Leju Holdings Limited Annual Report 2021

Plain-text annual report

Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 20-F(Mark One)☐REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934OR☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2021.OR☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal period from to OR☐SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934Date of event requiring this shell company reportFor the transition period from to Commission file number: 001-36396Leju Holdings Limited(Exact name of Registrant as specified in its charter)N/A(Translation of Registrant’s name into English)Cayman Islands(Jurisdiction of incorporation or organization)Level G, Building G, No.8 Dongfeng South Road,Chaoyang District, Beijing 100016The People’s Republic of China(Address of principal executive offices)Li-Lan Cheng, Chief Financial OfficerLeju Holdings LimitedLevel G, Building G, No.8 Dongfeng South Road,Chaoyang District, Beijing 100016People’s Republic of ChinaTelephone: +86 10 5895 1180Facsimile: +86 10 5895 1678(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)Securities registered or to be registered pursuant to Section 12(b) of the Act:Title of each class Trading Symbol Name of each exchange on which registeredAmerican Depositary Shares, each representing one ordinary share,par value $0.001 per shareLEJUNew York Stock ExchangeOrdinary shares, par value $0.001 per share*New York Stock Exchange* Not for trading but only in connection with the listing on the New York Stock Exchange of American depositary sharesSecurities registered or to be registered pursuant to Section 12(g) of the Act:None(Title of Class)Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:None(Title of Class)Table of ContentsIndicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.136,822,601 ordinary shares (excluding the 3,580,151 ordinary shares issued to our depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vestingof awards granted under our share incentive plan), par value $0.001 per share, as of December 31, 2021.Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes ☐ No ☒If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of1934.Yes ☐ No ☒Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes ☐ No ☒Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of thischapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).Yes ☒ No ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “largeaccelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):Large accelerated filer ☐Accelerated filer ☐Non-accelerated filer ☒Emerging growth company ☐If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extendedtransition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act ☐† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April5, 2012.Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reportingunder Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:U.S. GAAP ☒International Financial Reporting Standards as issued by the International Accounting Standards Board ☐Other ☐If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.Item 17 ☐ Item 18 ☐If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ☐ No ☒(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent tothe distribution of securities under a plan confirmed by a court.Yes ☐ No ☒Table of ContentsTABLE OF CONTENTSPageINTRODUCTION1FORWARD-LOOKING STATEMENTS2PART I3ITEM 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS3ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE3ITEM 3.KEY INFORMATION3ITEM 4.INFORMATION ON THE COMPANY51ITEM 4A.UNRESOLVED STAFF COMMENT84ITEM 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTS84ITEM 6.DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES103ITEM 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS114ITEM 8.FINANCIAL INFORMATION122ITEM 9.THE OFFER AND LISTING122ITEM 10.ADDITIONAL INFORMATION123ITEM 11.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK133ITEM 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES134PART II136ITEM 13.DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES136ITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS136ITEM 15.CONTROLS AND PROCEDURES136ITEM 16.[RESERVED]137ITEM 16A.AUDIT COMMITTEE FINANCIAL EXPERT137ITEM 16B.CODE OF ETHICS137ITEM 16C.PRINCIPAL ACCOUNTANT FEES AND SERVICES137ITEM 16D.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES138ITEM 16E.PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS138ITEM 16F.CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT138ITEM 16G.CORPORATE GOVERNANCE138ITEM 16H.MINE SAFETY DISCLOSURE138ITEM 16I.DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS138PART III139ITEM 17.FINANCIAL STATEMENTS139ITEM 18.FINANCIAL STATEMENTS139ITEM 19.EXHIBITS139SIGNATURES144Table of Contents1INTRODUCTIONUnless otherwise indicated and except where the context otherwise requires, references in this annual report on Form 20-F to:●“Leju” are to Leju Holdings Limited, and “we,” “us,” “our company,” or “our” are to Leju Holdings Limited and its subsidiaries, and, in the context ofdescribing our operations and consolidated financial information, our consolidated variable interest entities in China (each a consolidated variableinterest entity), including but not limited to Beijing Leju, Leju Hao Fang and Beijing Jiajujiu, and their respective subsidiaries;●“ADSs” are to our American depositary shares, each of which represents one ordinary share;●“Alibaba” are to Alibaba Group Holding Limited;●“Beijing Leju” are to Beijing Yisheng Leju Information Services Co., Ltd.;●“Beijing Jiajujiu” are to Beijing Jiajujiu E-Commerce Co., Ltd.;●“Beijing Maiteng” are to Beijing Maiteng Fengshun Science and Technology Co., Ltd.;●“China” or the “PRC” are to the People’s Republic of China, excluding, for the purposes of this annual report only, Hong Kong, Macau and Taiwan;●“Exchange Act” are to the Securities Exchange Act of 1934, as amended;●“E-House” are to E-House (China) Holdings Limited, a Cayman Islands exempted company with limited liability, and its predecessor entities;●“E-House Enterprise” are to E-House (China) Enterprise Holdings Limited, an exempted company incorporated in the Cayman Islands with limitedliability and listed on the main board of the Hong Kong Stock Exchange (stock code: 2048);●“O2O services” are to online to offline services, including in connection with the marketing of new residential properties by developers;●“ordinary shares” to our ordinary shares, par value $0.001 per share;●“RMB” and “Renminbi” are to the legal currency of China;●“Shanghai SINA Leju” are to Shanghai SINA Leju Information Technology Co., Ltd.;●“Leju Hao Fang” are to Shanghai Leju Hao Fang Information Service Co., Ltd. (formerly known as Shanghai Yi Xin E-Commerce Co., Ltd.);●“Shanghai Yi Yue” are to Shanghai Yi Yue Information Technology Co., Ltd.;●“SINA” are to SINA Corporation;●“Tencent” are to Tencent Holdings Limited or certain of its affiliates which have entered into agreements with us as described under “Item 7. MajorShareholders and Related Party Transactions—Related Party Transactions—Transactions and Agreements with Tencent”, as applicable;●“TM Home” are to TM Home Limited;●“U.S. dollars”, “$”, and “dollars” are to the legal currency of the United States;●“Weibo” are to SINA’s microblog; and●“Weixin” are to Tencent’s social communication platform “wechat”.Table of Contents2FORWARD-LOOKING STATEMENTSThis annual report on Form 20-F contains forward-looking statements that involve risks and uncertainties. All statements other thanstatements of historical facts are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factorsthat may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-lookingstatements.You can identify these forward-looking statements by words or phrases such as “may”, “will”, “expect”, “anticipate”, “aim”, “estimate”,“intend”, “plan”, “believe”, “likely to” or other similar expressions. We have based these forward-looking statements largely on our currentexpectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations,business strategy and financial needs. These forward-looking statements include:●our anticipated growth strategies;●our future business development, results of operations and financial condition;●expected changes in our revenues and certain cost or expense items;●the impact of the COVID-19 on our business operations, the industries we are operating in and the economy of China and elsewheregenerally;●our ability to attract clients and further enhance our brand recognition; and●trends and competition in the real estate services industry.You should read thoroughly this annual report and the documents that we refer to in this annual report with the understanding that ouractual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by thesecautionary statements. Other sections of this annual report include additional factors which could adversely impact our business and financialperformance. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possiblefor our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to whichany factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.You should not rely upon forward-looking statements as predictions of future events. We undertake no obligation to update or revise anyforward-looking statements, whether as a result of new information, future events or otherwise.Table of Contents3PART IITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERSNot applicable.ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLENot applicable.ITEM 3. KEY INFORMATIONOur Holding Company Structure and Contractual Arrangements with our Consolidated Variable Interest EntitiesLeju Holdings Limited is not a Chinese operating company but a Cayman Islands holding company with no equity ownership in itsconsolidated variable interest entities. We conduct our operations primarily through our PRC subsidiaries and our consolidated variable interestentities (including our variable interest entities, or VIEs, and their subsidiaries) in China. PRC laws and regulations restrict and impose conditionson foreign investment in the internet industry and there is uncertainty over administrative practice in advertising industries. Accordingly, weoperate part of our business through our consolidated variable interest entities, and rely on contractual arrangements among our PRC subsidiaries,our consolidated variable interest entities and their shareholders to control the business operations of our consolidated variable interest entities.Revenues contributed by our consolidated variable interest entities accounted for 99.9%, 99.9% and 99.9% of our total revenues for the years of2019, 2020 and 2021, respectively. As used in this annual report, “we,” “us,” “our company” and “our” refers to Leju Holdings Limited, itssubsidiaries, and, in the context of describing our operations and consolidated financial information, our consolidated variable interest entities inChina, including but not limited to Beijing Leju, Leju Hao Fang, or Beijing Jiajujiu, and their respective subsidiaries. Holders of Leju’s ADSs holdequity interest in Leju Holdings Limited, our Cayman Islands holding company, and do not have direct or indirect interest in our consolidatedvariable interest entities in China.A series of contractual agreements, including exclusive call option agreements, loan agreements, equity pledge agreements, powers ofattorney, exclusive business cooperation agreements, have been entered into by and among our subsidiaries, our consolidated variable interestentities and their respective shareholders. Terms contained in each set of contractual arrangements with our consolidated variable interest entitiesand their respective shareholders are substantially similar. As a result of the contractual arrangements, we have effective control over and areconsidered the primary beneficiary of these companies, and we have consolidated the financial results of these companies in our consolidatedfinancial statements. For more details of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure.”However, the contractual arrangements may not be as effective as direct ownership in providing us with control over our consolidatedvariable interest entities, and we may incur substantial costs to enforce the terms of the arrangements. In addition, these agreements have not beentested in PRC courts. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We rely on contractualarrangements with Beijing Leju, Leju Hao Fang and Beijing Jiajujiu and their respective shareholders for a portion of our operations, which maynot be as effective as direct ownership in providing operational control” and “Item 3. Key Information—D. Risk Factors—Risks Related to OurCorporate Structure—The shareholders of our consolidated variable interest entities may have potential conflicts of interest with us, and if any suchconflicts of interest are not resolved in our favor, our business may be materially and adversely affected.”There are also substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rulesregarding the status of the rights of Leju, a Cayman Islands holding company, with respect to its contractual arrangements with our consolidatedvariable interest entities and their shareholders. It is uncertain whether any new PRC laws or regulations relating to variable interest entitystructures will be adopted or if adopted, what they would provide. If we or any of our consolidated variable interest entities is found to be inviolation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRCregulatory authorities would have broad discretion to take action in dealing with such violations or failures. See “Item 3. Key Information—D. RiskFactors—Risks Related to Our Corporate Structure— If the PRC government finds that the agreements that establish the structure for operating ouradvertising services business and real estate online business in China do not comply with PRC governmental restrictions on foreign investment intheTable of Contents4advertising industry or the internet information service industry, we could be subject to severe penalties” and “—Substantial uncertainties existwith respect to the interpretation and implementation of the PRC Foreign Investment Law and how it may impact the viability of our currentcorporate structure, corporate governance and business operations.”Our corporate structure is subject to risks associated with our contractual arrangements with our consolidated variable interest entities. Ifthe PRC government deems that our contractual arrangements with our consolidated variable interest entities do not comply with PRC regulatoryrestrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change or areinterpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. Leju, itsPRC subsidiaries and consolidated variable interest entities, and investors of Leju face uncertainty about potential future actions by the PRCgovernment that could affect the enforceability of the contractual arrangements with our consolidated variable interest entities and, consequently,significantly affect the financial performance of our consolidated variable interest entities and our company as a whole. For a detailed descriptionof the risks associated with our corporate structure, please refer to risks disclosed under “Item 3. Key Information—D. Risk Factors—RisksRelated to Our Corporate Structure.”We face various risks and uncertainties related to doing business in China. Our business operations are primarily conducted in China, andwe are subject to complex and evolving PRC laws and regulations. For example, we face risks associated with regulatory approvals on offshoreofferings, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy, which may impact our ability to conduct certainbusinesses, accept foreign investments, or list on a United States or other foreign exchange. These risks could result in a material adverse change inour operations and the value of our ADSs, significantly limit or completely hinder our ability to continue to offer securities to investors, or causethe value of such securities to significantly decline. For a detailed description of risks related to doing business in China, please refer to risksdisclosed under “Item 3.D. Key Information—Risk Factors—Risks Related to Doing Business in China.”PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by,and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities toinvestors. Implementation of industry-wide regulations, including data security or anti-monopoly related regulations, in this nature may cause thevalue of such securities to significantly decline. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to DoingBusiness in China—The PRC government’s significant oversight and discretion over our business operation could result in a material adversechange in our operations and the value of our ADSs.”Risks and uncertainties arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws andquickly evolving rules and regulations in China, could result in a material adverse change in our operations and the value of our ADSs. For moredetails, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China —Uncertainties with respect to the PRC legalsystem could adversely affect us.” and “—Substantial uncertainties exist with respect to the interpretation and implementation of the PRC ForeignInvestment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.”Permissions Required from the PRC Authorities for Our OperationsWe conduct our business primarily through our subsidiaries and consolidated variable interest entities in China. Our operations in Chinaare governed by PRC laws and regulations. As of the date of this annual report, our PRC subsidiaries and consolidated variable interest entitieshave obtained the requisite licenses and permits from the PRC government authorities that are material for the business operations of Leju, its PRCsubsidiaries and consolidated variable interest entities in China, including, among others, the value-added telecommunications business operatinglicense with the approved business scope of “internet information service” and the filing with the real estate administrative authority for our realestate agency and brokerage businesses, and also given the uncertainties of interpretation and implementation of relevant laws and regulations andthe enforcement practice by relevant government authorities, we are required and may further be required to obtain additional licenses, permits,filings or approvals for the functions and services of our platform in the future. For more detailed information, see “Item 3. Key Information—D.Risk Factors—If we fail to obtain or keep licenses, permits or approvals applicable to the various online real estate services provided by us, wemay incur significant financial penalties and other government sanctions.”Furthermore, the PRC government has recently indicated an intent to exert more oversight and control over offerings that are conductedoverseas and/or foreign investment in China-based issuers. On December 24, 2021, the CSRC issued a draft of the Provisions of the State Councilon the Administration of Overseas Securities Offering and Listing by Domestic Companies, and a draftTable of Contents5of Administration Measures for the Filing of Overseas Securities Offering and Listing by Domestic Companies, for public comments, according towhich, the issuer or its affiliated major domestic operating company, as the case may be, shall file with the CSRC and report the relevantinformation for its follow-on offshore offering and other equivalent offshore offering activities. As of the date of this annual report, theaforementioned draft provisions have not been adopted and there still exists substantial uncertainties surrounding the CSRC requirements at thisstage. The approval of or report and filing with the CSRC, or other governmental authorities may be required in connection with our future offshoreofferings, and, if required, we cannot predict if we will be able to obtain such approval or complete such report and filing process.For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China— Theapproval of or report and filing with the CSRC or other PRC government authorities may be required in connection with our offshore offeringsunder PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing andreporting process.”Holding Foreign Companies Accountable ActThe Holding Foreign Companies Accountable Act, or the HFCAA, was enacted on December 18, 2020. The HFCAA states if the SECdetermines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PublicCompany Accounting Oversight Board (United States), or the PCAOB, for three consecutive years beginning in 2021, the SEC shall prohibit ourshares or ADSs from being traded on a national securities exchange. We have appointed Yu Certified Public Account, P.C., or Yu CPA, for the auditof our consolidated financial statements since the fiscal year ended December 31, 2019. Yu CPA is a U.S.-based accounting firm that is registeredwith the PCAOB and can be inspected by the PCAOB. Our predecessor auditor's work related to our operations in China for the fiscal years 2012to 2018 was not inspected by the PCAOB. There is no guarantee that our current auditor or any future auditor engaged by us would remain subjectto full PCAOB inspection during the entire term of our engagement, which may impact our ability to remain listed on a United States exchange.The related risks and uncertainties could cause the value of the ADSs to significantly decline. For more details, see “Item 3. Key Information—D.Risk Factors—Risks Related to Doing Business in China—Although our independent registered public accounting firm is registered with thePCAOB and currently subject to periodic PCAOB inspection, if it is later determined that the PCAOB is unable to inspect or investigate our auditorcompletely, investors would be deprived of the benefits of such inspection and our ADSs may be delisted or prohibited from trading.”Cash and Asset Flows through Our OrganizationLeju Holdings Limited is a holding company with no operations of its own. We conduct our operations in China primarily through oursubsidiaries and consolidated variable interest entities in China. As a result, although other means are available for us to obtain financing at theholding company level, Leju Holdings Limited’s ability to pay dividends to the shareholders and to service any debt it may incur may depend upondividends paid by our PRC subsidiaries and license and service fees paid by our PRC consolidated variable interest entities. If any of oursubsidiaries incurs debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends to LejuHoldings Limited. In addition, our PRC subsidiaries are permitted to pay dividends to Leju Holdings Limited only out of their retained earnings, ifany, as determined in accordance with PRC accounting standards and regulations. Further, our PRC subsidiaries and consolidated variable interestentities are required to make appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds, which arenot distributable as cash dividends except in the event of a solvent liquidation of the companies. For more details, see “Item 5. Operating andFinancial Review and Prospects—Liquidity and Capital Resources—Holding Company Structure.”Under PRC laws and regulations, our PRC subsidiaries and consolidated variable interest entities are subject to certain restrictions withrespect to paying dividends or otherwise transferring any of their net assets to us. Remittance of dividends by a wholly foreign-owned enterpriseout of China is also subject to examination by the banks designated by SAFE. The amounts restricted include the paid-up capital and the statutoryreserve funds of our PRC subsidiaries and the net assets of our consolidated variable interest entities in which we have no legal ownership, totaling$40.7 million, $52.9 million and $42.1 million as of December 31, 2019, 2020 and 2021, respectively. For risks relating to the fund flows of ouroperations in China, see “Item 3. Key Information—Risk Factors—Risks Related to Doing Business in China—Our PRC subsidiaries andconsolidated variable interest entities are subject to restrictions on paying dividends or making other payments to us, which may restrict our abilityto satisfy our liquidity requirements.”Table of Contents6Under PRC law, Leju Holdings Limited may provide funding to our PRC subsidiaries only through capital contributions or loans, and toour PRC consolidated variable interest entities only through loans, subject to satisfaction of applicable government registration and approvalrequirements. In the years ended December 31, 2019, 2020 and 2021, Leju Holdings Limited extended loans with outstanding principal amount ofRMB40.0 million, RMB40.0 million and RMB40.0 million, respectively, to our intermediate holding companies and subsidiaries, and