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United States securities and exchange commission logo
December 7, 2021
Ren Yong
Chief Executive Officer
Puyi Inc.
42F, Pearl River Tower
No. 15 Zhujiang West Road, Zhujiang New Town, Tianhe
Guangzhou, Guangdong, Province
People's Republic of China
Re: Puyi Inc.
Registration
Statement on Form F-3
Filed November 15,
2021
File No. 333-261063
Dear Mr. Yong:
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
Prospectus Cover Page, page i
1. We note your disclosure
that you are not an 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. 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. 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 securities,
including that it could cause the value of such securities to significantly
Ren Yong
FirstName
Puyi Inc. LastNameRen Yong
Comapany7,
December NamePuyi
2021 Inc.
December
Page 2 7, 2021 Page 2
FirstName LastName
decline or become worthless.
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 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
prospectus summary
should address, but not necessarily be limited to, the risks
highlighted on the prospectus
cover page.
Our Company, page 5
3. We note your disclosure on page 7 and throughout your filing that you
control and receive
economic benefits from Puyi Bohui's business operations through VIE
agreements and
that those agreements are designed to provide your WFOE with effective
control over the
VIE. We also note the disclosure on page 14 that you are the primary
beneficiary of the
VIE. However, you or your investors do not have an equity ownership
in, direct foreign
investment in, or control through such ownership/investment of the
VIE. As such, when
describing the design of the VIE agreements and related outcome,
please refrain from
implying that the VIE agreement is equivalent to an equity ownership
in the business of
the VIE. Any references to control or benefits that accrue to you
because of the VIE
should be limited to and clearly describe the conditions you met for
consolidation of the
VIE under U.S. GAAP and your disclosure should clarify that, for
accounting purposes,
you will be the primary beneficiary. In addition, your disclosure
should note, if true, that
the agreements have not been tested in a court of law.
4. Please disclose whether you are required to obtain any approvals to
offer securities to
foreign investors, whether you have received such approvals and the
consequences to you
and your investors if you do not receive or maintain the approvals,
inadvertently conclude
that such approvals are not required, or applicable laws, regulations,
or interpretations
change and you are required to obtain approval in the future.
5. Provide a clear description of how cash is transferred through your
organization. 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. Please expand your disclosure
on the
prospectus cover page to provide a description of how cash is
transferred through your
organization and the disclosure regarding your intentions to
distribute earnings or settle
amounts owed under the VIE agreements. State whether any transfers,
dividends, or
distributions have been made to date.
6. We note that the consolidated VIEs constitute a material part of your
consolidated
Ren Yong
FirstName
Puyi Inc. LastNameRen Yong
Comapany7,
December NamePuyi
2021 Inc.
December
Page 3 7, 2021 Page 3
FirstName LastName
financial statements. Please provide in tabular form a 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. The schedule should present major
line items, such as
revenue and cost of goods/services and subtotals and disaggregated
intercompany
amounts, such as separate line items for intercompany receivables and
investment in
subsidiary. The schedule should also disaggregate the parent company,
the VIEs and its
consolidated subsidiaries, the WFOEs that are the primary beneficiary
of the VIEs, and an
aggregation of other entities that are consolidated. The objective of
this disclosure is to
allow an investor to evaluate the nature of assets held by, and the
operations of, entities
apart from the variable interest entity, as well as the nature and
amounts associated with
intercompany transactions. Any intercompany amounts should be
presented on a gross
basis and when necessary, additional disclosure about such amounts
should be included in
order to make the information as presented not misleading.
7. Disclose in this section 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. We also note your disclosure on
page 12 and the risk
factor heading on page 16 that your ADSs may be delisted under the
Holding Foreign
Companies Accountable Act if the Public Company Accounting Oversight
Board is
unable to inspect auditors who are located in China. Please revise to
clarify that the
consequence is that trading in your securities may be prohibited under
the HFCA Act.
Our business is subject to complex and evolving Chinese laws and regulations
regarding data
privacy and cybersecurity, page 13
8. Please revise to discuss the extent to which you believe that you are
compliant with the
regulations or policies that have been issued by the CAC to date.
Risk Factors, page 13
9. Please move the risk factors related to your China operations to an
earlier part of your risk
factors, and make corresponding changes to the Summary of Risk
Factors.
Our ADSs may be delisted under the Holding Foreign Companies Accountable Act,
page 16
10. We note your disclosure that the U.S. Senate passed a bill on June 22,
2021 which, if
enacted, would reduce the number of consecutive non-inspection years
required for
triggering the prohibitions under the HFCA Act from three years to
two. Please clarify
that this bill was the Accelerating Holding Foreign Companies
Accountable Act, which, if
enacted, would reduce the time period before your securities may be
prohibited from
trading or delisted.
Ren Yong
Puyi Inc.
December 7, 2021
Page 4
Index to Exhibits, page II-3
11. Please list a statement of eligibility of trustee for the indenture as
an Exhibit 25 to
your registration statement. See Item 601(b)(25) of Regulation S-K. If
you wish
to designate the trustees on a delayed basis, as permitted by Section
305(b)(2) of the
Trust Indenture Act, please indicate that you will separately file the
Form T-1 under
the electronic form type "305B2" in the notes to the index, and
include the undertaking
contained in Item 512(j) of Regulation S-K. For further guidance,
please refer to Trust
Indenture Act of 1939 Compliance and Disclosure Interpretations
Questions 206.01 and
220.01.
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.
Please contact John Stickel at 202-551-3324 or Sonia Bednarowski at
202-551-3666 with
any questions.
FirstName LastNameRen Yong Sincerely,
Comapany NamePuyi Inc.
Division of
Corporation Finance
December 7, 2021 Page 4 Office of Finance
FirstName LastName