20-F: Sea Limited Details Securities Registered Under Exchange Act in 20-F Filing

Sea Limited's 20-F filing details the company's registered securities, including American depositary shares and Class A ordinary shares, as of December 31, 2023.

Summary

• Sea Limited's 20-F filing details the securities registered under Section 12 of the Securities Exchange Act of 1934 as of December 31, 2023.
• The registered securities include American depositary shares (ADSs), each representing one Class A ordinary share, and Class A ordinary shares themselves.
• The Class A ordinary shares are listed on the New York Stock Exchange (NYSE) under the trading symbol 'SE'.
• The Class A ordinary shares are registered but not for trading, only in connection with the listing of ADSs on the NYSE.
• All issued and outstanding ordinary shares are fully paid and non-assessable.
• Non-resident shareholders of the Cayman Islands may freely hold and vote their ordinary shares.
• The company's memorandum and articles of association prohibit the issuance of bearer shares; only registered shares are issued.
• Holders of ordinary shares are entitled to dividends declared by the board, subject to the memorandum and articles of association and Cayman Islands law.
• Dividends can only be paid out of profits or share premium, and only if the company can pay its debts after the dividend payment.
• The company maintains a register of members as required by Cayman Islands law, which serves as prima facie evidence of share ownership.
• The register includes member names, addresses, shareholdings, amounts paid on shares, and voting rights.
• The company's ordinary shares are divided into Class A and Class B shares, which have equal rights except for conversion and voting rights.
• Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder.
• Class B ordinary shares automatically convert to Class A upon transfer to a non-permitted transferee.
• Class A ordinary shares are not convertible into Class B ordinary shares, and no new Class B shares will be issued after the initial public offering (IPO).
• Holders of Class A and Class B ordinary shares vote together as one class, with Class A shares having one vote each and Class B shares having 15 votes each.
• Shareholders holding at least one-third of all votes can requisition an extraordinary general meeting.
• The board of directors is authorized to issue additional ordinary shares and preference shares, which may dilute the voting power of ordinary shareholders.
• In a liquidation event, assets are distributed to shareholders in proportion to the par value of their shares, after repaying share capital.
• The liability of members is limited to the amount unpaid on their shares.
• The board can make calls on ordinary shares for unpaid amounts, and shares are subject to forfeiture for non-payment.
• The company may redeem or repurchase shares, subject to certain conditions under Cayman Islands law.
• Rights attached to any class of shares can be materially adversely varied only with the written consent of the holders of a majority of the issued shares of that class or with the sanction of an ordinary resolution passed at a separate meeting of the holders of the shares of that class.
• Shareholders do not have general rights to inspect shareholder lists or corporate records, but the company will file annual audited financial statements with the SEC.
• Shareholders may increase share capital, consolidate shares, convert shares into stock, sub-divide shares, and cancel unissued shares by ordinary resolution.
• Shareholders may reduce share capital by special resolution, subject to Grand Court confirmation.
• The Companies Act differs from the laws applicable to Delaware corporations, particularly regarding mergers, shareholder suits, director duties, and shareholder actions.
• The company has provisions in its memorandum and articles of association that may discourage, delay or prevent a change of control of the company or management that shareholders may consider favorable.
• There are no limitations imposed by foreign law or by the memorandum and articles of association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on ordinary shares.
• The Bank of New York Mellon acts as the depositary for the American Depositary Shares (ADSs).
• Each ADS represents one Class A ordinary share deposited with The Hong Kong and Shanghai Banking Corporation Limited, as custodian for the depositary.
• ADS holders have rights as defined in the deposit agreement, which is governed by New York law.
• The depositary will distribute dividends and other distributions to ADS holders in proportion to the number of shares their ADSs represent, after deducting fees and expenses.
• The depositary will convert cash dividends into U.S. Dollars if possible and distribute them to ADS holders.
• The depositary may distribute additional ADSs representing shares distributed as a dividend or sell rights to purchase additional shares and distribute the net proceeds to ADS holders.
• ADS holders may surrender their ADSs for the purpose of withdrawal at the depositary's office and receive the underlying shares.
• ADS holders may exchange their ADR for uncertificated ADSs.
• ADS holders may instruct the depositary how to vote the number of deposited shares their ADSs represent.
• If the depositary does not receive voting instructions from an ADS holder by the specified date, the depositary will consider such ADS holder to have authorized and directed the depositary to give a discretionary proxy to a person designated by us to vote the number of deposited securities represented by their ADSs.
• The depositary may charge fees for various services, including issuance, cancellation, cash distribution, and depositary services.
• ADS holders are responsible for any taxes or other governmental charges payable on their ADSs or the deposited securities represented by their ADSs.
• The depositary will not tender deposited securities in any voluntary tender or exchange offer unless instructed to do so by an ADS holder surrendering ADSs.
• The deposit agreement may be amended by agreement between the company and the depositary without the holders consent for any reason.
• The depositary will initiate termination of the deposit agreement if we instruct it to do so.
• The deposit agreement expressly limits the obligations and liability of the company and the depositary.
• ADS holders have the right to cancel their ADSs and withdraw the underlying shares at any time except under certain limited circumstances.
• The Direct Registration System (DRS) and Profile Modification System (Profile) will apply to uncertificated ADSs.
• The depositary will make available for ADS holders inspection at its office all communications that it receives from us as a holder of deposited securities that we make generally available to holders of deposited securities.
• ADS Holders have a right to inspect the register of holders of ADSs, but not for the purpose of contacting those holders about a matter unrelated to our business or the ADSs.