ourconsolidated variable interest entities received RMB40.0 million, RMB40.0 million and RMB40.0 million as capital or investment, respectively.Leju Holdings Limited declared and paid cash dividends of USD26.9 million in 2015. It does not have any present plan to pay any cashdividends on our ordinary shares in the foreseeable future. We currently intend to retain most, if not all, of our available funds and any futureearnings to operate and expand our business. See “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Dividend Policy.” For PRC and United States federal income tax considerations of an investment in our ADSs, see “Item 10. AdditionalInformation—E. Taxation.”Selected Consolidated Financial DataThe following selected consolidated statements of operations data for the years ended December 31, 2019, 2020 and 2021 and selectedconsolidated balance sheet data as of December 31, 2020 and 2021 have been derived from our audited consolidated financial statements includedelsewhere in this annual report. The selected consolidated financial data should be read in conjunction with our audited consolidated financialstatements and related notes and “Item 5. Operating and Financial Review and Prospects” in this annual report. Our consolidated financialstatements are prepared and presented in accordance with U.S. GAAP.Our selected consolidated statement of operations data for the fiscal years ended December 31, 2017 and 2018 and our consolidatedbalance sheet data as of December 31, 2017, 2018 and 2019 have been derived from our audited consolidated financial statements not included inthis annual report.Our selected consolidated financial data also includes certain non-GAAP measures, which are not required by, or presented in accordancewith U.S. GAAP, but are included because we believe they are indicative of our operating performance and are used by investors and analysts toevaluate companies in our industry.Table of Contents7Our historical results do not necessarily indicate results expected for any future periods.Year Ended December 31,Selected Consolidated Statement of Operations Data 2017 2018 2019 2020 2021 (in thousands of $, except share and per share data)Revenues E-commerce 234,836 320,271 547,184 547,895 411,097Online advertising 113,235 138,372 143,779 170,783 122,522Listing 14,461 3,388 1,642 848 498Total net revenues 362,532 462,031 692,605 719,526 534,117Cost of revenues (74,054) (72,910) (68,298) (73,762) (55,801)Selling, general and administrative expenses (434,276) (402,258) (607,165) (622,026) (645,623)Goodwill impairment (41,223) — — — —Other operating income, net 3,072 2,163 598 381 560Income (loss) from operations (183,949) (10,974) 17,740 24,119 (166,747)Income (loss) before income taxes and income (loss) fromequity in affiliates (182,155) (14,107) 19,871 31,687 (163,408)Net income (loss) (162,043) (12,852) 10,872 20,998 (149,924)Net income (loss) attributable to Leju Holdings Limitedshareholders (160,901) (13,481) 11,522 19,302 (150,934)Income (loss) Earnings per share: Basic (1.19) (0.10) 0.08 0.14 (1.10)Diluted (1.19) (0.10) 0.08 0.14 (1.10)Weighted average numbers of shares used in computation: Basic 135,708,350 135,763,962 135,770,793 136,070,785 136,652,162Diluted 135,708,350 135,763,962 135,811,751 137,564,567 136,652,162As of December 31,Selected Consolidated Balance Sheet Data 2017 2018 2019 2020 2021 (in thousands of $)Cash and cash equivalents 150,968 147,263 159,012 284,489 250,314Accounts receivable and contract assets, net of allowance 80,606 104,834 148,467 204,586 37,486Total current assets 284,833 280,552 383,201 522,707 320,875Intangible assets, net 70,631 57,401 45,581 34,213 23,298Total assets 438,944 416,727 524,480 641,961 437,248Amounts due to related parties 3,093 3,477 4,407 7,106 7,632Total current liabilities 163,891 160,381 237,513 316,890 260,708Total liabilities 181,907 175,161 272,121 347,176 286,189Total Leju Holdings Limited shareholders’ equity 260,303 244,089 255,401 295,927 151,255Table of Contents8Non-GAAP financial MeasuresThe following table sets forth, for the periods specified, our adjusted income (loss) from operations, our adjusted net income (loss), andour adjusted net income (loss) attributable to Leju Holdings Limited shareholders. We present these non-GAAP financial measures because theyare used by our management to evaluate our operating performance, formulate business plans, and make strategic decisions on capital allocation.These non-GAAP financial measures enable our management to assess our operating results without considering the impact of non-cash charges,including share-based compensation expense, amortization of intangible assets resulting from business combinations and goodwill impairment. Wealso believe they are indicative of our operating performance and are used by investors and analysts to evaluate companies in our industry. Thesenon-GAAP measures of our performance are not required by, or presented in accordance with, U.S. GAAP. Such measures are not a measurementof financial performance or liquidity under U.S. GAAP and should not be considered as an alternative to income from operations, net income orany other performance measures derived in accordance with U.S. GAAP or an alternative to cash flows from operating activities as a measure ofliquidity. Our presentation of such measures may not be comparable to similarly titled measures presented by other companies. You should notcompare such measures as presented by us with the presentation of such measures by other companies because not all companies use the samedefinition.We define adjusted income (loss) from operations as income (loss) from operations before share-based compensation expense,amortization of intangible assets resulting from business combinations and goodwill impairment.We define adjusted net income (loss) as net income (loss) before share-based compensation expense, amortization of intangible assetsresulting from business combinations, goodwill impairment, and income tax impact on the share-based compensation expense, amortization ofintangible assets resulting from business combinations, and goodwill impairment.We define adjusted net income (loss) attributable to Leju Holdings Limited shareholders as net income (loss) before share-basedcompensation expense (net of non-controlling interests), amortization of intangible assets resulting from business combinations (net of non-controlling interests), goodwill impairment (net of non-controlling interests) and income tax impact on the share-based compensation expense,amortization of intangible assets resulting from business combinations, and goodwill impairment.We determine the tax effect of the items excluded from adjusted net income (loss) and adjusted net income (loss) attributable to LejuHoldings Limited shareholders based upon evaluation of the statutory tax treatment and the applicable tax rate of the jurisdiction in which the pre-tax items were incurred, and for which realization of the resulting tax benefit, if any, is expected. In certain jurisdictions where we do not expect torealize a tax benefit (due to a history of operating losses or other factors resulting in a valuation allowance related to deferred tax assets), a 0% taxrate is applied. The tax rates reflected are appropriate based on the non-GAAP income reflected in the reconciliation table.The use of the above non-GAAP financial measures has material limitations as an analytical tool, as they do not include all items thatimpact our income (loss) from operations, net income (loss), and net income (loss) attributable to Leju Holdings Limited shareholders for theperiod. We compensate for these limitations by providing the relevant disclosure of our share-based compensation expense, amortization ofintangible assets resulting from business acquisitions and goodwill impairment in our reconciliations to the financial measures under U.S. GAAP,and in our consolidated financial statements, all of which should be considered when evaluating our performance.Table of Contents9The following table reconciles our adjusted income (loss) from operations, adjusted net income (loss) and adjusted net income (loss)attributable to Leju Holdings Limited shareholders in the periods presented to the most directly comparable financial measure calculated andpresented in accordance with U.S. GAAP:Year Ended December 31, 2017 2018 2019 2020 2021 (in thousands of $)Income (loss) from operations (183,949) (10,974) 17,740 24,119 (166,747)Share-based compensation expense(1) 3,525 4,058 3,597 2,978 1,657Amortization of intangible assets resulting from business acquisitions 13,333 13,064 12,611 11,180 10,558Goodwill impairment 41,223 — — — —Adjusted income (loss) from operations (125,868) 6,148 33,948 38,277 (154,532)Net income (loss) (162,043) (12,852) 10,872 20,998 (149,924)Share-based compensation expense(1) 3,525 4,058 3,597 2,978 1,657Amortization of intangible assets resulting from business acquisitions 13,333 13,064 12,611 11,180 10,558Goodwill impairment 41,223 — — — —Income tax benefits: Current — — — — —Deferred(2) (2,144) (3,266) (3,153) (2,795) (2,640)Adjusted net income (loss) (106,106) 1,004 23,927 32,361 (140,349)Net income (loss) (160,901) (13,481) 11,522 19,302 (150,934)Share-based compensation expense(1) 3,491 4,038 3,597 2,978 1,657Amortization of intangible assets resulting from business acquisitions 13,333 13,064 12,611 11,180 10,558Goodwill impairment 41,223 — — — —Income tax benefits: Current — — — — —Deferred(2) (2,144) (3,266) (3,153) (2,795) (2,640)Adjusted net income (loss) attributable to Leju Holdings Limited shareholders (104,998) 355 24,577 30,665 (141,359)Note:(1)Share-based compensation expense includes share-based compensation expenses recorded by us for our own plans and options granted to ouremployees under E-House’s share incentive plan.(2)Represents the realization of deferred tax liabilities recognized for the temporary difference between the tax basis of intangible assetsrecognized from acquisitions and their reported amounts in the financial statements. The income tax impact on the share-based compensationexpense and goodwill impairment are nil.Financial Information Related to Our Consolidated Variable Interest EntitiesTable of Contents10The following table presents the condensed consolidating schedule of financial position for our consolidated variable interest entities andother entities as of the dates presented.Selected Condensed Consolidated Statements of Income InformationFor the Year Ended December 31, 2021 Consolidated CompanyVariable InterestSubsidiariesEntitiesEliminationsConsolidated TotalUSD(In thousand)Total net revenues 498 582,290 (48,671) 534,117Cost of revenues (8,071) (47,730) — (55,801)Selling, general and administrative expenses (79,342) (614,952) 48,671 (645,623)Other operating income, net 116 444 — 560Loss from operations (86,799) (79,948) — (166,747)Loss before income taxes and income (loss) from equity in affiliates (86,435) (76,973) — (163,408)Net loss (68,394) (81,530) — (149,924)For the Year Ended December 31, 2020 Consolidated CompanyVariable InterestSubsidiariesEntitiesEliminationsConsolidated TotalUSD(In thousand)Total net revenues 50,636 718,861 (49,971) 719,526Cost of revenues (8,149) (115,584) 49,971 (73,762)Selling, general and administrative expenses (29,354) (592,672) — (622,026)Other operating income, net 191 190 — 381Income from operations 13,324 10,795 — 24,119Income before income taxes and income (loss) from equity in affiliates 13,804 17,883 — 31,687Net income 6,720 14,278 — 20,998For the Year Ended December 31, 2019 Consolidated CompanyVariable InterestSubsidiariesEntitiesEliminationsConsolidated TotalUSD(In thousand)Total net revenues 40,123 691,566 (39,084) 692,605Cost of revenues (8,475) (98,907) 39,084 (68,298)Selling, general and administrative expenses (11,539) (595,626) — (607,165)Other operating income, net 411 187 — 598Income (loss) from operations 20,520 (2,780) — 17,740Income (loss) before income taxes and income (loss) from equity in affiliates 22,706 (2,835) — 19,871Net income (loss) 13,716 (2,844) — 10,872Table of Contents11Selected Condensed Consolidated Balance Sheets InformationAs of December 31, 2021 Consolidated CompanyVariable InterestSubsidiariesEntitiesEliminationsConsolidated TotalUSD(In thousand)Cash and cash equivalents 50,505 199,809 — 250,314Accounts receivable and contract assets, net of allowance 1,585 35,901 — 37,486Total current assets 213,626 266,217 (158,968) 320,875Intangible assets, net 22,959 339 — 23,298Total assets 266,476 329,740 (158,968) 437,248Amounts due to related parties 4,938 155,388 (152,694) 7,632Total current liabilities 41,280 372,122 (152,694) 260,708Total liabilities 47,008 391,875 (152,694) 286,189Total Leju Holdings Limited shareholders’ equity 219,472 (61,943) (6,274) 151,255As of December 31, 2020 Consolidated CompanyVariable InterestSubsidiariesEntitiesEliminationsConsolidated TotalUSD(In thousand)Cash and cash equivalents 47,513 236,976 — 284,489Accounts receivable and contract assets, net of allowance 3,651 200,935 — 204,586Total current assets 288,774 459,969 (226,036) 522,707Intangible assets, net 33,610 603 — 34,213Total assets 340,743 527,254 (226,036) 641,961Amounts due to related parties 2,368 224,644 (219,906) 7,106Total current liabilities 51,708 485,088 (219,906) 316,890Total liabilities 60,223 506,859 (219,906) 347,176Total Leju Holdings Limited shareholders’ equity 280,540 21,517 (6,130) 295,927Selected Condensed Consolidated Cash Flows InformationFor the Year Ended December 31, 2021 Consolidated CompanyVariable InterestSubsidiariesEntitiesConsolidated TotalUSD(In thousand)Net cash (used in) provided by operating activities 1,539 (41,428) (39,889)Net cash (used in)/provided by investing activities (749) 431 (318)Net cash provided by financing activities 1,033 — 1,033For the Year Ended December 31, 2020 Consolidated CompanyVariable InterestSubsidiariesEntitiesConsolidated TotalUSD(In thousand)Net cash provided by operating activities 8,034 100,461 108,495Net cash (used in)/provided by investing activities 1,171 (1,069) 102Net cash provided by financing activities 540 — 540Table of Contents12For the Year Ended December 31, 2019 Consolidated CompanyVariable InterestSubsidiariesEntitiesConsolidated TotalUSD(In thousand)Net cash (used in)/provided by operating activities (24,975) 44,671 19,696Net cash (used in)/provided by investing activities 253 (5,814) (5,561)Net cash (used in)/provided by financing activities 41 — 41A. [Reserved]B. Capitalization and IndebtednessNot applicable.C. Reasons for the Offer and Use of ProceedsNot applicable.D. Risk FactorsSummary of Risk FactorsAn investment in our ADSs or Class A ordinary shares involves significant risks. Below is a summary of material risks we face, organizedunder relevant headings. These risks are discussed more fully in Item 3. Key Information—D. Risk Factors.Risks Related to Our Business●Our business is susceptible to fluctuations in China’s real estate industry, which may materially and adversely affect our results ofoperations.●Our business may be materially and adversely affected by government measures aimed at China’s real estate industry.●We may fail to compete effectively, which could significantly reduce our market share and materially and adversely affect our business,financial condition and results of operations.●Failure to continue to develop and expand our content, service offerings and features, and to develop or incorporate the technologies thatsupport them, could jeopardize our competitive position.●Failure to attract and retain qualified personnel at a reasonable cost could jeopardize our competitive position.●We derive a substantial portion of our revenues from several major urban centers in China, and we face market risk due to ourconcentration in these major urban areas.●Regulation of the internet industry in China, including censorship of information distributed over the internet and the complex andevolving Chinese and international laws and regulations regarding data privacy and cybersecurity, may materially and adversely affect ourbusiness.Table of Contents13Risks Related to Our Corporate Structure●Leju is a Cayman Islands holding company with no equity ownership in our consolidated variable interest entities. We conduct ouroperations primarily through our PRC subsidiaries and consolidated variable interest entities in China. Holders of Leju’s ADSs holdequity interest in Leju Holdings Limited, our Cayman Islands holding company, and do not have direct or indirect interest in ourconsolidated variable interest entities in China. If the PRC government deems that our contractual arrangements with our consolidatedvariable interest entities do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if theseregulations or the interpretation of existing regulations change or are interpreted differently in the future, we could be subject to severepenalties or be forced to relinquish our interests in those operations. Leju, its PRC subsidiaries and consolidated variable interest entities,and investors of Leju face uncertainty about potential future actions by the PRC government that could affect the enforceability of thecontractual arrangements with our consolidated variable interest entities and, consequently, significantly affect the financial performanceof our consolidated variable interest entities and our company as a group.●We rely on contractual arrangements with Beijing Leju, Leju Hao Fang and Beijing Jiajujiu and their respective shareholders for a portionof our operations, which may not be as effective as direct ownership in providing operational control.●Our ability to enforce the equity pledge agreements between us and the shareholders of Beijing Leju, Leju Hao Fang or Beijing Jiajujiumay be subject to limitations based on PRC laws and regulations.Risks Related to Doing Business in China●Changes in PRC government policies could have a material and adverse effect on overall economic growth in China, which couldadversely affect our business.●The approval of or report and filing with the CSRC or other PRC government authorities may be required in connection with our offshoreofferings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or completesuch filing and reporting process.●The PRC government’s significant oversight and discretion over our business operation could result in a material adverse change in ouroperations and the value of our ADSs.●Changes in international trade policies and rising political tensions, particularly between the U.S. and China, may adversely impact ourbusiness and operating results.●Although our independent registered public accounting firm is registered with the PCAOB and currently subject to periodic PCAOBinspection, if it is later determined that the PCAOB is unable to inspect or investigate our auditor completely, investors would be deprivedof the benefits of such inspection and our ADSs may be delisted or prohibited from trading.Risks Related to Our ADSs●The market price for our ADSs has been and may continue to be highly volatile.●Our ADSs may be delisted from the New York Stock Exchange as a result of our failure of meeting the New York Stock Exchangecontinued listing requirements.●We are a “controlled company” within the meaning of the NYSE Listed Company Manual and, as a result, has relied and may continue torely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.Table of Contents14Risks Related to Our BusinessOur business is susceptible to fluctuations in China’s real estate industry, which may materially and adversely affect our results ofoperations.We conduct our real estate services business primarily in China. Our business depends substantially on conditions in China’s real estateindustry and more particularly on the volume of new property transactions in China. Demand for private residential real estate in China has grownrapidly in recent years but such growth is often coupled with volatility and fluctuations in real estate transaction volume and prices. Fluctuations ofsupply and demand in China’s real estate industry are caused by economic, social, political and other factors. Over the years, governments at bothnational and local levels have announced and implemented various policies and measures aimed to regulate the real estate market, in some cases tostimulate further development and more purchase of residential real estate units and in other cases to restrict these activities from growing toorapidly. These measures can affect real estate buyers’ eligibility to purchase additional units, their down payment requirements and financing, aswell as availability of land to developers and their ability to obtain financing. These measures have affected and continue to affect the conditions ofChina’s real estate market and cause fluctuations in real estate pricing and transaction volume. See “—Our business may be materially andadversely affected by government measures aimed at China’s real estate industry”. Furthermore, there may be situations in which China’s realestate industry is so active that real estate developers see a reduced need for marketing initiatives and reduce their spending on such initiatives,which could potentially adversely affect our result of operations. To the extent fluctuations in China’s real estate industry adversely affect spendingon real estate marketing, our financial condition and results of operations may be materially and adversely affected.Our business may be materially and adversely affected by government measures aimed at China’s real estate industry.The real estate industry in China is subject to government regulations, including measures that are intended to control real estate prices.The regulations at both central government level and local government level change from time to time, to either stimulate or depress the real estatemarket, and it is difficult to foresee the timing or direction of regulatory changes. In the fourth quarter of 2016, local governments in more than 20cities issued notices to restrict purchases of houses, including Beijing, Shanghai, Shenzhen, Guangzhou and Tianjin. The restrictive measuresinclude, but are not limited to, an adjustment to the percentage of required down payment, more restrictive eligibility requirement imposed onpurchasers and a limit on the maximum number of houses one may purchase. During the first quarter of 2017, a new round of restrictive measuresat national level has permeated into more than 30 cities, including both first-tier and second-tier cities. For example, first-tier cities such as Beijingand Guangzhou further increased the percentage of required down payment. Meanwhile, a number of second-tier cities such as Hangzhou, Fuzhou,Nanjing, Changsha and Shijiazhuang have set a series of restrictions, including the maximum number of houses one may purchase, the maximumamount of mortgage loan(s) one may borrow, and the percentage of required down payment. In 2017, local governments of both first-tier andsecond-tier cities have also promulgated various policies to impose restrictions or eligibility requirements on buyers purchasing real estate. In thefirst three quarters of 2018, central and local governments emphasized the general administrative policy that “housing is for living, not forspeculation”, and continuously implemented restrictive policies to curb significant increase of housing price. Furthermore, as a practical method tocurb the housing price in China, local governments in certain areas of China have been reviewing the upper price limit of new residential propertiesfor sale with increased scrutiny. If the local government determines, at its own discretion, that the upper price limit of a new residential property inits real estate sale plan is too high, the local government may refuse to approve such sale plan. In 2019, central government reiterated its insistenceon the general administrative policy that “housing is for living, not for speculation,” and clearly put forward that real estate should not be used as ashort-term tool for stimulating economy. In April 2019, Ministry of Housing and Urban-Rural Development of the People’s Republic of China gavewarnings to four cities, Foshan, Suzhou, Dalian and Nanning, where the price index of newly built commercial housing and second-hand housingincreased significantly. In December 2019, National Conference on Housing and Urban-rural Development emphasized that land prices andhousing prices should remain stable in 2020, and restrictive measures should be continuously adopted. Since 2020, local governments in severalcities have implemented control measures for housing price. For example, the Municipal Bureau of Housing and Urban Rural Development ofShenzhen promulgated regulations that families and adult singles (including divorced persons) who are willing to purchase commercial housesmust have settled in the