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United States securities and exchange commission logo
August 25, 2022
Sunny Rui Sun
Chief Financial Officer
LexinFintech Holdings Ltd.
27/F CES Tower
No. 3099 Keyuan South Road
Nanshan District , Shenzhen 518057
Re: LexinFintech
Holdings Ltd.
Form 20-F for the
Fiscal Year Ended December 31, 2021
Filed April 29,
2022
File No. 001-38328
Dear Ms. Sun:
We have reviewed your filing 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.
Annual Report on Form 20-F Filed April 29, 2022
Part I
Introduction, page 1
1. We note that you define
"China" or the "PRC" as referring to the People s Republic of
China, excluding Hong
Kong, Macau and Taiwan. In future filings, please revise to
clarify that the legal
and operational risks associated with operating in China also apply to
operations in Hong
Kong, Macau and/or Taiwan. Additionally, to the extent you
have operations in Hong
Kong, Macau or Taiwan, or have directors and officers located in
Hong Kong, Macau or
Taiwan, discuss the commensurate laws and regulations in Hong
Kong, Macau and Taiwan,
if applicable, and any risks and consequences to the company
associated with those
laws and regulations.
Sunny Rui Sun
FirstName LastNameSunny
LexinFintech Holdings Ltd. Rui Sun
Comapany
August 25, NameLexinFintech
2022 Holdings Ltd.
August
Page 2 25, 2022 Page 2
FirstName LastName
Item 3. Key Information
A. Selected financial data
Our Holding Company Structure and Contractual Arrangements with the Variable
Interest
Entities and Their Shareholders, page 4
2. In future filings, please revise to disclose that the structure
involves unique risks to
investors and, if true, that these contracts have not been tested in
court. Explain whether
the VIE structure is used to provide investors with exposure to
foreign investment in
China-based companies where Chinese law prohibits direct foreign
investment in the
operating companies, and disclose that investors may never 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 a material change in the value of the
securities you are registering
for sale, 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.
3. In future filings, please revise your disclosure about the legal and
operational risks
associated with being based in, or having the majority of your
operations in China.
Without limitation, your disclosure should describe these risks and
make clear they could
cause the value of your securities to become worthless. Your
disclosure should also
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 or may impact the company s ability to conduct its
business, accept
foreign investments, or list on a U.S. or other foreign exchange.
Please disclose whether
your auditor is subject to the determinations announced by the PCAOB
on December 16,
2021 and whether and how the Holding Foreign Companies Accountable Act
and related
regulations will affect your company. In this regard we note your
disclosure in the last
risk factor on page 51.
4. In future filings, please revise to 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, or referring to the
VIE as a possessive of the operating company and its subsidiaries. For
example, disclose,
if true, that your subsidiaries and/or the VIE conduct operations in
China, that the VIE is
consolidated for accounting purposes but is not an entity in which you
own equity, and
that the holding company does not conduct operations. In this regard
we note that your
definition of "we" on page 1 includes the variable interest entities.
Sunny Rui Sun
FirstName LastNameSunny
LexinFintech Holdings Ltd. Rui Sun
Comapany
August 25, NameLexinFintech
2022 Holdings Ltd.
August
Page 3 25, 2022 Page 3
FirstName LastName
Cash and Asset Flows through Our Organization, page 6
5. In future filings, please revise to disclose any transfers of cash or
other assets, dividends,
or distributions that have been made to-date between the holding
company, its
subsidiaries, and consolidated VIEs, or to investors, and the
direction of the transfer or, if
none, so state. If any such transfers, dividends or distributions have
been made, provide
cross-references to the condensed consolidating schedule and the
consolidated financial
statements. 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. Additionally, in the first full paragraph on page 7,
disclose the U.S. Dollar
equivalent of the total amount of service fees that the VIEs paid to
the relevant WFOE
under the technical services agreements for the periods presented in
your financial
statements.
Permissions Required from the PRC Authorities for Our Operations, page 6
6. In future filings, please revise to describe the consequences to you
and your investors if
you, your subsidiaries, or the VIEs: (i) do not receive or maintain
permissions or
approvals you may be required to obtain from Chinese authorities to
operate your business
and to offer your securities, (ii) inadvertently conclude that such
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.
Additionally, please
disclose how you determined that permissions related to the CAC and
the CSRC s
Overseas Listing Regulations were not required. If you relied on the
advice of counsel in
making this determination, identify counsel. If you did not consult
counsel in making
these determinations, explain why you did not obtain the advice of
counsel; if true,
disclose that your determination is based on a risk-based analysis;
and include related risk
factor disclosure. Additionally, please update your related disclosure
elsewhere in your
annual report as necessary.
D. Risk Factors
Summary of Risk Factors, page 12
7. In future filings, please revise your summary of risk factors, 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 the 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;
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
Sunny Rui Sun
LexinFintech Holdings Ltd.
August 25, 2022
Page 4
operations and/or the value of the securities you are registering
for sale;
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;
Additionally, relocate the Risks Related to Our Corporate
Structure and the Risks
Related to Doing Business in China sections to the front of the
summary and detailed
risk factor sections;
Further, revise to discuss enforcement of civil liabilities in
Item 3 of your annual
report, state whether you have obtained the advice of Cayman
Islands and PRC
counsel with respect to your determinations and include a related
summary risk
factor; and
Please also revise the last risk factor on page 65 to make
corresponding disclosure
with respect to Cayman Islands and PRC counsels' respective
determinations.
C. Organizational Structure, page 109
8. In future filings, please revise to relocate this section toward the
beginning of Item 4.
Information on the Company. Additionally, disclose clearly that the
company uses a
structure that involves a VIE based in China and what that entails and
identify clearly the
entity(ies) in which the company s operations are conducted. Indicate
the domicile of
each entity depicted on the diagram of your corporate structure and
clearly disclose which
entities you won equity interests in and which you claim to have
economic rights and
exercise control over via contractual arrangements (i.e., the VIEs).
Further, describe 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
FirstName LastNameSunny Rui Sun
founders and owners, and the challenges the company may face enforcing
these
Comapany NameLexinFintech
contractual agreements due Holdings Ltd.
to legal uncertainties and jurisdictional
limits. Please also
disclose, if true,
August 25, 2022 Page 4 that the VIE agreements have not been tested in a
court of law.
FirstName LastName
Sunny Rui Sun
FirstName LastNameSunny
LexinFintech Holdings Ltd. Rui Sun
Comapany
August 25, NameLexinFintech
2022 Holdings Ltd.
August
Page 5 25, 2022 Page 5
FirstName LastName
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 Marc Thomas at 202-551-3452 or Robert Klein at
202-551-3847 if you
have questions regarding comments on the financial statements and related
matters. Please
contact David Gessert at 202-551-2326 or Eric Envall at 202-551-3234 with any
other questions.
Sincerely,
Division of
Corporation Finance
Office of Finance