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United States securities and exchange commission logo
April 1, 2022
Tao Xu
Chief Financial Officer
KE Holdings Inc.
Oriental Electronic Technology Building
No. 2 Chuangye Road, Haidian District
Beijing 1000086
People's Republic of China
Re: KE Holdings Inc.
Form 20-F for the
Fiscal Year Ended December 31, 2020
Filed April 6, 2021
File No. 001-39436
Dear Mr. Xu:
We have reviewed your February 17, 2022 response to our comment
letter 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. Unless we note otherwise, our references to prior comments are
to comments in our
December 17, 2021 letter.
Form 20-F for the Fiscal Year Ended December 31, 2020
Explanatory Note, page 1
1. Please disclose in the
explanatory note, if true, that these contracts with the variable
interest entities have
not been tested in court
2. We note your response
to our prior comment 9. Please revise the last sentence of the
proposed disclosure to
make clear whether these risks could cause the value of your
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 or
Tao Xu
FirstName LastNameTao Xu
KE Holdings Inc.
Comapany
April NameKE Holdings Inc.
1, 2022
April 21, 2022 Page 2
Page
FirstName LastName
may impact the company s ability to conduct its business, accept
foreign investments, or
list on a U.S. or other foreign exchange. Please expand disclosure at
the outset of Part I to
state 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.
3. We note your response to our prior comment 10. Please also refrain
from using terms such
as our VIE contractual arrangements when describing activities
or functions of the VIE.
In that regard, please ensure consistent references to the VIE
throughout your filing.
Item 3. Key Information, page 4
4. We note the revisions made in response to comment 1 and we reissue. We
note your
disclosure that the Cayman Islands holding company controls and
receives the economic
benefits of the VIE s business operations through contractual
agreements between the VIE
and your Wholly Foreign-Owned Enterprise (WFOE) and that those
agreements are
designed to provide your WFOE with the power, rights, and obligations
equivalent in all
material respects to those it would possess as the principal equity
holder of the VIE. We
also note your disclosure that the Cayman Islands holding company is
the primary
beneficiary of the VIE. However, neither the investors in the holding
company nor the
holding company itself have an equity ownership in, direct foreign
investment in, or
control of, through such ownership or investment, the VIE.
Accordingly, please refrain
from implying that the contractual agreements are equivalent to 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 a clear description of the conditions you
have satisfied for
consolidation of the VIE under U.S. GAAP. Additionally, your
disclosure should clarify
that you are the primary beneficiary of the VIE for accounting
purposes. Please also
disclose, if true, that the VIE agreements have not been tested in a
court of law.
5. Please provide early in this section a diagram of the company s
corporate structure,
identifying the person or entity that owns the equity in each depicted
entity. Describe all
contracts and arrangements through which you claim to have economic
rights and exercise
control that results in consolidation of the VIE s operations and
financial results into your
financial statements. 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 legal uncertainties and jurisdictional
limits.
6. We reissue comment 3. Disclose in this section each permission or
approval that you,
your subsidiaries, or the VIEs are required to obtain from Chinese
authorities to offer the
securities to foreign investors. State whether you, your subsidiaries,
or VIEs are covered
Tao Xu
FirstName LastNameTao Xu
KE Holdings Inc.
Comapany
April NameKE Holdings Inc.
1, 2022
April 31, 2022 Page 3
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FirstName LastName
by permissions requirements from the China Securities Regulatory
Commission (CSRC),
Cyberspace Administration of China (CAC) or any other governmental
agency that is
required to approve the VIE s operations and state affirmatively
whether you have
received all requisite permissions or approvals and whether any
permissions or approvals
have been denied. Please also describe the consequences to you and
your investors if you,
your subsidiaries, or the VIEs do not receive or maintain such
permissions or approvals.
7. We note your response to our prior comment 4. Please ensure that
amounts included in
this disclosure can be cross-referenced to the condensed consolidating
schedule and the
consolidated financial statements. Further, please include this
information with the
disclosures to be provided at both the outset of Item 3 and also the
outset of Part I.
8. We have further considered your response to our prior comment 5 issued
in our letter
dated September 20, 2021 and reflected in your correspondence dated
October 25, 2021
where you proposed to provide financial information related to the
VIEs in tabular format.
Please revise such information further to present the WFOEs that are
the primary
beneficiaries of the VIEs in a separate column, and describe the
intercompany activities
under the VIE agreements in order to provide investors with an
understanding for how the
VIE transacts with the WFOE and how the WFOE transacts with the
parent.
D. Risk Factors, page 8
9. We note your disclosure about the Holding Foreign Companies
Accountable Act. Please
expand your risk factors to disclose that the United States Senate has
passed the
Accelerating Holding Foreign Companies Accountable Act, which, if
enacted, would
decrease the number of "non-inspection years" from three years to two
years, and thus,
would reduce the time before your securities may be prohibited from
trading or delisted.
Update your disclosure to reflect that the Commission adopted rules to
implement the
HFCAA and that, pursuant to the HFCAA, the PCAOB has issued its report
notifying the
Commission of its determination that it is unable to inspect or
investigate completely
accounting firms headquartered in mainland China or Hong Kong.
10. Disclose the risks that being based in or having the majority of the
company s operations
in China poses to investors. For example, specifically discuss the
risk that the 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, which could
result in a material change in your operations and/or the value of the
securities you are
registering for sale.
General
11. We note that many of your officers and directors are located outside
of the United States.
Please include a separate section on enforcement of liabilities
addressing the ability of
shareholders to enforce their legal rights under United States
securities laws. Please also
revise the risk factor on page 42 to expand upon this risk.
Tao Xu
KE Holdings Inc.
April 1, 2022
Page 4
You may contact Babette Cooper, Staff Accountant, at 202-551-3396 or
Wilson Lee,
Staff Accountant, at 202-551-3468 if you have any questions.
FirstName LastNameTao Xu Sincerely,
Comapany NameKE Holdings Inc.
Division of Corporation
Finance
April 1, 2022 Page 4 Office of Real Estate &
Construction
FirstName LastName