Shenzhen for three years, and shall provide a continuous payment certificate of personal income tax or social insurance forat least 36 months. Shanghai Housing and Urban Rural Construction Management Committee, together with other seven municipal bureaus,promulgated regulations that prioritize the needs of families without houses and adopt a scoring system for the purchase of first-hand houses.Under this scoring system, each purchaser will be scored based on the marital status, registered residence location, number of houses owned by thepurchaser and purchase records of commercial houses within five years. On July 13, 2021, certain PRC authorities promulgated Notice on theContinuousTable of Contents15Rectification and Regulation of the Real Estate Market Order, which provides for intensified punishment by local authorities for real estateagencies violating laws and regulations, including warning and interview, suspension of business for rectification, revocation of business licenseand qualification certificate, exposure to the public, and reference to security and judicial authorities for investigation and punishment in the case ofcriminal offence. However, it is uncertain for how long these measures will remain in effect, and whether the central or local governments willfurther tighten their policies or adopt new measures that are less restrictive. Frequent changes in government policies may also create uncertaintythat could discourage investment in real estate. Our business may be materially and adversely affected as a result of decreased transaction volumesor real estate prices that may result from government policies.We may fail to compete effectively, which could significantly reduce our market share and materially and adversely affect our business,financial condition and results of operations.We face competition in each of our primary business activities. We face various competitors with whom we may compete on one or morelines of business. For example, we compete with fang.com, formerly soufun.com, a leading real estate internet portal in China and compete withanjuke.com, which is operated by 58.com, a major online real estate listing platform in China. In addition, we also compete with mobile-basedproviders of news, such as toutiao.com, for our online advertising business. Our competitors may have more established brand names, larger visitornumbers and more extensive distribution channels than we do, either overall, or in specific regions in which we operate.The business of providing online real estate services in China has become increasingly competitive. The barriers to entry for establishinginternet-based businesses are low, thereby allowing new entrants to emerge rapidly. The new competitive landscape has placed additional demandson us to increase the amount of resources we provide to customers and increase the quality of our services in order to retain customers. As theonline real estate services industry in China is constantly evolving, our current or future competitors may be able to better position themselves toattract funding and to compete as the industry matures.We also face competition from companies in other media that offer e-commerce, advertising, listing and similar services. Any of thesecompetitors may offer products and services that provide significant advantages over those offered by us in terms of performance, price, scope,creativity or other advantages. These products and services may achieve greater market acceptance than our service offerings, and thus weaken ourbrand. Increased competition in the online real estate services industry in China could make it difficult for us to retain existing customers andattract new customers, and could lead to a reduction in our revenues or an increase in our costs and expenses to conduct business.Any of our current or future competitors may also receive investments from or enter into other commercial or strategic relationships withlarger, well-established and well-financed companies and obtain significantly greater financial, marketing and content licensing and developmentresources than us. Furthermore, some of our competitors receive support from local governments, which may place us at a disadvantage whencompeting with them in their local markets. We cannot assure you that we will be able to compete successfully against our current or futurecompetitors. Any failure to compete effectively in the real estate internet services market in China would have a material adverse effect on ourbusiness, financial condition and results of operations.Table of Contents16Failure to continue to develop and expand our content, service offerings and features, and to develop or incorporate the technologies thatsupport them, could jeopardize our competitive position.As a company providing online services, we participate in an industry characterized by rapidly changing technology and new products andservices. We rely in part on attracting customers to our platform by providing attractive and helpful content and tools on our websites and mobiledevices to assist customers seeking to purchase residential properties and home furnishings. In addition, our ability to continue to generate andmaintain online advertising service revenues depends on our ability to innovate. To remain competitive, we must continue to develop and expandour content and service offerings. We must also continue to enhance and improve the user interface, functionality and features of our websites andour mobile applications. These efforts may require us to develop internally, or to license, increasingly complex technologies. In addition, many ofour competitors are continually introducing new internet-related products, services and technologies, which will require us to update or modify ourown technology to keep pace. New internet-related products, services and technologies developed by competitors could render our products andservices obsolete if we are unable to update or modify our own technology. Developing and integrating new products, services and technologiesinto our existing businesses could be expensive and time-consuming. Furthermore, such new features, functions and services may not achievemarket acceptance or serve to enhance our brand loyalty. We may not succeed in incorporating new internet technologies, or, in order to do so, wemay incur substantial expenses. If we fail to develop and introduce or acquire new features, functions, services or technologies effectively and on atimely basis, we may not continue to attract new users and may be unable to retain our existing users. If we are not successful in incorporating newinternet technologies, our business, results of operations and growth prospects could be materially and adversely affected.Failure to attract and retain qualified personnel at a reasonable cost could jeopardize our competitive position.As our industry is characterized by high demand and intense competition for talent, we may need to offer higher compensation and otherbenefits in order to attract and retain quality sales, technical and other operational personnel in the future. We compete with other companiesengaged in online real estate services and internet-related businesses and with print media for qualified personnel. We have, from time to time inthe past, experienced, and we expect in the future to continue to experience, difficulty in hiring and retaining highly skilled employees withappropriate qualifications. There may be a limited supply of qualified individuals in some of the cities in China where we have operations and othercities into which we intend to expand. We must hire and train qualified managerial and other employees on a timely basis to keep pace with ourrapid growth while maintaining consistent quality of services across our operations in various geographic locations. We must also providecontinued training to our managerial and other employees so that they are equipped with up-to-date knowledge of various aspects of our operationsand can meet our demand for high-quality services. If we fail to do so, the quality of our services may decline in one or more of the markets wherewe operate, which in turn, may cause a negative perception of our brand and adversely affect our business. We cannot assure you we will be able toattract or retain the quality personnel that we need to achieve our business objectives.In addition, we place substantial reliance on the real estate industry experience and knowledge of our senior management team as well astheir relationships with other industry participants. For example, Mr. Xin Zhou, our chairman, and Mr. Yinyu He, our chief executive officer, areboth particularly important to our future success. We do not carry key person insurance on any member of our senior management team. The loss ofone or more members of our senior management team could hinder our ability to effectively manage our business and implement our growthstrategies. Finding suitable replacements for our current senior management could be difficult as competition for such talent is intense.If we fail to successfully attract new personnel, retain and motivate our current personnel, or retain our senior management, we may losecompetitiveness and our business and results of operations could be materially and adversely affected.Our business faces risks associated with the application of the e-commerce business model to the real estate industry and our new productsand services may not perform as expected.Our e-commerce business was established in 2011 and experienced rapid growth to become an important part of our online real estateservice operations. Although we generally have been able to effectively manage the growth of this product and maintain contractual arrangementswith third-party property developers who allow us to sell discount coupons to prospective real estate purchasers on acceptable terms, there can beno assurance that we will continue to be able to do so in the future. Customer complaints or negative publicity about our services could diminishconsumer confidence in and use of our services. We may also explore new real estate e-commerce products or other product offerings.Development of new products or initiatives may involve various risks andTable of Contents17there can be no assurance that such products or initiatives may be successfully developed, will perform as expected, or be well-received bycustomers. Failure to successfully develop or launch new products could materially and adversely affect our business, results of operations andrevenue growth prospects.We derive a substantial portion of our revenues from several major urban centers in China, and we face market risk due to ourconcentration in these major urban areas.We derive a substantial portion of our revenues from major urban centers in China, including Beijing, Hainan, Guangzhou and Foshan. Inthe year ended December 31, 2021, approximately 38% of our revenues was derived from Beijing, Hainan, Guangzhou and Foshan. We expectthese four urban centers to continue to be important sources of revenues. If any of these major urban centers experiences an event that negativelyimpacts the local real estate industry or online advertising, such as a serious economic downturn or contraction, a natural disaster, or slower growthdue to adverse governmental policies or otherwise, demand for our services could decline significantly and our business and growth prospectscould be materially and adversely impacted.A severe or prolonged downturn in the global or Chinese economy could materially and adversely affect our business and our financialcondition.COVID-19 has had a severe and negative impact on the Chinese and the global economy. For more details on risks related to the COVID-19 pandemic, see “The COVID-19 pandemic has had and may continue to have a material adverse impact on our business, operating results and financial condition.” Although Chinese economy recovered to some degree in 2021, there remains substantial uncertainty about the dynamic of the COVID-19 pandemic, which may have potential continuing impacts on subsequent periods, if the global pandemic and the resulting disruption were to extend over a prolonged period, or if a wide spread of COVID-19 happens again in China. The global spread of COVID-19 pandemic in major countries of the world may also result in global economic distress, and the extent to which it may affect our results of operations will depend on future developments of the COVID-19 pandemic, which are highly uncertain and difficult to predict. Even before the COVID-19 pandemic, the global macroeconomic environment was facing numerous challenges. The growth rate of the Chinese economy had already been slowing since 2010. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies which has been adopted by the central banks and financial authorities of some of the world’s leading economies, including the United States and China. The conflict in Ukraine and the imposition of broad economic sanctions on Russia could raise energy prices and disrupt global markets. Unrest, terrorist threats and the potential for war in the Middle East and elsewhere may increase market volatility across the globe. There have also been concerns about the relationship between China and other countries, including the surrounding Asian countries, which may potentially have economic effects. In particular, there is significant uncertainty about the future relationship between the United States and China with respect to trade policies, treaties, government regulations and tariffs. Economic conditions in China are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in China. Any severe or prolonged slowdown in the global or Chinese economy may materially and adversely affect our business, results of operations and financial condition.Failure to maintain or enhance our brands could have a material and adverse effect on our business and results of operations.We believe the “Leju” brand is associated with a leading real estate online platform in China, and it is important for the continued successof our business. The brand is integral to our sales and marketing efforts. Our continued success in maintaining and enhancing our brands and imagedepends to a large extent on our ability to satisfy customer needs by further developing and maintaining quality of services across our operations,as well as our ability to respond to competitive pressures.If we cannot manage our growth effectively and efficiently, our results of operations or profitability could be adversely affected.We intend to continue to grow our operations primarily in our current markets. This growth has placed, and will continue to place,substantial demands on our managerial, operational, technological and other resources. Our planned growth will also place significant demands onus to maintain the quality of our services. In order to manage and support our growth, we must continue to improve our existing operational,administrative and technological systems and our financial and management controls, and recruit, train and retain additional qualified real estateservice professionals as well as other administrative and sales and marketing personnel,Table of Contents18particularly as we expand into new markets. We may not be able to effectively and efficiently manage the growth of our operations, recruit andretain qualified personnel and integrate new expansion into our operations. As a result, our quality of service may deteriorate and our results ofoperations or profitability could be adversely affected.Our results of operations may fluctuate or otherwise be materially and adversely affected due to seasonal variations.Our operating income and earnings have historically been substantially lower during the first quarter than other quarters. The first quarterof each year generally contributes the smallest portion of our annual revenues due to reduced real estate transactions, advertising and marketingactivities of our customers in the PRC real estate industry during and around the Chinese New Year holiday, which generally occurs in January orFebruary of each year and due to the cold winter weather in northern China. In contrast, the third and fourth quarters of each year generallycontribute a larger portion of our annual revenues due to increased real estate transactions, advertising and marketing activities during the monthsof September and October. For this reason, our results of operations may not be comparable from quarter to quarter.Unexpected network interruptions or security breaches, including “hacking” or computer virus attacks, may cause delays or interruptionsof service, resulting in reduced use and performance of our websites and damage our reputation and brands.Our business depends heavily on the performance and reliability of China’s internet infrastructure, the continued accessibility ofbandwidth and servers on our service providers’ networks and the continuing performance, reliability and availability of our technology platform.Any failure to maintain the satisfactory performance, reliability, security and availability of our computer and hardware systems may causesignificant harm to our reputation and our ability to attract and maintain customers and visitor traffic. Major risks related to our networkinfrastructure include:●any breakdown or system failure resulting in a sustained shutdown of our servers, including failures which may be attributable tosustained power shutdowns, or efforts to gain unauthorized access to our systems causing loss or corruption of data or malfunctions ofsoftware or hardware;●any disruption or failure in the national backbone network, which would prevent our customers and users from accessing our websites;●any damage from fire, flood, earthquake and other natural disasters; and●computer viruses, hackings and similar events.Computer viruses and hackings may cause delays or other service interruptions and could result in significant damage to our hardware,software systems and databases, disruptions to our business activities, such as to our e-mail and other communication systems, breaches of securityand inadvertent disclosure of confidential or sensitive information, inadvertent transmissions of computer viruses and interruptions of access to ourwebsites through the use of denial-of-service or similar attacks. In addition, the inadvertent transmission of computer viruses could expose us to amaterial risk of loss or litigation and possible liability. We maintain most of our servers and backup servers in Beijing, and all information on ourwebsites is backed up weekly. Any hacking, security breach or other system disruption or failure that occurs in between our weekly backupprocedures could disrupt our business or cause us to lose, and be unable to recover, data such as real estate listings, contact information and otherimportant customer information.Ensuring secured transmission of confidential information through public networks is essential to maintaining the confidence of ourcustomers and users. Our existing security measures may not be adequate to protect such confidential information. In addition, computer andnetwork systems are susceptible to breaches by computer hackers. Security breaches could expose us to litigation and potential liability for failingto secure confidential customer information, and could harm our reputation and reduce our ability to attract customers and users. Future securitybreaches, if any, may result in a material adverse effect on our business, financial condition and results of operations.We also do not maintain insurance policies covering losses relating to our systems and do not have business interruption insurance.Moreover, the low coverage limits of our property insurance policies may not be adequate to compensate us for all losses, particularly with respectto any loss of business and reputation that may occur. To improve our performance and to prevent disruptionTable of Contents19of our services, we may have to make substantial investments to deploy additional servers or create one or more copies of our websites to mirrorour online resources, either of which could increase our expenses and reduce our net income.Any failure to protect our trademarks, copyrights and other intellectual property rights could have a negative impact on our business.We believe our trademarks, copyrights and other intellectual property rights are critical to our success. Any unauthorized use of ourtrademarks and other intellectual property rights could harm our business. Historically, China’s track record for protection of intellectual propertyrights has been poor, and infringement of intellectual property rights continues to pose a serious risk of doing business in China. Monitoring andpreventing unauthorized use is difficult and the measures we take to protect our intellectual property rights may not be adequate. We haveregistered the software copyrights of substantially all of our mobile applications and software copyrights are still enforceable absent registration inChina, but registration by itself may not be adequate protection from potential misuse, infringement or other challenges from third parties claimingrights on our intellectual property.Furthermore, the application of laws governing intellectual property rights in China and abroad is uncertain and evolving, and couldexpose us to risks. If we are unable to adequately protect our brand, trademarks and other intellectual property rights, we may lose these rights andour business may suffer materially. We typically impose contractual obligations on employees and consultants and have taken other precautionarymeasures to maintain the confidentiality of our proprietary information and restricted the use of the proprietary information other than for ourcompany’s benefit. However, if our employees and consultants do not honor their contractual obligations or misappropriate our database and otherproprietary information, our business would suffer as a result.As internet domain name rights are not rigorously regulated or enforced in China, other companies have incorporated in their domainnames elements similar in writing or pronunciation to the “Leju” trademark or its Chinese equivalent. This may result in confusion between thosecompanies and our company and may lead to the dilution of our brand value, which could adversely affect our business.We may be subject to intellectual property infringement or misappropriation claims by third parties, which may force us to incursubstantial legal expenses and, if determined adversely against us, could materially disrupt our business.Some of our competitors may own copyrights, trademarks, trade secrets and internet content, which they may use to assert claims againstus. We provide training to our staff with respect to procedures designed to reduce the likelihood that we may use, develop or make available anycontent or applications without the proper licenses or necessary third party consents. However, these procedures may not be effective in completelypreventing the unauthorized posting or use of copyrighted material or the infringement of other rights of third parties.The validity, enforceability and scope of protection of intellectual property rights in internet-related industries, particularly in China, isuncertain and still evolving. For example, as we face increasing competition and as litigation becomes a more common way to resolve disputes inChina, we face a higher risk of being the subject of intellectual property infringement claims. Pursuant to relevant laws and regulations, internetservice providers may be held liable for damages if such providers have reason to know that the works uploaded or linked infringe the copyrightsof others. In cases involving the unauthorized posting of copyrighted content by users on websites in China, there have been court proceedings butno settled court practice as to when and how hosting providers and administrators of a website can be held liable for the unauthorized posting bythird parties of copyrighted material. Any such proceeding could result in significant costs to us and divert our management’s time and attentionfrom the operation of our business, as well as potentially adversely impact our reputation, even if we are ultimately absolved of all liability.In addition, we cannot assure you that we will not become subject to intellectual property laws in other jurisdictions, such as the UnitedStates, by virtue of our ADSs being listed on the New York Stock Exchange, or NYSE, the ability of users to access, download and use ourproducts and services in the United States and other jurisdictions, the ownership of our ADSs by investors in the United States and otherjurisdictions, or the extraterritorial application of foreign law by foreign courts or otherwise, among other reasons. If a