Sentiment

Score: 5

Explanation: The document is a factual description of the company's securities and governance structure, with a neutral sentiment.

Positives

• Non-resident shareholders of the Cayman Islands may freely hold and vote their ordinary shares.
• Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder.
• The depositary will distribute dividends and other distributions to ADS holders in proportion to the number of shares their ADSs represent, after deducting fees and expenses.

Negatives

• Class A ordinary shares are registered but not for trading, only in connection with the listing of ADSs on the NYSE.
• Issuance of additional ordinary shares and preference shares may dilute the voting power of ordinary shareholders.
• Shareholders do not have general rights to inspect shareholder lists or corporate records.
• The Companies Act differs from the laws applicable to Delaware corporations, particularly regarding mergers, shareholder suits, director duties, and shareholder actions.
• The deposit agreement expressly limits the obligations and liability of the company and the depositary.
• ADS holders are responsible for any taxes or other governmental charges payable on their ADSs or the deposited securities represented by their ADSs.

Risks

• The board of directors is authorized to issue additional ordinary shares and preference shares, which may dilute the voting power of ordinary shareholders.
• The Companies Act differs from the laws applicable to Delaware corporations, particularly regarding mergers, shareholder suits, director duties, and shareholder actions.
• The company has provisions in its memorandum and articles of association that may discourage, delay or prevent a change of control of the company or management that shareholders may consider favorable.
• ADS holders may face difficulties in protecting their interests, and their ability to protect their rights through U.S. courts may be limited, because the company is incorporated under Cayman Islands law.
• The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and holders of ADSs may not be able to exercise their right to vote their Class A ordinary shares.
• The trading price of the ADSs is likely to be volatile, which could result in substantial losses to investors.

Future Outlook

The board of directors is authorized to issue additional ordinary shares and preference shares, which may dilute the voting power of ordinary shareholders.

Industry Context

This announcement is a standard regulatory filing for companies listed on the NYSE and provides information about the company's share structure and shareholder rights.

Comparison to Industry Standards

• The dual-class share structure with different voting rights is a common practice among technology companies, similar to Alphabet (Google) and Meta (Facebook).
• The limitations on shareholder rights to inspect corporate records are typical for Cayman Islands companies, contrasting with the more extensive rights available to shareholders of Delaware corporations.
• The use of a depositary for ADSs is a standard arrangement for foreign companies listed on U.S. exchanges, facilitating trading and ownership for U.S. investors.

Stakeholder Impact

• Shareholders: Details voting rights, dividend entitlements, and liquidation preferences.
• ADS Holders: Explains the rights and responsibilities of ADS holders, including fees and voting procedures.

Key Dates

Keywords

ordinary shares, American depositary shares, ADS, securities, Sea Limited, Class A, Class B, shareholders, depositary, dividends