclose how you will refer to the holding company,
subsidiaries, and VIEs when
providing the disclosure throughout the document so that it is 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 are purchasing their interest.
Our Company, page 6
4. 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 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.
Chengcai Qu
FirstName LastNameChengcai Qu Ltd
Q&K INTERNATIONAL GROUP
Comapany
August 19, NameQ&K
2021 INTERNATIONAL GROUP Ltd
August
Page 3 19, 2021 Page 3
FirstName LastName
5. In your summary of risk factors, disclose the risks that your
corporate structure and being
based in or having the majority of the company s operations in China
pose to investors. In
particular, describe the significant regulatory, liquidity, and
enforcement risks with cross-
references to the more detailed discussion of these risks in the
prospectus. 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.
6. 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.
7. 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.
8. We note that the consolidated VIEs constitute a material part of your
consolidated
financial statements. Please 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
Chengcai Qu
FirstName LastNameChengcai Qu Ltd
Q&K INTERNATIONAL GROUP
Comapany
August 19, NameQ&K
2021 INTERNATIONAL GROUP Ltd
August
Page 4 19, 2021 Page 4
FirstName LastName
by, and the operations of, entities apart from the variable interest
entity, which includes
the cash held and transferred among entities.
9. 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.
Risk Factors, page 9
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, 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
12. 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.
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.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
Chengcai Qu
Q&K INTERNATIONAL GROUP Ltd
August 19, 2021
Page 5
Please contact Stacie Gorman at 202-551-3585 or Maryse Mills-Apenteng at
202-551-
3457 with any questions.
Sincerely,
FirstName LastNameChengcai Qu
Division of Corporation
Finance
Comapany NameQ&K INTERNATIONAL GROUP Ltd
Office of Real Estate &
Construction
August 19, 2021 Page 5
cc: Shuang Zhao, Esq.
FirstName LastName