claim of infringementbrought against us in the United States or other jurisdictions is successful, we may be required to pay substantial penalties or other damages andfines, remove relevant content or enter into license agreements which may not be available on commercially reasonable terms or at all. Eventhough the allegations or claims could be baseless, defense against any of these allegations or claims would be both costly and time-consuming andcould significantly divert the efforts and resources of our management and other personnel.Table of Contents20We are required to comply with PRC and other applicable laws relating to privacy and cybersecurity. The improper use or disclosure ofdata could have a material and adverse effect on our business and prospects.Our business generates and processes a large quantity of data. We face risks inherent in handling and protecting large volume of data. Inparticular, we face a number of challenges relating to data from transactions and other activities on our platforms, including:●protecting the data in and hosted on our system, including against attacks on our system by outside parties or fraudulent behavior orimproper use by our employees;●addressing concerns related to privacy and sharing, safety, security and other factors; and●complying with applicable laws, rules and regulations relating to the collection, use, storage, transfer, disclosure and security of personalinformation, including any requests from regulatory and government authorities relating to these data.In general, we expect that data security and data protection compliance will receive greater attention and focus from regulators, bothdomestically and globally, as well as attract continued or greater public scrutiny and attention going forward, which could increase our compliancecosts and subject us to heightened risks and challenges associated with data security and protection. If we are unable to manage these risks, wecould become subject to penalties, including fines, suspension of business and revocation of required licenses, and our reputation and results ofoperations could be materially and adversely affected.The PRC regulatory and enforcement regime with regard to data security and data protection is evolving and may be subject to differentinterpretations or significant changes. Moreover, different PRC regulatory bodies, including the Standing Committee of the NPC, the Ministry ofIndustry and Information Technology, or the MIIT, the CAC, the MPS and the SAMR, have enforced data privacy and protections laws andregulations with varying standards and applications. See “Item 4.B. Information on the Company—Business Overview—Regulation.” Thefollowing are examples of certain recent PRC regulatory activities in this area:Data Security●In June 2021, the Standing Committee of the NPC promulgated the Data Security Law, which took effect in September 2021. TheData Security Law, among other things, provides for security review procedure for data-related activities that may affect nationalsecurity. In July 2021, the state council promulgated the Regulations on Protection of Critical Information Infrastructure, whichbecame effective on September 1, 2021. Pursuant to this regulation, critical information infrastructure means key network facilities orinformation systems of critical industries or sectors, such as public communication and information service, energy, transportation,water conservation, finance, public services, e-government affairs and national defense science, the damage, malfunction or dataleakage of which may endanger national security, people’s livelihoods and the public interest. In December 2021, the CAC, togetherwith other authorities, jointly promulgated the Cybersecurity Review Measures, which became effective on February 15, 2022 andreplaces its predecessor regulation. Pursuant to the Cybersecurity Review Measures, critical information infrastructure operators thatprocure internet products and services must be subject to the cybersecurity review if their activities affect or may affect nationalsecurity. The Cybersecurity Review Measures further stipulates that critical information infrastructure operators or network platformoperators that hold personal information of over one million users shall apply with the Cybersecurity Review Office for acybersecurity review before any public offering at a foreign stock exchange. As of the date of this annual report, no detailed rules orimplementation rules have been issued by any authority and we have not been informed that we are a critical informationinfrastructure operator by any government authorities. Furthermore, the exact scope of “critical information infrastructure operators”under the current regulatory regime remains unclear, and the PRC government authorities may have wide discretion in theinterpretation and enforcement of the applicable laws. Therefore, it is uncertain whether we would be deemed to be a criticalinformation infrastructure operator under PRC law. If we are deemed to be a critical information infrastructure operator under thePRC cybersecurity laws and regulations, we may be subject to obligations in addition to what we have fulfilled under the PRCcybersecurity laws and regulations.●In November 2021, the CAC released the Regulations on the Network Data Security (Draft for Comments), or the Draft Regulations.The Draft Regulations provide that data processors refer to individuals or organizations that, during theirTable of Contents21data processing activities such as data collection, storage, utilization, transmission, publication and deletion, have autonomy over thepurpose and the manner of data processing. In accordance with the Draft Regulations, data processors shall apply for a cybersecurityreview for certain activities, including, among other things, (i) the listing abroad of data processors that process the personalinformation of more than one million users and (ii) any data processing activity that affects or may affect national security. However,there have been no clarifications from the relevant authorities as of the date of this annual report as to the standards for determiningwhether an activity is one that “affects or may affect national security.” In addition, the Draft Regulations requires that dataprocessors that process “important data” or are listed overseas must conduct an annual data security assessment by itself orcommission a data security service provider to do so, and submit the assessment report of the preceding year to the municipalcybersecurity department by the end of January each year. As of the date of this annual report, the Draft Regulations was released forpublic comment only, and their respective provisions and anticipated adoption or effective date may be subject to change withsubstantial uncertainty.Personal Information and Privacy●The Anti-monopoly Guidelines for the Platform Economy Sector published by the Anti-monopoly Committee of the State Council,effective on February 7, 2021, prohibits collection of user information through coercive means by online platforms operators.●In August 2021, the Standing Committee of the NPC promulgated the Personal Information Protection Law, which integrates thescattered rules with respect to personal information rights and privacy protection and took effect on November 1, 2021. We updateour privacy policies from time to time to meet the latest regulatory requirements of PRC government authorities and adopt technicalmeasures to protect data and ensure cybersecurity in a systematic way. Nonetheless, the Personal Information Protection Lawelevates the protection requirements for personal information processing, and many specific requirements of this law remain to beclarified by the CAC, other regulatory authorities, and courts in practice. We may be required to make further adjustments to ourbusiness practices to comply with the personal information protection laws and regulations.Many of the data-related legislations are relatively new and certain concepts thereunder remain subject to interpretation by the regulators.If any data that we possess belongs to data categories that are subject to heightened scrutiny, we may be required to adopt stricter measures forprotection and management of such data. The Cybersecurity Review Measures and the Draft Regulations remain unclear on whether the relevantrequirements will be applicable to companies that are already listed in the United States, such as us. We cannot predict the impact of theCybersecurity Review Measures and the Draft Regulations, if any, at this stage, and we will closely monitor and assess any development in therule-making process. If the Cybersecurity Review Measures and the enacted version of the Draft Regulations mandate clearance of cybersecurityreview and other specific actions to be taken by issuers like us, we face uncertainties as to whether these additional procedures can be completed byus timely, or at all, which may subject us to government enforcement actions and investigations, fines, penalties, suspension of our non-compliantoperations, or removal of our app from the relevant application stores, and materially and adversely affect our business and results of operations.As of the date of this annual report, we have not been involved in any formal investigations on cybersecurity review made by the CAC on suchbasis.In general, compliance with the existing PRC laws and regulations, as well as additional laws and regulations that PRC regulatory bodiesmay enact in the future, related to data security and personal information protection, may be costly and result in additional expenses to us, andsubject us to negative publicity, which could harm our reputation and business operations. There are also uncertainties with respect to how suchlaws and regulations will be implemented and interpreted in practice.Table of Contents22In addition, regulatory authorities around the world have adopted or are considering a number of legislative and regulatory proposalsconcerning data protection. These legislative and regulatory proposals, if adopted, and the uncertain interpretations and application thereof could,in addition to the possibility of fines, result in an order requiring that we change our data practices and policies, which could have an adverse effecton our business and results of operations. The European Union General Data Protection Regulation (“GDPR”), which came into effect on May 25,2018, includes operational requirements for companies that receive or process personal data of residents of the European Economic Area. TheGDPR establishes new requirements applicable to the processing of personal data, affords new data protection rights to individuals and imposespenalties for serious data breaches. Individuals also have a right to compensation under the GDPR for financial or non-financial losses. Althoughwe do not conduct any business in the European Economic Area, in the event that residents of the European Economic Area access our website orour mobile platform and input protected information, we may become subject to provisions of the GDPR.If we fail to obtain or keep licenses, permits or approvals applicable to the various online real estate services provided by us, we may incursignificant financial penalties and other government sanctions.The internet and online advertising industries in China are highly regulated by the PRC government. Various regulatory authorities of thePRC government, such as the State Council, the MIIT, the State Administration for Market Regulation, or SAMR, the GAPPRFT, and the Ministryof Public Security, are empowered to issue and implement regulations governing various aspects of the internet and advertising industries.Moreover, new laws, rules and regulations may be adopted, or new interpretations of existing laws, rules and regulations may be released, toaddress issues that arise from time to time. As a result, substantial uncertainties exist regarding the interpretation and implementation of any currentand future PRC laws, rules and regulations applicable to the internet and online advertising industries.Each of our consolidated variable interest entities, including Beijing Leju, Leju Hao Fang and Beijing Jiajujiu, as well as their respectivesubsidiaries, is required to obtain and maintain a value-added telecommunications service operating license, or ICP license, from the MIIT or itslocal counterpart in order to provide internet information services and a business license from the SAMR or its local branches which specificallyincludes operating advertising business in order to engage in advertising activities in China, to the extent applicable to their respective business.Beijing Leju, Beijing Yisheng Leju Internet Technology Co., Ltd., a subsidiary of Beijing Jiajujiu, and Leju Hao Fang, each hold a valid ICPlicense issued by the local provincial branch of the MIIT for the operation of our value-added telecommunication business. The business scope ofthe business licenses of Beijing Leju and its subsidiaries which engage in the advertising business includes operating advertising business. Theselicenses are essential to the operation of our online real estate business. The ICP licenses are subject to annual review by the relevant governmentauthorities. The annual review of ICP licenses and business licenses is for the government authorities to conduct an annual inspection of the statusof compliance of the license-holding entity. We have submitted the application documents for the annual review of the ICP licenses. At the time ofand for the purpose of the annual review of these licenses, the relevant government authorities did not ask for disclosure of our full corporatestructure and thus we did not provide such information. They have not so far expressed any opinion with respect to our corporate structure inconnection with these annual reviews. Moreover, the regulations relating to ICP licenses also provide that an ICP license holder must first obtainapprovals from, or make filings with, competent counterparts of the MIIT in connection with subsequent updates to its shareholding structure orcertain other matters relating to such ICP license holder. We cannot assure you that we will be able to successfully pass the annual review of ourICP licenses, or complete the updating and renewal of the filing records of our ICP licenses with local MIIT counterparts on a timely basis.In addition, Beijing Leju, Leju Hao Fang and/or Beijing Jiajujiu and their respective subsidiaries may be required to obtain additionallicenses. For example, the release, broadcasting and transmission of graphics, video and audio programs or weblinks to such programs, otherwebsites or data on the websites may be deemed as providing internet publication services as well as transmission of video and audio programs onthe internet, which could require internet publication licenses and licenses for online transmission of audio-visual programs. During operation ofour e-commerce business, we post information, including graphics, weblinks to videos, live-broadcasting, other websites or data on websitesoperated by us. Our consolidated variable interest entities and their subsidiaries do not have internet publication licenses and licenses for onlinetransmission of audio-visual programs, and are not applying for these licenses. For those video/audio programs and certain other forms of contentthat we believe are subject to the requirements of these licenses, such programs and content are hosted by SINA through our contractualarrangement with SINA. In the case that SINA does not possess the necessary licenses and permits, our video/audio programs and other contenthosted by SINA are subject to the risk of being suspended by government authorities. Moreover, we cannot assure you that government would notrequire us to obtain these licenses separately for operation of our own websites and those websites licensed to us even if the underlying hosting ofthe relevantTable of Contents23content may be provided by a qualified third party. If we are required to apply for such licenses, we can provide no assurance that we will procureand maintain such additional licenses.Under applicable PRC laws, rules and regulations, the failure to obtain and/or maintain the licenses and permits required to conduct ourbusiness may subject our affected consolidated variable interest entities to various penalties, including confiscation of revenues, imposition of finesand/or restrictions on their business operations, or the discontinuation of their operations. Any such disruption in the business operations of ourconsolidated variable interest entities could materially and adversely affect our business, financial condition and results of operations.The E-Commerce Law may have an adverse impact on our business, financial conditions and results of operations.In August 2018, the Standing Committee of the National People’s Congress promulgated the E-Commerce Law, which became effectiveon January 1, 2019. The E-Commerce Law generally provides that e-commerce operators must obtain administrative licenses if business activitiesconducted by the e-commerce operators are subject to administrative licensing requirements under applicable laws and regulations. In addition, theE-Commerce Law imposes a number of new obligations on e-commerce platform operators, including the obligations: (i) to verify and registerplatform merchants, (ii) to ensure platform cybersecurity, including, but not limited to, data privacy, (iii) to ensure fair dealing and the legitimaterights and interests of consumers on the platform, (iv) to publicize transaction information preservation and transaction rules, and (v) to protectintellectual properties. See “Regulation—Regulations Relating to E-Commerce” for further details. These regulatory requirements may have anadverse impact on our business and results of operations. As no detailed interpretation and implementation rules have been promulgated, it remainsuncertain how the E-Commerce Law will be interpreted and implemented. We cannot assure you that our current business operations satisfy theobligations provided under the E-Commerce Law in all respects. If the PRC governmental authorities determine that we are not in compliance withall the requirements proposed under the E-Commerce Law, we may be subject to fines and/or other sanctions.We are exposed to potential liability for information on our websites and for products and services sold over the internet and we may incursignificant costs and damage to our reputation as a result of defending against such potential liability and could be subject to penalties orother severe consequences from PRC regulatory authorities as a result of such information.We provide third-party content on our websites such as real estate listings, contractor information listings, links to third-party websites,advertisements and content provided by customers and users of our community-oriented services. In addition, our website, jiaju.com, is a platformfor third-party home furnishing distributors to offer their products and services to consumers. We could be exposed to liability with respect to suchthird-party information or the goods and services sold through our website. Among other things, we may face assertions that, by directly orindirectly providing such third-party content or links to other websites, we should be liable for defamation, negligence, copyright or trademarkinfringement, or other actions by parties providing such content or operating those websites. We may also face assertions that content on ourwebsites, including statistics or other data we compile internally, or information contained in websites linked to our websites contains falseinformation, errors or omissions, and users and our customers could seek damages for losses incurred as a result of their reliance upon or otherwiserelating to incorrect information. We may also be subject to fines and other sanctions by the government for such incorrect information. Moreover,our relevant consolidated variable interest entities, as internet advertising service providers, are obligated under PRC laws and regulations tomonitor the advertising content shown on our websites for compliance with applicable law. Especially, on November 26, 2021, SAMR issued theMeasures for the Administration of Internet Advertising (Draft for comment) for public comment, which requires that advertisers shall beresponsible for the authenticity and legality of the content of Internet advertisements, including but not limited to check the relevant advertisingsupporting documents and verify the advertising contents. Violation of applicable law may result in penalties, including fines, confiscation ofadvertising fees, orders to cease dissemination of the offending advertisements and orders to publish advertisements correcting the misleadinginformation. In case of serious violations, the PRC authorities may revoke the offending entities’ advertising licenses and/or business licenses. Inaddition, our websites could be used as a platform for fraudulent transactions. The measures we take to guard against liability for third-partycontent or information may not be adequate to exonerate us from relevant civil and other liabilities. Any such claims, with or without merit, couldbe time-consuming to defend and result in litigation and significant diversion of management’s attention and resources. Even if these claims do notresult in liability to us, we could incur significant costs in investigating and defending against these claims and suffer damage to our reputation. Ourgeneral liability insurance may not cover all potential claims to which we are exposed to and may not be adequate to indemnify us for all liabilitythat may be imposed.Table of Contents24Failure to maintain effective internal controls over financial reporting could cause us to inaccurately report our financial result or fail toprevent fraud and have a material and adverse effect on our business, results of operations and the trading price of our ADSs.We are subject to the reporting obligations under U.S. securities laws. Section 404 of the Sarbanes-Oxley Act of 2002 and related rulesrequire public companies to include a report of management on their internal control over financial reporting in their annual reports. This reportmust contain an assessment by management of the effectiveness of a public company’s internal control over financial reporting. We sometimes hirea professional consultant to assist us in such efforts. Our efforts to implement standardized internal control procedures and develop the internal testsnecessary to verify the proper application of the internal control procedures and their effectiveness are a key area of focus for our board ofdirectors, our audit committee and senior management.We had been an “emerging growth company”, as defined in the JOBS Act, and ceased to be one as of the end of the fiscal year endedDecember 31, 2019. For so long as we were an “emerging growth company”, we took advantage of certain exemptions from requirementsapplicable to other public companies that are not emerging growth companies including, most significantly, not being required to comply with theauditor attestation requirements of Section 404. Although we ceased to be an “emerging growth company”, as a “non-accelerated filer” as definedunder Rule 12b-2 of the Exchange Act, we are still not required to have an attestation report on internal control over financial reporting from ourexternal auditors.Our management has concluded that our internal control over financial reporting was effective as of December 31, 2021. See “Item 15.Controls and Procedures”. However, if we fail to maintain effective internal control over financial reporting in the future, our management may notbe able to conclude that we have effective internal control over financial reporting at a reasonable assurance level.Furthermore, our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting.It is possible that, had our independent registered public accounting firm conducted an audit of our internal control over financial reporting, suchaccountant might have identified material weaknesses and deficiencies or might issue a qualified report if it is not satisfied with our internalcontrols or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differentlyfrom us.In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified,supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control overfinancial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. We may not be able to anticipate and identify accountingissues, or other risks critical to financial reporting that could materially impact the consolidated financial statements. Generally, if we fail toachieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meetour reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit