20-F: Jianpu Technology Inc. Details Share Structure and Governance in 20-F Filing

Jianpu Technology Inc.'s 20-F filing provides a detailed overview of its share structure, corporate governance practices, and related party transactions, highlighting the company's operational framework and regulatory compliance.

Summary

• Jianpu Technology Inc., a Cayman Islands holding company, conducts its operations in China through subsidiaries and VIEs.
• The company's ordinary shares are divided into Class A (one vote per share) and Class B (ten votes per share), with Class B convertible to Class A.
• The filing details the rights of shareholders, including dividend entitlements and voting rights, as governed by Cayman Islands law.
• It outlines the contractual arrangements with VIEs, emphasizing control through exclusive purchase options, equity pledges, and business cooperation agreements.
• The document addresses risks associated with the VIE structure, including potential conflicts of interest and regulatory uncertainties.
• It discusses the impact of PRC laws on foreign investment, data security, and overseas securities offerings.
• The filing also covers the Holding Foreign Companies Accountable Act and its potential impact on the company's trading status in the U.S.
• Cash flow management within the organization is explained, noting restrictions on dividend payments from PRC subsidiaries.
• The document includes financial information related to the VIEs, providing a condensed consolidating schedule of financial positions, results of operations and cash flows.
• The company has completed reporting procedures with the CSRC as required by the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies in connection with its delisting from the NYSE.

Sentiment

Score: 5

Explanation: The document presents a mixed sentiment. While there's a reduction in net loss and revenue growth, the delisting from the NYSE and regulatory uncertainties weigh negatively.

Positives

• The company has completed reporting procedures with the CSRC as required by the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies in connection with its delisting from the NYSE.
• The company has implemented a dynamic and multi-layered cybersecurity defense system to effectively mitigate both internal and external cyber threats.

Negatives

• The company's ADSs may be subject to trading prohibitions under the Holding Foreign Companies Accountable Act.
• The company's ability to pay dividends depends on the performance of its PRC subsidiaries and is subject to PRC regulations.
• The company relies on contractual arrangements with VIEs to operate in restricted sectors, which carries regulatory risks.
• The company's ADSs were delisted from the NYSE and have subsequently been quoted on the OTC Pink.

Risks

• The company faces risks associated with PRC regulations, including data security, foreign investment restrictions, and cybersecurity reviews.
• The company's VIE structure is subject to regulatory scrutiny and may be deemed non-compliant.
• The company's ADSs may be prohibited from trading in the United States under the HFCAA if the PCAOB is unable to inspect or investigate completely auditors located in China.
• The company's ability to pay dividends depends on the performance of its PRC subsidiaries and is subject to PRC regulations.
• The company's ADSs were delisted from the NYSE and have subsequently been quoted on the OTC Pink.

Future Outlook

The company intends to manage and further reduce its cost of promotion and acquisition as a proportion of its total revenues. The company expects its sales and marketing expenses and research and development expenses in 2024 to remain relatively stable.

Industry Context

The company operates in China's rapidly evolving online and mobile consumer market, which is subject to regulatory changes and competition from other platforms, including those affiliated with major internet companies.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards or benchmarks.
• The document does not list specific comparible companies, projects, and results.

Legal Proceedings

• A putative securities class action was filed against the company and certain of its officers in the U.S. District Court for the Southern District of New York: Guttentag v. Jianpu Technology Inc. et al. (Case No. 21-cv-01419).
• The plaintiffs in the case allege, in sum and substance, that certain of the company's disclosures since the first quarter of 2018 contained material misstatements and omissions in violation of the Securities Exchange Act of 1934.
• On August 23, 2023, the Court granted the company's motion to dismiss the second amended complaint and closed the case with no claim for the Company.

Related Party Transactions

• The company generated revenues in the total amount of RMB1.1 million for the loan recommendation services to RONG360, RMB2.1 million for the big data and system-based risk management services to RONG360, and charged administrative expenses of RMB6.0 million to RONG360, including expenses related to operational, administrative, human resources, legal, accounting and internal control.
• RONG360 charged the company RMB0.4 million for cost of promotion and acquisition and RMB0.5 million for research and development expenses including expenses related to system development.
• As of December 31, 2023, RMB6.9 million was due to RONG360, which reflected the aforementioned related party transactions and related settlement and prepayment between RONG360 and the company.
• Another related party is the company's equity investee in which the company acquired 35% interest in March 2021, which charged the company customer services of RMB1.1 million for service delivered in 2023.
• As of December 31, 2023, the company had RMB3.5 million due to a related party, from which the company obtained contractual control of KTN in October 2018.
• As of December 31, 2023, the company also had RMB24 thousand due from other related parties.

Stakeholder Impact

• Shareholders face uncertainty due to regulatory changes and potential trading prohibitions.
• Employees may be affected by cost optimization measures and changes in business strategy.
• Customers may experience changes in service offerings and product availability.
• Financial service providers may be impacted by changes in the company's platform and services.

Next Steps

• The company will continue to monitor and assess any development in the rule-making process of the Cybersecurity Review Measures and the enacted version of the Regulations on the Administration of Cyber Data Security (Draft for Comments).
• The company will continue to promote such business adjustments to comply with the Administrative Measures on Credit Reporting Business.

Key Dates

Keywords

Jianpu Technology, 20-F Filing, Share Structure, Corporate Governance, VIE Structure, PRC Regulations, HFCAA, ADSs, Dividends, Delisting