ouraccess to capital markets, harm our results of operations, and lead to a decline in the trading price of our ADSs. Additionally, ineffective internalcontrol over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting fromthe stock exchange on which we list, regulatory investigations and civil or criminal sanctions.Increases in labor costs in China may adversely affect our business and our profitability.China’s economy has experienced increases in labor costs in recent years. China’s overall economy and the average wage in China areexpected to continue to grow. The average wage level for our employees has also increased in recent years. We expect that our labor costs,including wages and employee benefits, will continue to increase. Unless we are able to pass on these increased labor costs to our customers byincreasing prices for our products or services, our profitability and results of operations may be materially and adversely affected.In addition, we have been subject to regulatory requirements in terms of entering into labor contracts with our employees and payingvarious statutory employee benefits, including pensions, housing fund, medical insurance, work-related injury insurance, unemployment insuranceand childbearing insurance to designated government agencies for the benefit of our employees. Pursuant to the PRC Labor Contract Law and itsimplementation rules, employers are subject to requirements in terms of signing labor contracts, minimum wages, paying remuneration,determining the term of employees’ probation and unilaterally terminating labor contracts. In the event that we decide to terminate some of ouremployees or otherwise change our employment or labor practices, the PRC LaborTable of Contents25Contract Law and its implementation rules may limit our ability to effect those changes in a desirable or cost-effective manner, which couldadversely affect our business and results of operations. Besides, pursuant to the PRC Labor Contract Law, dispatched employees are intended to bea supplementary form of employment and the fundamental form should be direct employment by enterprises and organizations that requireemployees. Further, it is expressly stated in the Interim Provisions on Labor Dispatch that the number of seconded employees an employer usesmay not exceed 10% of its total labor force and the employer has a two-year transition period to comply with such requirement. Some of our PRCsubsidiaries, consolidated variable interest entities and their subsidiaries use seconded employees for their principal business activities. Thetransition period ended on February 29, 2016, and those PRC subsidiaries, consolidated variable interest entities and their subsidiaries havecompleted reducing the percentage of seconded employees to less than 10% as required. If the relevant PRC companies are deemed to haveviolated the limitation on the use of seconded employees under the relevant labor laws and regulations, we may be subject to fines and incur othercosts to make required changes to our current employment practices.As the interpretation and implementation of labor-related laws and regulations are still evolving, we cannot assure you that ouremployment practice does not and will not violate labor-related laws and regulations in China, which may subject us to labor disputes orgovernment investigations. If we are deemed to have violated relevant labor laws and regulations, we could be required to provide additionalcompensation to our employees and our business, financial condition and results of operations could be materially and adversely affected.The successful operation of our business depends upon the performance and reliability of the internet infrastructure andtelecommunications networks in China.Our business depends on the performance and reliability of the internet infrastructure in China. Substantially all access to the internet ismaintained through state-controlled telecommunication operators under the administrative control and regulatory supervision of the MIIT. Inaddition, the national networks in China are connected to the internet through international gateways controlled by the PRC government. Theseinternational gateways are generally the only websites through which a domestic user can connect to the internet. We cannot assure you that a moresophisticated internet infrastructure will be developed in China. We may not have access to alternative networks in the event of disruptions, failuresor other problems with China’s internet infrastructure. In addition, the internet infrastructure in China may not support the demands associated withcontinued growth in internet usage.We also rely on China Unicom and China Telecom to provide us with data communications capacity primarily through localtelecommunications lines and internet data centers to host our servers. We do not have access to alternative services in the event of disruptions,failures or other problems with the fixed telecommunications networks of China Unicom or China Telecom, or if China Unicom or China Telecomotherwise fails to provide such services. Any unscheduled service interruption could disrupt our operations, damage our reputation and result in adecrease in our revenues. Furthermore, we have no control over the costs of the services provided by China Unicom and China Telecom. If theprices that we pay for telecommunications and internet services rise significantly, our gross margins could be significantly reduced. In addition, ifinternet access fees or other charges to internet users increase, our user traffic may decrease, which in turn may cause our revenues to decline.We are subject to changing law and regulations regarding regulatory matters, corporate governance and public disclosure that haveincreased both our costs and the risk of non-compliance.We are subject to rules and regulations by various governing bodies, including, for example, the Securities and Exchange Commission,which is charged with the protection of investors and the oversight of companies whose securities are publicly traded, and the various regulatoryauthorities in China and the Cayman Islands, and to new and evolving regulatory measures under applicable law. Our efforts to comply with newand changing laws and regulations have resulted in and are likely to continue to result in, increased general and administrative expenses and adiversion of management time and attention from revenue-generating activities to compliance activities.Moreover, because these laws, regulations and standards are subject to varying interpretations, their application in practice may evolveover time as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additionalcosts necessitated by ongoing revisions to our disclosure and governance practices. If we fail to address and comply with these regulations and anysubsequent changes, we may be subject to penalty and our business may be harmed.Table of Contents26Any natural or other disasters, including outbreaks of health epidemics, and other extraordinary events could severely disrupt our businessoperations.Our operations are vulnerable to interruption and damage from natural and other types of disasters, including earthquakes, fire, floods,environmental accidents, power loss, communication failures and similar events. If any natural disaster or other extraordinary events were to occurin the area where we operate, our ability to operate our business could be seriously impaired. Our business could also be materially and adverselyaffected by the outbreak of health epidemics, including H7N9 bird flu, H1N1 swine influenza, avian influenza, severe acute respiratory syndrome,or SARS, Ebola, COVID-19 or another epidemic. Any such occurrence in China could severely disrupt our business operations and adverselyaffect our results of operations. For example, in December 2019, a novel strain of coronavirus (COVID-19) was reported to have surfaced, andsubsequently the COVID-19 spread throughout China and worldwide. Our business operations could be disrupted if any of our employees aresuspected of having the COVID-19, since it could require our employees to be quarantined and/or our offices to be disinfected. In addition, ourresults of operations could be adversely affected to the extent that the pandemic harms the Chinese economy in general.The COVID-19 pandemic has had and may continue to have a material adverse impact on our business, operating results and financialcondition.In recent years, there have been outbreaks of epidemics in China and globally. Starting from early 2020, in response to intensifying effortsto contain the spread of COVID-19, the Chinese government has taken a number of actions, which include quarantining individuals infected withor suspected of having COVID-19, restricting residents from travel, encouraging employees of enterprises to work remotely from home andcancelling public activities, among others. The pandemic resulted in a general slowdown in China’s economy and a significant reduction in realestate transaction volumes as many of our developer clients had to close their project sales centers and show rooms for an extended period,adversely affecting our e-commerce services. Many real estate developers also scaled back online advertising expenditures.In the fiscal year of 2021, some instances of COVID-19 infections emerged in various regions of China has resulted in the regionalshutdown and delay in the commencement of operations, as well as varying levels of travel restrictions. Since December 2021, there has been arecurrence of COVID-19 outbreaks in certain provinces of China due to the Delta and Omicron variants. As a result, the Chinese government hasimplemented similar measures as described above to contain further spread of COVID-19. Many corporate offices, physical stores and other offlineservices in the affected regions have been temporarily closed again, which has adversely affected our operating efficiency and capacity. Because ofthe city-wide lock-downs from time to time, there have been significant strains on offline operating activities and negative impacts on our e-commerce and advertising services. We have reinstated temporary remote working arrangement for our employees in the affected regions fromMarch 2022.As a result of the above, our results of operations have been adversely affected in since 2020. The extent to which COVID-19 maycontinue to impact our results of operations will depend on the continuing developments of the pandemic, including potential recurrence of thepandemic in China and measures to contain it, new information concerning the global pandemic and its impact on China, all of which are highlyuncertain and unpredictable and mostly beyond our control. We will continue to monitor and evaluate the impacts of COVID-19 to our business,financial condition, results of operations and cash flows. Because of the uncertainty surrounding the COVID-19 pandemic, including theeffectiveness of any vaccine program or anti-viral treatment, such impacts cannot be reasonably estimated at this time.Potential strategic investments, acquisitions or new business initiatives may disrupt our ability to manage our business effectively.Strategic investments, acquisitions or new business initiatives and any subsequent integration of new companies or businesses will requiresignificant attention from our management, in particular to ensure that such changes do not disrupt any existing collaborations, or affect our users’opinion and perception of our services and customer support. In addition, in the case of acquisitions or new business initiatives our managementwill need to ensure that the acquired or new business is effectively integrated into our existing operations. The diversion of our management’sattention and any difficulties encountered in integration could have a material adverse effect on our ability to manage our business. In addition,strategic investments, acquisitions or new business initiatives could expose us to potential risks, including:●risks associated with the assimilation of new operations, services, technologies and personnel;Table of Contents27●unforeseen or hidden liabilities;●the diversion of resources from our existing businesses and technologies;●the inability to generate sufficient revenues to offset the costs and expenses of the transaction; and●potential loss of, or harm to, relationships with employees, customers and users as a result of the integration of new businesses orinvestment.Certain of our leased office premises contain defects in the leasehold interests and if we are forced to relocate operations affected by suchdefects, our operations may be adversely affected.As of March 31, 2022, we had leased 76 office premises in 59 cities in China, in addition to a branch office in Hong Kong and ourprincipal executive offices in Beijing, China. A number of these leased properties contain defects in the leasehold interests. Such defects includethe lack of proper title or right to lease with respect to 14 leased premises, the landlords’ failure to duly register the leases with the relevant PRCgovernment authority with respect to 68 leased premises and the failure to renew lease agreements before the expiration date with respect to 1leased premise.Under PRC regulations, in situations where a tenant lacks evidence of the landlord’s title or right to lease, the relevant lease agreementmay not be valid or enforceable and may also be subject to challenge by third parties. In addition, under PRC laws and regulations, while thefailure to register the lease agreement does not affect its effectiveness between the tenant and the landlord, such lease agreement may be subject tochallenge by and unenforceable against a third party who leases the same property from the landlord and the lease agreement entered into by suchthird party has been duly registered with the competent PRC government authority. This risk may be mitigated if we continue to occupy the leasedpremises under our lease. Furthermore, the landlord and the tenant may be subject to administrative fines for such failure to register the lease.We have taken steps to cause our landlords to procure valid evidence as to the title or right to lease, to complete the lease registrationprocedures, as well as to renew lease agreements. However, we cannot assure you that such defects will be cured in a timely manner or at all. Ouroperations may be interrupted and additional relocation costs may be incurred if we are required to relocate operations affected by such defects.We have limited business insurance coverage.The insurance industry in China is still at an early stage of development and PRC insurance companies offer only limited businessinsurance products. As a result, we do not have any business disruption insurance or litigation insurance coverage for our operations in China. Anybusiness disruption, litigation or natural disaster may cause us to incur substantial costs and result in the diversion of our resources, as well assignificantly disrupt our operations, and have a material adverse effect on our business, financial position and results of operations.We may have conflicts of interest with our controlling shareholder and its affiliates; because of its controlling ownership interest in ourcompany, we may not be able to resolve such conflicts on favorable terms for us.E-House Enterprise became our controlling shareholder since November 2020. On November 24, 2021, TM Home Limited (“TMHome”), a company incorporated in the Cayman Islands with limited liability and owned as to 70.23% and 29.77% by E-House Enterprise andAlibaba Investment Limited, respectively, completed the acquisition of an aggregate of 55.8% interest in our issued share capital previously helddirectly by E-House Enterprise by purchasing 76,401,247 of our ordinary shares from E-House Enterprise. E-House Enterprise remains to be ourultimate controlling shareholder.Table of Contents28E-House Enterprise, through its holdings in TM Home, may from time to time make strategic decisions that it believes are in the bestinterests of its business and its shareholders. These decisions may be different from the decisions that we would have made on our own. E-HouseEnterprise’s decisions with respect to us or our business may be resolved in ways that favor E-House Enterprise and therefore E-House Enterprise’sown shareholders, which may not coincide with the interests of our other shareholders. We may not be able to resolve any potential conflicts, andeven if we do so, the resolution may be less favorable to us than if we were dealing with an unaffiliated shareholder. Even if both parties seek totransact business on terms intended to approximate those that could have been achieved among unaffiliated parties, this may not succeed inpractice.Potential conflicts of interest between E-House Enterprise and us also include the following:●Our board members or executive officers may have conflicts of interest. Mr. Xin Zhou, our chairman, is currently also serving as E-House Enterprise’s chairman and executive director. Some of our board members and executive officers are also board members andexecutive officers of E-House Enterprise, and/or also own shares or options in E-House Enterprise. These relationships could create,or appear to create, conflicts of interest when these persons are faced with decisions with potentially different implications for E-House Enterprise and us.●Sale of shares in our company. E-House Enterprise, through its holdings in TM Home, may decide to sell or otherwise dispose of allor a portion of our shares that it holds to a third party, including to one of our competitors, thereby giving that third party substantialinfluence over our business and our affairs. Such a sale could be contrary to the interests of certain of our shareholders, including ouremployees or our public shareholders.●Allocation of business opportunities. Business opportunities may arise that both we and E-House Enterprise find attractive, andwhich would complement our respective businesses. E-House Enterprise may decide to take the opportunities itself, which wouldprevent us from taking advantage of the opportunity.Conflicts of interest may also arise between the affiliates of E-House Enterprise and us, such as E-House. We have entered intoagreements with E-House with respect to various ongoing relationships between us, which may give rise to conflicts of interests. See “Item 7.Major Shareholders and Related Party Transactions—B. Related Party Transactions— Transactions and Agreements with E-House”.We derive a significant amount of revenue from our operation of SINA websites and there can be no assurance that our relationship withSINA will continue on satisfactory terms.Through an agreement in 2009 entered into between SINA and E-House, we own SINA’s real estate operations. To a large extent, theoperations and revenues of our business rely on SINA’s cooperation with us. The domain names of some major websites of our business are ownedby SINA and licensed to us through agreements which we initially entered into with SINA in 2009 with terms through 2019 and which weamended and restated in 2014 to extend through 2024. A significant number of users of these websites are linked through other SINA websites.Pursuant to an advertising inventory agency agreement with SINA, we are the exclusive agent of SINA for selling advertising to the real estateadvertisers through 2024. To a certain extent, we rely on SINA’s continued cooperation on an ongoing basis to enjoy our rights pursuant to ouragreements with SINA. SINA could at any time reduce its support for our business. In addition, SINA’s dual role as our principal shareholder andcontractual counterparty could result in conflicts of interest. If for any reason SINA does not fulfill its obligations in accordance with theadvertising inventory agency agreement or any of the other agreements or otherwise reduces its support for our online real estate operations, ourbusiness may be materially and adversely affected.Any negative development with respect to E-House Enterprise or SINA may materially and adversely affect our business and brand.We benefit from our relationship with E-House Enterprise, our controlling shareholder, and its affiliates such as E-House in marketing ourservices, including providing services to their clients. Our business and brand continue to be closely connected with those of E-House Enterpriseand its affiliates. We derive a significant amount of revenue from our operation of SINA websites, and SINA is a principal shareholder of ours. Thesuccess of the websites we operate on the platform of SINA is also dependent on the brands and images of SINA. If either E-House Enterprise orSINA loses its market position or suffers any negative publicity, it couldTable of Contents29have an adverse impact on our business, our marketing efforts, our relationships with strategic partners and customers, our reputation and brand.Risks Related to Our Corporate StructureIf the PRC government finds that the agreements that establish the structure for operating our advertising services business and real estateonline business in China do not comply with PRC governmental restrictions on foreign investment in the advertising industry or theinternet information service industry, we could be subject to severe penalties.Leju Holdings Limited is a Cayman Islands exempted company and a foreign person under PRC law. Due to PRC government restrictionson foreign investment in the internet industry and the uncertainty over administrative practice in advertising industries, we conduct part of ourbusiness through contractual arrangements with our affiliated PRC entities. Our e-commerce business with respect to new residential properties isoperated through our contractual arrangements with Leju Hao Fang and its shareholders. Our e-commerce business with respect to home furnishingis operated through our contractual arrangements with Beijing Jiajujiu and its shareholders. Our online advertising business for new residentialproperties websites and our secondary listings business are operated through our contractual arrangements with Beijing Leju and its shareholders.Beijing Leju and its subsidiaries, Leju Hao Fang, and Beijing Jiajujiu and its subsidiaries and branches hold the licenses and approvals that areessential for our business operations.We have entered into, through our PRC subsidiaries, Shanghai SINA Leju, Shanghai Yi Yue and Beijing Maiteng, a series of contractualarrangements with Beijing Leju, Leju Hao Fang, Beijing Jiajujiu and their respective shareholders. These contractual arrangements enable us to (i)direct the activities that most significantly affect the economic performance of Beijing Leju, Leju Hao Fang, Beijing Jiajujiu and their subsidiariesand branches; (ii) receive substantially all of the economic benefits from the three consolidated variable interest entities and their subsidiaries inconsideration for the services provided by our PRC subsidiaries; and (iii) have an exclusive option to purchase all or part of the equity interests inthe consolidated variable interest entities, when and to the extent permitted by PRC law, or request any existing shareholder of the consolidatedvariable interest entities to transfer all or part of the equity interest in the consolidated variable interest entities to another PRC person or entitydesignated by us at any time in our discretion. These agreements make us their “primary beneficiary” for accounting purposes under U.S. GAAP.For descriptions of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure”.However, Leju is a Cayman Islands holding company with no equity ownership in our consolidated variable interest entities, and weconduct our operations in China primarily through our consolidated variable interest entities. Holders of Leju's ADSs hold equity interest in LejuHoldings Limited, our Cayman Islands holding company, and do not have direct or indirect interest in our consolidated variable interest entities inChina. If the PRC government deems that our contractual arrangements with our consolidated variable interest entities do not comply with PRCregulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change orare interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. We maynot be able to repay the notes and other indebtedness, and our shares may decline in value or become worthless, if we are unable to assert ourcontractual control rights over the assets of our PRC subsidiaries, which contribute to 99.9% of our revenues in 2021. Leju, its PRC subsidiariesand consolidated variable interest entities, and investors of Leju face uncertainty about potential future actions by the PRC government that couldaffect the enforceability of the contractual arrangements with our consolidated variable interest entities and, consequently, significantly affect thefinancial performance of our consolidated variable interest entities and our company as a group.If the PRC government finds that these contractual arrangements do not comply with its restrictions on foreign investment in the internetbusiness or advertising industry, or if the PRC government otherwise finds that we, Beijing Leju, Leju Hao Fang or Beijing Jiajujiu, or any of theirsubsidiaries and branches is in violation of PRC laws or regulations or lack the necessary permits or licenses to operate our business, the relevantPRC regulatory authorities, including the State Administration for Industry and Commerce, which regulates advertising companies, and the MIIT,which regulates internet information service companies, would have broad discretion in dealing with such violations, including:●revoking our business and operating licenses;●discontinuing or restricting our operations;Table of Contents30●imposing fines or confiscating any of our income that they deem to have been obtained through illegal operations;●imposing conditions or requirements with which we or our PRC subsidiaries and affiliates may not be able to comply;●requiring us or our PRC subsidiaries and affiliates to restructure the relevant ownership structure or operations; or●taking other regulatory or enforcement actions that could be harmful to our business.The imposition of any of these penalties could have a material and adverse effect on our business, financial condition and results ofoperations. If any of these penalties results in our inability to direct the activities of any of Beijing Leju, Leju Hao Fang or Beijing Jiajujiu thatmost significantly impact its economic performance, and/or our failure to receive the economic benefits from any of Beijing Leju, Leju Hao Fangor Beijing Jiajujiu, we may not be able to consolidate the entity in our consolidated financial statements in accordance with U.S. GAAP.Although we believe we, our PRC subsidiaries and our consolidated variable interest entities comply with current PRC laws andregulations, we cannot assure you that the PRC government would agree that our contractual arrangements comply with PRC licensing, registrationor other regulatory requirements, with existing policies or with requirements or policies that may be adopted in the future. The PRC governmenthas broad discretion in determining rectifiable or punitive measures for non-compliance with or violations of PRC laws and regulations. If the PRCgovernment determines that we or our consolidated variable interest entities do not comply with applicable law, it could revoke our consolidatedvariable interest entities' business and operating licenses, require our consolidated variable interest entities to discontinue or restrict ourconsolidated variable interest entities' operations, restrict our consolidated variable interest entities' right to collect revenues, block our consolidatedvariable interest entities' websites, require our consolidated variable interest entities to restructure our operations, impose additional conditions orrequirements with which our consolidated variable interest entities may not be able to comply, impose restrictions on our consolidated variableinterest entities' business operations or on their customers, or take other regulatory or enforcement actions against our consolidated variable interestentities that could be harmful to their business. Any of these or similar occurrences could significantly disrupt our or our consolidated variableinterest entities' business operations or restrict our consolidated variable interest entities from conducting a substantial portion of their businessoperations, which could materially and adversely affect our consolidated variable interest entities' business, financial condition and results ofoperations. If any of these occurrences results in our inability to direct the activities of any of our consolidated variable interest entities that mostsignificantly impact its economic performance, and/or our failure to receive the economic benefits from any of our consolidated variable interestentities, we may not be able to consolidate these entities in our consolidated financial statements in accordance with U.S. GAAP.We rely on contractual arrangements with Beijing Leju, Leju Hao Fang and Beijing Jiajujiu and their respective shareholders for aportion of our operations, which may not be as effective as direct ownership in providing operational control.We rely on contractual arrangements with Beijing Leju, Leju Hao Fang and Beijing Jiajujiu and their respective shareholders to operateour online real estate business. For descriptions of these contractual arrangements, see “Item 4. Information on the Company—C. OrganizationalStructure”. These contractual arrangements may not be as effective as direct ownership in providing us with control over Beijing Leju, Leju HaoFang or Beijing Jiajujiu. These contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration inChina. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRClegal procedures. If any of the other parties fails to perform their obligations under these contractual arrangements, we may have to incursubstantial costs and resources to enforce such arrangements, and we would have to rely on legal remedies under PRC law, including seekingspecific performance or injunctive relief and claiming damages, which we cannot assure you will be effective. Furthermore, the legal environmentin China is not as developed as in other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit ourability to enforce these contractual arrangements, which may make it difficult to exert effective control over Beijing Leju, Leju Hao Fang andBeijing Jiajujiu, and our ability to conduct our business may be negatively affected.In 2019, 2020 and 2021, Beijing Leju, Leju Hao Fang, Beijing Jiajujiu and their respective subsidiaries and branches contributed inaggregate 99.9%, 99.9% and 99.9%% of our total net revenues, respectively. In the event we are unable to enforce the contractual arrangements, wemay not be able to have the power to direct the activities that most significantly affect the economic performance of Beijing Leju, Leju Hao Fang,Beijing Jiajujiu and their respective subsidiaries and branches, and our ability to conduct our business may be negatively affected, and we may notbe able to consolidate the financial results of Beijing Leju, Leju Hao Fang,Table of Contents31Beijing Jiajujiu and their respective subsidiaries and branches into our consolidated financial statements in accordance with U.S. GAAP.The shareholders of our consolidated variable interest entities may have potential conflicts of interest with us, and if any such conflicts ofinterest are not resolved in our favor, our business may be materially and adversely affected.We have designated individuals who are PRC nationals to be the shareholders of our consolidated variable interest entities in China. Theseindividuals may have conflicts of interest with us. We cannot assure you that when conflicts of interest arise, they will act in the best interests ofour company or that conflicts of interests will be resolved in our favor. In addition, they may breach or cause our consolidated variable interestentities and their subsidiaries to breach or refuse to renew the existing contractual arrangements that allow us to effectively control our consolidatedvariable interest entities and their subsidiaries and receive economic benefits from them. Currently, we do not have arrangements to addresspotential conflicts of interest between the shareholders of our consolidated variable interest entities and our company. We rely on them to abide bythe laws of the Cayman Islands and China, which provide that directors and/or officers owe a fiduciary duty to our company, which requires themto act in good faith and in the best interests of our company and not to use their positions for personal gain. If we cannot resolve any potentialconflicts of interest or disputes between us and the individual shareholders of our consolidated variable interest entities which may arise, we wouldhave to rely on legal proceedings to enforce our rights, which could be costly and unsuccessful.Our ability to enforce the equity pledge agreements between us and the shareholders of Beijing Leju, Leju Hao Fang or Beijing Jiajujiumay be subject to limitations based on PRC laws and regulations.Pursuant to the equity pledge agreements relating to our consolidated variable interest entities, Beijing Leju, Leju Hao Fang and BeijingJiajujiu, the shareholders of the consolidated variable interest entities pledge their equity interest in the consolidated variable interest entities to oursubsidiaries to secure their and the relevant consolidated variable interest entities’ performance of the obligations under the relevant contractualarrangements. The equity pledges under these equity pledge agreements have been registered with the relevant local branch of the SAMR.According to the Civil Code of the PRC, which was issued by the National People’s Congress on May 28, 2020 and became effective on January 1,2021, the pledgee and the pledgor are prohibited from making an agreement prior to the expiration of the debt performance period to transfer theownership of the pledged equity to the pledgee when the obligor fails to pay the debt due. However, under the Civil Code of the PRC, when anobligor fails to pay its debt when due, the pledgee may choose to either conclude an agreement with the pledgor to obtain the pledged equity orseek payments from the proceeds of the auction or sell-off of the pledged equity. If any of the consolidated variable interest entities or itsshareholders fails to perform its obligations secured by the pledges under the equity pledge agreements, one remedy in the event of default underthe agreements is to require the pledgor to sell the equity interests in the relevant consolidated variable interest entity in an auction or private saleand remit the proceeds to our subsidiaries in China, net of related taxes and expenses. Such an auction or private sale may not result in our receiptof the full value of the equity interests in the relevant consolidated variable interest entity. We consider it very unlikely that the public auctionprocess would be undertaken since, in an event of default, our preferred approach would be to ask our PRC subsidiary that is a party to theexclusive call option agreement with the consolidated variable interest entity’s shareholder, to designate another PRC person or entity to acquire theequity interest in the consolidated variable interest entity and replace the existing shareholder pursuant to the exclusive call option agreement.In addition, in the registration forms of the local branch of SAMR for the pledges over the equity interests under the equity pledgeagreements, the amount of registered equity interests pledged to our PRC subsidiaries was stated as the pledgor’s portion of the registered capital ofthe consolidated variable interest entity. The equity pledge agreements with the shareholders of the consolidated variable interest entities providethat the pledged equity interest constitutes continuing security for any and all of the indebtedness, obligations and liabilities under the relevantcontractual arrangements, and therefore the scope of pledge should not be limited by the amount of the registered capital of the consolidatedvariable interest entities. However, there is no guarantee that a PRC court will not take the position that the amount listed on the equity pledgeregistration forms represents the full amount of the collateral that has been registered and perfected. If this is the case, the obligations that aresupposed to be secured in the equity pledge agreements in excess of the amount listed on the equity pledge registration forms could be determinedby the PRC court to be unsecured debt, which takes last priority among creditors and often does not have to be paid back at all. We do not haveagreements that pledge the assets of the consolidated variable interest entities and their subsidiaries for the benefit of us or our PRC subsidiaries,although the consolidated variable interest entities grant our PRC subsidiaries options to purchase the assets of the consolidated variable interestentities and their equity interests in their subsidiaries under the exclusive call option agreement.Table of Contents32Contractual arrangements we have entered into with Beijing Leju, Leju Hao Fang and Beijing Jiajujiu may be subject to scrutiny by thePRC tax authorities and a finding that we, Beijing Leju, Leju Hao Fang or Beijing Jiajujiu owe additional taxes could reduce our netincome and the value of your investmentUnder PRC laws and regulations, arrangements and transactions among related parties may be audited or challenged by the PRC taxauthorities. We could face material and adverse consequences if the PRC tax authorities determine that the contractual arrangements we haveentered into with Beijing Leju, Leju Hao Fang or Beijing Jiajujiu do not represent an arm’s-length price and adjust the taxable income of BeijingLeju, Leju Hao Fang, Beijing Jiajujiu or their subsidiaries and branches in the form of a transfer pricing adjustment. A transfer pricing adjustmentcould, among other things, result in a reduction of expense deductions recorded by Beijing Leju, Leju Hao Fang, Beijing Jiajujiu or theirsubsidiaries and branches, which could in turn increase their PRC tax liabilities. In addition, the PRC tax authorities may impose late payment feesand other penalties on our consolidated variable interest entities for underpayment of taxes. Our consolidated net income may be materially andadversely affected if our consolidated variable interest entities’ tax liabilities increase or if they are found to be subject to late payment fees or otherpenalties.Risks Related to Doing Business in ChinaChanges in PRC government policies could have a material and adverse effect on overall economic growth in China, which couldadversely affect our business.We conduct substantially all of our business in China. As the real estate industry is highly sensitive to business spending, credit conditionsand personal discretionary spending levels, it tends to decline during general economic downturns. Accordingly, our results of operations, financialcondition and prospects are subject, to a significant degree, to economic developments in China. While China’s economy has experiencedsignificant growth in the past three decades, growth has been uneven across different periods, regions and among various economic sectors ofChina. The PRC government may implement measures that are intended to benefit the overall economy even if they would be expected to have anegative effect on the real estate industry. The real estate industry is also sensitive to credit policies. In recent years, the PRC government adjustedthe People’s Bank of China’s statutory deposit reserve ratio and benchmark interest rates several times in response to various economic situations.Any future monetary tightening may reduce the overall liquidity in the economy and reduce the amount of credit available for real estate purchase.Higher interest rates may increase borrowing costs for purchasers who rely on mortgage loans to finance their real estate purchase. These couldnegatively affect overall demand for real estate and adversely affect our operating and financial results. We cannot assure you that China willcontinue to have rapid or stable economic growth in the future or that changes in credit or other government policies that are intended to createstable economic growth will not adversely impact the real estate industry.Uncertainties with respect to the PRC legal system could adversely affect us.We conduct our business primarily through our subsidiaries and consolidated variable interest entities in China. Our operations in Chinaare governed by PRC laws and regulations. Our subsidiaries are generally subject to laws and regulations applicable to foreign investments inChina and, in particular, laws applicable to foreign-invested enterprises. The PRC legal system is based on written statutes. Prior court decisionsmay be cited for reference but have limited precedential value. PRC legislation and regulations have gradually enhanced the protections afforded tovarious forms of foreign investments in China. However, China has not developed a fully integrated legal system and recently enacted laws andregulations may not sufficiently cover all aspects of economic activities in China. In particular, because these laws and regulations are relativelynew, the interpretation and enforcement of these laws and regulations involve uncertainties. In addition, any litigation in China may be protractedand result in substantial costs and diversion of resources and management attention.Table of Contents33The PRC government’s significant oversight over our business operation could result in a material adverse change in our operations andthe value of our ADSs.We conduct our business primarily in China. Our operations in China are governed by PRC laws and regulations. The PRC governmenthas significant oversight over the conduct of our business, and may intervene or influence our operations as the government deems appropriate toadvance regulatory and societal goals and policy positions. The PRC government has recently published new policies that significantly affectedcertain industries and we cannot rule out the possibility that it will in the future release regulations or policies that directly or indirectly affect ourindustry or require us to seek additional permission to continue our operations, which could result in a material adverse change in our operationand/or the value of our ADSs. Therefore, investors of our company and our business face potential uncertainty from actions taken by the PRCgovernment affecting our business.Substantial uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and how it mayimpact the viability of our current corporate structure, corporate governance and business operations.The “variable interest entity” structure has been adopted by many PRC-based companies, including us, to obtain necessary licenses andpermits in the industries that are currently subject to foreign investment restrictions in China. See “—Risks Related to Our Corporate Structure”and “Item 4. Information on the Company—C. Organizational Structure.” On March 15, 2019, the PRC National People’s Congress approved theForeign Investment Law, which came into effect on January 1, 2020 and replaced the trio of existing laws regulating foreign investment in China,namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations. The Foreign Investment Law embodies an expectedPRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative effortsto unify the corporate legal requirements for both foreign and domestic investments. However, since it is relatively new, uncertainties still exist inrelation to its interpretation and implementation. For instance, under the Foreign Investment Law, “foreign investment” refers to the investmentactivities directly or indirectly conducted by foreign individuals, enterprises or other entities in China. Though it does not explicitly classifycontractual arrangements as a form of foreign investment, there is no assurance that foreign investment via contractual arrangement would not beinterpreted as a type of indirect foreign investment activities under the definition in the future. In addition, the definition contains a catch-allprovision which includes investments made by foreign investors through means stipulated in laws or administrative regulations or other methodsprescribed by the State Council. Therefore, it still leaves leeway for future laws, administrative regulations or provisions promulgated by the StaleCouncil to provide for contractual arrangements as a form of foreign investment. In any of these cases, it will be uncertain whether our contractualarrangements will be deemed to be in violation of the market access requirements for foreign investment under the PRC laws and regulations.Furthermore, if future laws, administrative regulations or provisions prescribed by the State Council mandate further actions to be taken bycompanies with respect to existing contractual arrangements, we may face substantial uncertainties as to whether we can complete such actions in atimely manner, or at all. Failure to take timely and appropriate measures to cope with any of these or similar regulatory compliance challengescould materially and adversely affect our current corporate structure, corporate governance and business operations.Governmental control of currency conversion may affect the value of your investment.The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittanceof currency out of China. Restrictions on currency exchanges between the Renminbi and other currencies may limit our ability to utilize ourrevenues and funds, in particular in relation to capital account transactions such as investments and loans. We receive substantially all of ourrevenues in Renminbi. Under our current structure, our income will be primarily derived from dividend payments from our PRC subsidiaries.Shortages in the availability of foreign currency may restrict the ability of our PRC subsidiaries and our consolidated variable interest entities toremit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency denominated obligations.Under current PRC regulations, the Renminbi is convertible for “current account transactions”, which include among other thingsdividend payments and payments for the import of goods and services, subject to compliance with certain procedural requirements. Although theRenminbi has been fully convertible for current account transactions since 1996, we cannot assure you that the relevant PRC governmentauthorities will not limit or eliminate our ability to purchase and retain foreign currencies for current account transactions in the future.Table of Contents34Conversion of the Renminbi into foreign currencies and of foreign currencies into the Renminbi, for payments relating to “capital accounttransactions”, which principally include investments and loans, generally requires the approval of the State Administration of Foreign Exchange, orSAFE, and other relevant PRC governmental authorities.In response to the persistent capital outflow from China and the depreciation of Renminbi against U.S. dollar in the fourth quarter of 2016,the People’s Bank of China and SAFE have implemented a series of capital control measures over recent months, including stricter vettingprocedures for PRC-based companies’ outbound remittance of foreign currency for overseas acquisitions, dividend payments and shareholder loanrepayments. For instance, on January 26, 2017, SAFE issued the a SAFE Circular 3, which stipulates several capital control measures on theoutbound remittance of profit from domestic entities to offshore entities, including: (i) under the principle of genuine transaction, banks must checkboard resolutions regarding profit distribution, original version of tax filing records and audited financial statements; and (ii) domestic entities musthold income to account for previous years’ losses before remitting the profits. The PRC government may continue to strengthen its capital controls,and SAFE may adopt more restrictions and substantial vetting processes for both current account and capital account cross-border transactions.Restrictions on the convertibility of the Renminbi for capital account transactions could affect the ability of our PRC subsidiaries and affiliatedPRC operating companies to make investments overseas or to obtain foreign exchange through debt or equity financing, including by means ofloans or capital contributions from us.Fluctuation in the value of the Renminbi may have a material and adverse effect on your investment.The conversion of Renminbi into foreign currencies, including U.S. dollars, is based on rates set by the People’s Bank of China. TheRenminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. The value of Renminbi against the U.S. dollar and othercurrencies is affected by changes in China’s political and economic conditions and by China’s foreign exchange policies, among other things. Wecannot assure you that Renminbi will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predicthow market forces or PRC or U.S. government policy may impact the exchange rate between Renminbi and the U.S. dollar in the future.As our costs and expenses are mostly denominated in Renminbi, the appreciation of the Renminbi against the U.S. dollar would increaseour costs in U.S. dollar terms. In addition, as our operating subsidiaries and consolidated variable interest entities in China receive revenues inRenminbi, any significant depreciation of the Renminbi against the U.S. dollar may have a material and adverse effect on our revenues in U.S.dollar terms and financial condition, and the value of, and any dividends payable on, our ordinary shares. For example, to the extent that we need toconvert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on theRenminbi amount we receive from the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of makingpayments for dividends on our ordinary shares or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have anegative effect on the U.S. dollar amount available to us. These and other effects on our financial data resulting from fluctuations in the value of theRenminbi against the U.S. dollar could have a material and adverse effect on the market price of our ADSs and your investment.Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered intoany hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedgingtransactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge ourexposure or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability toconvert Renminbi into foreign currency. As a result, fluctuations in exchange rates may have a material adverse effect on your investment. See“Item 11. Quantitative and Qualitative Disclosures about Market Risk—Foreign Exchange Risk.”Changes in international trade policies and rising political tensions, particularly between the U.S. and China, may adversely impact ourbusiness and operating results.There have been changes in international trade policies and rising political tensions, particularly between the U.S. and China, but also as aresult of the conflict in Ukraine and sanctions on Russia. The U.S. government has made statements and taken certain actions that may lead topotential changes to U.S. and international trade policies towards China. While the “Phase One” agreement was signed between the United Statesand China on trade matters, it remains unclear what additional actions, if any, will be taken by the U.S. or other governments with respect tointernational trade, tax policy related to international commerce, or other trade matters. The situation is further complicated by the political tensionsbetween the United States and China that escalated during the COVID-19Table of Contents35pandemic and in the wake of the PRC National People’s Congress’ decision on Hong Kong national security legislation and sanctions andrestrictions imposed by the U.S. government on Chinese companies and citizens. Against this backdrop, China has implemented, and may furtherimplement, measures in response to the changing trade policies, treaties, tariffs and sanctions and restrictions against Chinese companies initiatedby the U.S. government. For example, the Ministry of Commerce of China published the Measures for Security Review of Foreign Investment inDecember 2020 to counter restrictions imposed by foreign countries on Chinese citizens and companies, and foreign investment in certain keyareas, including products and services of key information technology and internet, that results in acquiring the actual control of the investee, isrequired to obtain approval from designated governmental authorities in advance.In addition, we have been closely monitoring domestic policies in the United States designed to restrict certain Chinese companies fromsupplying or operating in the U.S. market. These policies include the Clean Network project initiated by the U.S. Department of State in August2020 and new authorities granted to the Department of Commerce to prohibit or restrict the use of information and communications technology andservices, or ICTS. While a substantial majority of our business is conducted in China, policies like these may deter U.S. users from accessingand/or using our apps, products and services, which could adversely impact our user experience and reputation.Likewise, we are monitoring policies in the United States that are aimed at restricting U.S. persons from investing in or supplying certainChinese companies. The United States and various foreign governments have imposed controls, license requirements and restrictions on the importor export of technologies and products (or voiced the intention to do so). For instance, the United States is in the process of developing new exportcontrols with respect to "emerging and foundational" technologies, which may include certain AI and semiconductor technologies. In addition, theU.S. government may potentially impose a ban prohibiting U.S. persons from making investments in or engaging in transactions with certainChinese companies. Measures such as these could deter suppliers in the United States and/or other countries that impose export controls and otherrestrictions from providing technologies and products to, making investments in, or otherwise engaging in transactions with Chinese companies. Asa result, Chinese companies would have to identify and secure alterative supplies or sources of financing, while they may not be able to do so in atimely manner and at commercially acceptable terms, or at all. In addition, Chinese companies may have to limit and reduce their research anddevelopment and other business activities, or cease conducting transactions with parties, in the United States and other countries that impose exportcontrols or other restrictions.Rising trade and political tensions could reduce levels of trades, investments, technological exchanges and other economic activitiesbetween China and other countries, which would have an adverse effect on global economic conditions, the stability of global financial markets,and international trade policies. It could also adversely affect the financial and economic conditions in the jurisdictions in which we operate, aswell as our overseas expansion, our financial condition, and results of operations. While cross-border business currently may not be an area of ourfocus, if we plan to expand our business internationally in the future, any unfavorable government policies on international trade or any restrictionon Chinese companies may affect the consumer demands for our products and service, impact our competitive position, or prevent us from beingable to conduct business in certain countries. In addition, our results of operations could be adversely affected if any such tensions or unfavorablegovernment trade policies harm the Chinese economy or the global economy in general.PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC residentbeneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries, limit ourPRC subsidiaries’ ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us.The Notice on Issues Relating to the Administration of Foreign Exchange in Fund-Raising and Round-Trip Investment Activities ofDomestic Residents Conducted via Offshore Special Purpose Companies, or SAFE Circular 75, requires PRC residents to register with the relevantlocal branch of SAFE before establishing or controlling any company outside China, referred to as an offshore special purpose company, for thepurpose of raising funds from overseas to acquire or exchange the assets of, or acquiring equity interests in, PRC entities held by such PRCresidents and to update such registration in the event of any significant changes with respect to that offshore company. SAFE promulgated theCircular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and RoundtripInvestment through Special Purpose Vehicles, or SAFE Circular 37, in July 2014, which replaced SAFE Circular 75. SAFE Circular 37 requiresPRC residents to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for thepurpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interests in domestic enterprises or offshoreassets or interests,Table of Contents36referred to in SAFE Circular 37 as a “special purpose vehicle”. The term “control” under SAFE Circular 37 is broadly defined as the operationrights, beneficiary rights or decision-making rights acquired by the PRC residents in the offshore special purpose vehicles or PRC companies bysuch means as acquisition, trust, proxy, voting rights, repurchase, convertible bonds or other arrangements. SAFE Circular 37 further requiresamendment to the registration in the event of any changes with respect to the basic information of the special purpose vehicle, such as changes in aPRC resident individual shareholder, name or operation period; or any significant changes with respect to the special purpose vehicle, such asincrease or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event. If theshareholders of the offshore holding company who are PRC residents do not complete their registration with the local SAFE branches, the PRCsubsidiaries may be prohibited from distributing their profits and proceeds from any reduction in capital, share transfer or liquidation to theoffshore company, and the offshore company may be restricted in its ability to contribute additional capital to its PRC subsidiaries. Moreover,failure to comply with the SAFE registration and amendment requirements described above could result in liability under PRC law for evasion ofapplicable foreign exchange restrictions.We have requested our beneficial owners who are PRC residents to make the necessary applications, filings and amendments required bySAFE. However, we cannot provide any assurances that all of our beneficial owners who are PRC residents will continue to make, obtain or amendany applicable registrations or approvals required by these SAFE regulations. The failure or inability of our PRC resident beneficial owners tocomply with the registration procedures set forth therein may subject us to fines and legal sanctions, restrict our cross-border investment activities,or limit our ability to contribute additional capital into our PRC subsidiaries, or limit our PRC subsidiaries’ ability to pay dividends or make otherdistributions to our company or otherwise adversely affect our business. Moreover, failure to comply with the SAFE registration requirementscould result in liability under PRC laws for evasion of foreign exchange restrictions. Furthermore, pursuant to our agreements with Tencent, ourPRC subsidiaries, Shanghai SINA Leju, Shanghai Yi Yue and Beijing Maiteng are restricted from paying dividends to us until each of ourindividual beneficial shareholders who are PRC residents and subject to SAFE registration as described above submits its application to SAFE andeach of such PRC subsidiaries submits an application with SAFE as required.As it is uncertain how the SAFE regulations will be interpreted or implemented, we cannot predict how these regulations will affect ourbusiness operations or future strategy. For example, we may be subject to a more stringent review and approval process with respect to our foreignexchange activities, including the remittance of dividends and foreign currency-denominated borrowings, which may adversely affect our results ofoperations and financial condition. In addition, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owners ofsuch company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by theSAFE regulations. This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.Failure to comply with PRC regulations regarding the registration requirements for employee stock ownership plans or share option plansmay subject the PRC plan participants or us to fines and other legal or administrative sanctions.Under the applicable regulations and SAFE rules, PRC citizens who participate in an employee stock ownership plan or a stock optionplan in an overseas publicly listed company are required to register with SAFE and complete certain other procedures. In February 2012, SAFEpromulgated the Notices on Issues concerning the Foreign Exchange Administration for Stock Incentive Plan of Overseas Publicly-ListedCompany, or the Stock Option Rules, which terminated the Application Procedures of Foreign Exchange Administration for Domestic IndividualsParticipating in Employee Stock Ownership Plan or Stock Option Plan of Overseas Publicly-Listed Company issued by SAFE in March 2007.Pursuant to the Stock Option Rules, if a PRC resident participates in any stock incentive plan of an overseas publicly-listed company, a qualifiedPRC domestic agent must, among other things, file on behalf of such participant an application with SAFE to conduct the SAFE registration withrespect to such stock incentive plan and obtain approval for an annual allowance with respect to the purchase of foreign exchange in connectionwith the exercise or sale of stock options or stock such participant holds. Such participating PRC residents’ foreign exchange income received fromthe sale of stock and dividends distributed by the overseas publicly-listed company must be fully remitted into a PRC collective foreign currencyaccount opened and managed by the PRC agent before distribution to such participants. We and our PRC employees who have been granted stockoptions are subject to this rule, and we have registered our existing employee stock ownership plan and stock option plan with the local SAFEbranch in Shanghai. However, if there is any change to our existing employee stock ownership plan or stock option plan, we cannot assure you thatwe and our PRC optionees will be able to amend such registration in a timely manner, or at all. If we or our PRC optionees fail to comply withthese regulations, we or our PRC optionees may be subject to fines and legal sanctions. See “Item 4. Information on the Company— B. BusinessOverview—Regulation—Foreign Exchange Registration of Employee Stock Incentive Plans”.Table of Contents37The approval of and or report and filing with the CSRC or other PRC government authorities may be required in connection with ouroffshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval orcomplete such filing and reporting process.The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, adopted by six PRCregulatory agencies in 2006 and amended in 2009, requires an overseas special purpose vehicle formed for listing purposes through acquisitions ofPRC domestic companies and controlled by PRC persons or entities to obtain the approval of the CSRC prior to the listing and trading of suchspecial purpose vehicle’s securities on an overseas stock exchange. The interpretation and application of the regulations remain unclear, and ourhistorical and future offshore offerings may ultimately require approval of the CSRC. If the CSRC approval is required, it is uncertain whether wecan or how long it will take us to obtain the approval and, even if we obtain such CSRC approval, the approval could be rescinded. Any failure toobtain or delay in obtaining the CSRC approval for any of our offshore offerings, or a rescission of such approval if obtained by us, would restrictour ability to raise funds, subject us to sanctions imposed by the CSRC or other PRC regulatory authorities, which could include fines and penaltieson our operations in China, restrictions or limitations on our ability to pay dividends outside of China, and other forms of sanctions that maymaterially and adversely affect our business, financial condition, and results of operations.On July 6, 2021, the relevant PRC government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities inAccordance with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervisionon overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant regulatorysystems to deal with the risks and incidents faced by China-based overseas-listed companies. As a follow-up, on December 24, 2021, the StateCouncil issued a draft of the Provisions of the State Council on the Administration of Overseas Securities Offering and Listing by DomesticCompanies, or the Draft Provisions, and the CSRC issued a draft of Administration Measures for the Filing of Overseas Securities Offering andListing by Domestic Companies, or the Draft Administration Measures, for public comments.Pursuant to these drafts, an overseas offering and listing by a domestic company, whether directly or indirectly, shall be filed with theCSRC. Specifically, the examination and determination of an indirect offering and listing will be conducted on a substance-over-form basis, and anoffering and listing shall be considered as an indirect overseas offering and listing by a domestic company if the issuer meets the followingconditions: (i) the operating income, gross profit, total assets, or net assets of the domestic enterprise in the most recent fiscal year was more than50% of the relevant line item in the issuer’s audited consolidated financial statement for that year; and (ii) senior management personnelresponsible for business operations and management are mostly PRC citizens or are ordinarily resident in the PRC, and the main place of businessis in the PRC or carried out in the PRC. According to the Draft Administration Measures, the issuer or its affiliated domestic company, as the casemay be, shall file with the CSRC for its initial public offering, follow-on offering, listing of securities in another overseas market, and otherequivalent offing activities. Particularly, the issuer shall submit the filing with respect to its initial public offering and listing or listing of securitiesin another overseas market within three business days after submitting the application documents for the foregoing transactions, and the issuer shallsubmit the filing with respect to its follow-on offering within three business days after completion of the follow-on offering. Besides, direct orindirect overseas listing of assets of PRC domestic companies by merger and acquisition, share swap, allocation, or other arrangements through oneof a series of transactions are also subject to filing with CSRC. Failure to comply with the filing requirements may result in fines to the relevantdomestic companies, suspension of their businesses, revocation of their business licenses and operation permits and fines on the controllingshareholder and other responsible persons. The Draft Administration Measures also sets forth certain regulatory red lines for overseas offerings andlistings by domestic enterprises. For more details of the Draft Provisions and the Draft Administration Measures, please refer to “Regulation –Regulations on Overseas Offering and Listing.”Table of Contents38As of the date of this annual report, the Draft Provisions and the Draft Administration Measures were released for public comment only.There are uncertainties as to whether the Draft Provisions and the Draft Administration Measures would be further amended, revised or updated.Substantial uncertainties exist with respect to the enactment timetable and final content of the Draft Provisions and the Draft AdministrationMeasures. As the CSRC may formulate and publish guidelines for filings in the future, the Draft Administration Measures does not provide fordetailed requirements of the substance and form of the filing documents. In a Q&A released on its official website, the respondent CSRC officialindicated that the proposed new filing requirement will start with new companies and the existing companies seeking to carry out activities likefollow-on financing or listing of securities in another overseas market. As for the filings for the existing companies, the regulator will grantadequate transition period and apply separate arrangements. The Q&A also addressed the contractual arrangements and pointed out that if relevantdomestic laws and regulations have been observed, companies with compliant VIE structure may seek overseas listing after completion of theCSRC filings. Nevertheless, it does not specify what qualify as compliant VIE structures and what relevant domestic laws and regulations arerequired to be complied with. Given the substantial uncertainties surrounding the latest CSRC filing requirements at this stage, we cannot assureyou that we will be able to complete the filings and fully comply with the relevant new rules on a timely basis, if at all.Relatedly, on December 27, 2021, the NDRC and the Ministry of Finance, or the MOC, jointly issued the Special AdministrativeMeasures (Negative List) for Foreign Investment Access (2021 Version), or the 2021 Negative List, which became effective on January 1, 2022.Pursuant to such Special Administrative Measures, if a domestic company engaging in the prohibited business stipulated in the 2021 Negative Listseeks an overseas offering and listing, it shall obtain the approval from the competent governmental authorities. Besides, the foreign investors ofthe company shall not be involved in the company’s operation and management, and their shareholding percentage shall be subject, mutatismutandis, to the relevant regulations on the domestic securities investments by foreign investors. As the 2021 Negative List is relatively new, thereremain substantial uncertainties as to the interpretation and implementation of these new requirements, and it is unclear as to whether and to whatextent listed companies like us will be subject to these new requirements. If we are required to comply with these requirements and fail to do so ona timely basis, if at all, our business operation, financial conditions, business prospect and ability of financing, may be adversely and materiallyaffected.In addition, we cannot assure you that any new rules or regulations promulgated in the future will not impose additional requirements onus or otherwise tightening the regulations on companies with a variable interest entity structure. If it is determined in the future that approval andfiling from the CSRC or other regulatory authorities or other procedures, including the cybersecurity review under the enacted version of therevised Measures for Cybersecurity Review and the draft of Regulations on the Network Data Security, are required for our offshore offerings, it isuncertain whether we can or how long it will take us to obtain such approval or complete such filing procedures and any such approval or filingcould be rescinded or rejected. Any failure to obtain or delay in obtaining such approval or completing such filing procedures for our offshoreofferings, or a rescission of any such approval or filing if obtained by us, would subject us to sanctions by the CSRC or other PRC regulatoryauthorities for failure to seek CSRC approval or filing or other government authorization for our offshore offerings. These regulatory authoritiesmay impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges inChina, delay or restrict the repatriation of the proceeds from our offshore offerings into China or take other actions that could materially andadversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our listed securities. TheCSRC or other PRC regulatory authorities also may take actions requiring us, or making it advisable for us, to halt our offshore offerings beforesettlement and delivery of the shares offered. Consequently, if investors engage in market trading or other activities in anticipation of and prior tosettlement and delivery, they do so at the risk that settlement and delivery may not occur. In addition, if the CSRC or other regulatory authoritieslater promulgate new rules or explanations requiring that we obtain their approvals or accomplish the required filing or other regulatory proceduresfor our prior offshore offerings, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established toobtain such a waiver. Any uncertainties or negative publicity regarding such approval requirement could materially and adversely affect ourbusiness, prospects, financial condition, reputation, and the trading price of our listed securities.PRC regulations relating to acquisitions in China require us to obtain certain approvals from the MOC and the failure to obtain suchapprovals could have a material and adverse effect on our business, results of operations, reputation and the trading price of our ADSs.The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, jointly issued by six PRCregulatory agencies and amended by the MOC in 2009, include provisions that purport to require the MOC’s approval for acquisitions by offshoreentities established or controlled by domestic companies, enterprises or natural persons ofTable of Contents39onshore entities that are related to such domestic companies, enterprises or natural persons. However, the interpretation and implementation of theM&A Rules remain unclear with no consensus currently existing regarding the scope and applicability of the MOC approval requirement onforeign acquisitions among related parties.We have entered into contractual arrangements with each of Beijing Leju, Leju Hao Fang and Beijing Jiajujiu and their respectiveshareholders, which provide us with substantial ability to control each of these entities. See “Item 4. Information on the Company—C.Organizational Structure”.If the MOC subsequently determines that their approval was required for such contractual arrangements, we may need to apply for aremedial approval. There can be no assurance that we will be able to obtain such approval or waiver of such approval from the MOC. Inability toobtain such approval or waiver from the MOC may have a material and adverse effect on our business. Further, we may be subject to certainadministrative punishments or other sanctions from the MOC. The MOC or other regulatory agencies may impose fines and penalties on ouroperations in China, limit our operating privileges in China, delay or restrict the repatriation of U.S. dollars into China, or take other actions thatcould have further material and adverse effects on our business, financial condition, results of operations, reputation and prospects, as well as thetrading price of our ADSs.The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of PRC companies by foreigninvestors, which could make it more difficult for us to pursue growth through acquisitions in China.The M&A Rules and recently adopted regulations and rules concerning mergers and acquisitions established additional procedures andrequirements that could make merger and acquisition activities by foreign investors more time consuming and complex. For example, the M&ARules require that the MOC be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRCdomestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that have or may have impact on the nationaleconomic security; or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored brand. Mergers, acquisitions or contractual arrangements that allow one market player to take control of or to exert decisive impact onanother market player must also be notified in advance to the MOC when the threshold under the Provisions on Thresholds for Prior Notification ofConcentrations of Undertakings issued by the State Council in August 2008 and amended in 2018 is triggered. In addition, the Implementing RulesConcerning Security Review on the Mergers and Acquisitions by Foreign Investors of Domestic Enterprises, issued by the MOC in August 2011,specify that mergers and acquisitions by foreign investors involved in “an industry related to national security” are subject to strict review by theMOC, and prohibit any activities attempting to bypass such security review, including by structuring the transaction through a proxy or contractualcontrol arrangement. These laws and regulations are continually evolving as newly enacted Foreign Investment Law took effect. On December 19,2020, the Measures for the Security Review for Foreign Investment was jointly issued by NDRC and MOFCOM and took effect from January 18,2021. The Measures for the Security Review for Foreign Investment specified provisions concerning the security review mechanism on foreigninvestment, including the types of investments subject to review, review scopes and procedures, among others. As these measures are recentlypromulgated, official guidance has not been issued by the designated office in charge of such security review yet. At this stage, the interpretation ofthose measures remains unclear in many aspects such as what would constitute "important information technology and internet services andproducts" and whether these measures may apply to foreign investment that is implemented or completed before the enactment of these newmeasures. In the future, we may grow our business by acquiring complementary businesses.In the future, we may grow our business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming, and any required approval processes,including obtaining approval from the MOC or its local counterparts may delay or inhibit our ability to complete such transactions. We believe thatour business is not in an industry related to national security but we cannot preclude the possibility that the MOC or other government agenciesmay publish explanations contrary to our understanding or broaden the scope of such security reviews in the future, in which case our futureacquisitions in China, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized orprohibited. Our ability to expand our business or maintain or expand our market share through future acquisitions would as such be materially andadversely affected.Table of Contents40Our PRC subsidiaries and consolidated variable interest entities are subject to restrictions on paying dividends or making other paymentsto us, which may restrict our ability to satisfy our liquidity requirements.Leju is a holding company registered in the Cayman Islands. It relies on dividends from its PRC subsidiaries as well as service and otherfees paid to its PRC subsidiaries by our consolidated variable interest entities for our cash and financing requirements, such as the funds necessaryto pay dividends and other cash distributions to its shareholders, including holders of its ADSs, and service any debt it may incur.Our consolidated variable interest entities are directly held by certain PRC individuals designated by us and thus are not able to makedividend payments to our PRC subsidiaries and holding companies outside China. We have the right to charge our consolidated variable interestentities service fees through our relevant PRC subsidiaries pursuant to the exclusive business cooperation agreements entered into with ourconsolidated variable interest entities, which together with the other agreements with our consolidated variable interest entities and their respectiveshareholders, enable us to enjoy substantially all of the economic benefits of our consolidated variable interest entities. These contractualarrangements we have entered into with our consolidated variable interest entities may be subject to scrutiny by the PRC tax authorities. See “Item3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—Contractual arrangements we have entered into with BeijingLeju, Leju Hao Fang and Beijing Jiajujiu may be subject to scrutiny by the PRC tax authorities and a finding that we, Beijing Leju, Leju Hao Fangor Beijing Jiajujiu owe additional taxes could reduce our net income and the value of your investment”. Our consolidated variable interest entitieshave paid and will continue to pay the service fees to our relevant PRC subsidiaries pursuant to the exclusive technical support agreements betweenthem.Current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined inaccordance with PRC accounting standards and regulations. In addition, each of our PRC subsidiaries is required to set aside a certain amount of itsafter-tax profits each year, if any, to fund certain statutory reserves. These reserves are not distributable as cash dividends. In addition, the PRCEnterprise Income Tax Law, or the EIT Law, and its implementation rules provide that withholding tax rate of 10% will be applicable to dividendspayable by PRC companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties or arrangements betweenthe PRC central government and governments of other countries or regions where the non-PRC-resident enterprises are incorporated. We have notreceived any dividend payments or other distributions from our PRC subsidiaries, and as we currently intend to retain all of the available funds andany future earnings of our PRC subsidiaries to fund the development and growth of our business, we do not expect to receive any dividendpayments or other distributions from our PRC subsidiaries in the foreseeable future.Furthermore, if our PRC subsidiaries and consolidated variable interest entities incur debt on their own behalf in the future, theinstruments governing the debt may restrict the ability of our consolidated variable interest entities to pay service fees to our PRC subsidiaries orthe ability of our PRC subsidiaries to pay dividends to us, which may restrict our ability to satisfy our liquidity requirements. Our contractualarrangements with our consolidated variable interest entities enable us to prevent them from entering into debt arrangements that may bedetrimental to us because these contractual arrangements provide us with the ability to direct the activities that most significantly affect theeconomic performance of our consolidated variable interest entities. In addition, the exclusive call option agreements among our PRC subsidiaries,consolidated variable interest entities and their respective shareholders specifically provide that the applicable consolidated variable interest entityshall not, and its shareholders shall ensure that the consolidated variable interest entity does not, incur any loan or offer any guarantee without theprior written consent of our applicable PRC subsidiary. However, any limitation on the ability of our PRC subsidiaries or consolidated variableinterest entities to pay dividends or make other payments to us could materially and adversely limit our ability to grow, make investments oracquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from making loansor additional capital contributions to our PRC operating subsidiaries.As an offshore holding company of our PRC operating subsidiaries, Leju may make loans to its PRC subsidiaries and consolidatedvariable interest entities, or may make additional capital contributions to its PRC subsidiaries, subject to satisfaction of applicable governmentalregistration and approval requirements.Any loans we extend to our PRC subsidiaries, which are treated as foreign-invested enterprises under PRC law, cannot exceed thestatutory limit and must be registered with the local counterpart of SAFE. The statutory limit for the total amount of foreign debt of a foreign-invested company was the difference between the amount of total investment and the amount of registeredTable of Contents41capital of such foreign-invested company as approved by the MOC or its local counterpart. According to a notice issued by the People’s Bank ofChina regarding foreign debt on January 11, 2017, the total amount of foreign debt of our PRC subsidiaries or consolidated variable interest entitiesor other PRC domestic entities shall not exceed two times of their respective net assets. Pursuant to the above notice and other PRC law regardingforeign debt, within a one-year grace period starting from January 11, 2017, the statutory limit for the total amount of foreign debt of a foreign-invested company, which is subject to its own choice, is either the difference between the amount of total investment and the amount of registeredcapital as approved by the MOC or its local counterpart, or two times of their respective net assets. It is very likely that our PRC subsidiaries willelect to apply two times of their respective net assets as the limit for foreign debt if any of them needs to borrow any foreign debt during the graceperiod. We may extend loans to the relevant PRC subsidiary in an amount that does not exceed the difference between the amount of its totalinvestment and the amount of its registered capital or two times of its net assets referenced above. With respect to our consolidated variable interestentities or other domestic PRC entities, the limit for the total amount of foreign amount is two times of their respective net assets pursuant to theabove notice. According to Notice of the National Development and Reform Commission on Promoting the Administrative Reform of theRecordation and Registration System for Enterprises’ Issuance of Foreign Debts issued by the National Development and Reform Commission inSeptember 2015, any loans we extend to our consolidated variable interest entities or other PRC operating companies that are domestic PRCentities for more than one year must be filed with the National Development and Reform Commission or its local counterpart and must also beregistered with SAFE or its local branches.We may also decide to finance our PRC subsidiaries by means of capital contributions. According to the Interim Measures for theRecordation Administration of the Formation and Modification of Foreign-Funded Enterprises issued by the MOC on October 8, 2016, which waslatest amended on June 29, 2018, these capital contributions shall be filed with the MOC or its local counterpart. On December 30, 2019, MOC andSAMR jointly promulgated Measures for the Reporting of Foreign Investment Information, which came into effect on January 1, 2020 andreplaced the Interim Measures for the Recordation Administration of the Formation and Modification of Foreign-Funded Enterprises. According tothe Measures for the Reporting of Foreign Investment Information, foreign investors or foreign-invested enterprises shall report investmentinformation to commerce departments through the enterprise registration system and the National Enterprise Credit Information Publicity System,and market regulatory departments shall forward such investment information reported by foreign investors or foreign-invested enterprises tocommerce departments in a timely manner. SAFE has also issued a few circulars with respect to the conversion by a foreign-invested enterprise offoreign currency registered capital into Renminbi and the flow and use of such Renminbi fund. Capital contributions are currently required to befiled in the Foreign Investment Comprehensive Management Information System. In March 2015, SAFE issued the Circular on the Reforming ofthe Management Method of the Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, effective June 2015, or SAFE Circular 19.Under SAFE Circular 19, a foreign-invested enterprise may choose to convert its registered capital from foreign currency to Renminbi on a self-discretionary basis, and the Renminbi capital converted can be used for equity investments within China, which will be regarded as thereinvestment of foreign-invested enterprise.SAFE also promulgated a circular in November 2011, which prohibits a foreign-invested enterprise from using Renminbi funds convertedfrom its foreign currency registered capital to provide entrustment loans or repay loans borrowed from non-financial enterprises. Violation of thesecirculars could result in severe monetary or other penalties. These circulars may limit our ability to transfer funds to our consolidated variableinterest entities and the subsidiaries of our PRC subsidiaries, and we may not be able to convert funds into Renminbi to invest in or acquire anyother PRC companies, or establish other consolidated variable interest entities in China. Despite the restrictions under these SAFE circulars, ourPRC subsidiaries may use their income in Renminbi generated from their operations to finance the relevant consolidated variable interest entitiesthrough entrustment loans to the consolidated variable interest entities or loans to such variable interest entities’ shareholders for the purpose ofmaking capital contributions to such variable interest entities. In addition, our PRC subsidiaries can use Renminbi funds converted from foreigncurrency registered capital to carry out any activities within their normal course of business and business scope, including to purchase or leaseservers and other relevant equipment and fund other operational needs in connection with their provision of services to the relevant consolidatedvariable interest entities under the applicable exclusive technical support agreements.In light of the various requirements imposed by PRC regulations on loans to, and direct investment in, PRC entities by offshore holdingcompanies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary governmentapprovals on a timely basis, if at all, with respect to future loans to our PRC subsidiaries or any consolidated variable interest entity or futurecapital contributions by us to our PRC subsidiaries. If we fail to complete such registrations or obtain such approvals, our ability to fund our PRCoperations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.Table of Contents42The discontinuation of any of the preferential tax treatments currently available to us in China or imposition of any additional PRC taxeson us could adversely affect our financial condition and results of operations.Pursuant to a Circular on Enterprise Income Tax Preferential Treatments issued by the State Administration of Taxation, or SAT, and theMinistry of Finance effective February 2008, as partially amended by a Circular on Enterprise Income Tax Policies for Further Encouraging theDevelopment of the Software Industry and the Integrated Circuit Industry, a qualified software enterprise is eligible to be exempted from incometax for its first two profitable years, followed by a 50% reduction in income tax, to a rate of 12.5%, for the subsequent three years. ShanghaiFangxin, a wholly owned subsidiary of ours, was recognized as a qualified software enterprise and was further approved by the local tax authorityin October 2012 to become eligible for being exempted from income tax for 2012 and 2013, followed by a 50% reduction in income tax from 2014through 2016. Shanghai Fangxin has ceased to enjoy preferential tax treatment starting from 2017. Shanghai SINA Leju was entitled to enjoy afavorable statutory tax rate of 15% for 2013 through 2017 as a “high and new technology enterprise”. Shanghai SINA Leju renewed itsqualification of “high and new technology enterprise” in 2018 and is entitled to enjoy a favorable statutory tax rate of 15% from 2018 through2020. If Shanghai SINA Leju fails to maintain “high and new technology enterprise” status, its applicable enterprise income tax rate may increaseto up to 25%. The loss or potential loss of preferential tax treatments enjoyed by Shanghai SINA Leju could have a material and adverse effect onour financial condition and results of operations. Shanghai SINA Leju renewed its qualification of software enterprise in October 2020. In 2021,Shanghai SINA Leju renewed its qualification of “high and new technology enterprise” to enjoy the favorable statutory tax rate of 15% for thefollowing three years.Various local governments in China have also provided discretionary preferential tax treatments to us. However, at any time, these localgovernments may decide to reduce or eliminate these preferential tax treatments. Furthermore, these local implementations of tax laws may befound in violation of national laws or regulations, and as a consequence, we may be subject to retroactive imposition of higher taxes as a result. Weare required under U.S. GAAP to accrue taxes for these contingencies. The change in accounting requirement for reporting tax contingencies, anyreduction or elimination of these preferential tax treatments and any retroactive imposition of higher taxes could have an adverse effect on ourresults of operations.We face uncertainty with respect to indirect transfer of equity interests in PRC resident enterprises or other assets attributed to a PRCestablishment of a non-PRC company, or immovable properties located in China owned by their non-PRC holding companies.We face uncertainties on the reporting and consequences on private equity financing transactions, share exchange or other transactionsinvolving the transfer of shares in our company by investors who are non-PRC resident enterprises.In February 2015, the SAT issued the Notice on Several Issues Concerning Enterprise Income Tax for Indirect Share Transfer by Non-PRC Resident Enterprises, or the SAT Bulletin 7, which replaced previous rules under the Notice on Strengthening Administration of EnterpriseIncome Tax for Share Transfers by Non-PRC Resident Enterprises, or the SAT Circular 698, issued by the SAT in 2009. Pursuant to the SATBulletin 7, an “indirect transfer” of assets of a PRC resident enterprise, including equity interests in a PRC resident enterprise, by non-PRC residententerprises may be re-characterized and treated as a direct transfer of PRC taxable assets, if such transaction arrangement lacks a reasonablecommercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from suchindirect transfer may be subject to PRC enterprise income tax. According to the SAT Bulletin 7, “PRC taxable assets” include assets attributed to anestablishment in China, immovable properties located in China, and equity interests in PRC resident enterprises, in respect of which gains fromtheir transfer by a direct holder, being a non-PRC resident enterprise, would be subject to PRC enterprise income taxes. In respect of an indirecttransfer of assets of a PRC establishment, the resulting gain is to be included with the enterprise income tax filing of the PRC establishment orplace of business being transferred, and would consequently be subject to PRC enterprise income tax at a rate of 25%. If the underlying transferrelates to immovable properties located in China or to equity interests in a PRC resident enterprise, which is not related to a PRC establishment orplace of business of a non-resident enterprise, a PRC enterprise income tax at 10% would apply, subject to preferential tax treatment underapplicable tax treaties or similar arrangements, if any, and the party who is obligated to make payments for the transfer has a withholdingobligation. Although the SAT Bulletin 7 does not apply to share transfers of publicly traded companies, there is uncertainty as to the application ofthe SAT Bulletin 7 or previous rules under the SAT Circular 698. We and our non-PRC resident investors may be at risk of being subject to taxfiling or withholding obligations under the SAT Bulletin 7 and we may be required to expend valuable resources to comply with the SAT Bulletin 7or to establish that we should not be taxed under the SAT Bulletin 7.Table of Contents43We cannot assure you that the PRC tax authorities will not, at their discretion, adjust any capital gains and impose tax return filing andwithholding or tax payment obligations on the transferors and transferees, while our PRC subsidiaries may be requested to assist in the filing. AnyPRC tax imposed on a transfer of our shares or any adjustment of such gains would cause us to incur additional costs and may have a negativeimpact on the value of your investment in us.Dividends payable to us by our PRC subsidiaries may be subject to PRC withholding taxes or we may be subject to PRC taxation on ourworldwide income, and dividends distributed to our investors may be subject to PRC withholding taxes under the EIT Law and ourinvestors may be subject to PRC withholding tax on the transfer of our ordinary shares or ADSs.Under the EIT Law and its implementation rules, all domestic and foreign invested companies would be subject to a uniform enterpriseincome tax at the rate of 25% and dividends from a PRC subsidiary to its foreign parent company will be subject to a withholding tax at the rate of10%, unless such foreign parent company’s jurisdiction of incorporation has a tax treaty with China that provides for a reduced rate of withholding,or the tax is otherwise exempted or reduced pursuant to PRC tax laws.Under the Measures for the Administration of Non-Resident Taxpayers’ Enjoyment of the Treatment under Tax Agreements, effectiveNovember 2015, our Hong Kong subsidiaries need to obtain approval from the relevant local branch of the SAT in order to enjoy the preferentialwithholding tax rate of 5% in accordance with the Arrangement between Mainland China and Hong Kong for the Avoidance of Double Taxationand Prevention of Fiscal Evasion with respect to Taxes on Income. The SAT further clarified in a circular that tax treaty benefits will be denied to“conduit” or shell companies without business substance and that a beneficial ownership analysis will be used based on a “substance-over-form”principle to determine whether or not to grant the tax treaty benefits. It is unclear at this stage whether this circular applies to dividends from ourPRC subsidiaries paid to us through our Hong Kong subsidiaries. However, it is possible that our Hong Kong subsidiaries might not be consideredas “beneficial owners” of any dividends from their PRC subsidiaries and as a result would be subject to withholding tax at the rate of 10%. As aresult, there is no assurance that our Hong Kong subsidiaries will be able to enjoy the preferential withholding tax rate.In addition, under the EIT Law, enterprises organized under the laws of jurisdictions outside China with their “de facto managementbodies” located within China may be considered PRC resident enterprises and therefore be subject to PRC enterprise income tax at the rate of 25%on their worldwide income. Under the implementation rules of the EIT Law, “de facto management bodies” are defined as the bodies that havematerial and overall management and control over the business, personnel, accounts and properties of the enterprise. A subsequent circular issuedby the SAT provides that a foreign enterprise controlled by a PRC company or a PRC company group will be classified as a “resident enterprise”with its “de facto management bodies” located within China if the following requirements are satisfied: (i) the senior management and coremanagement departments in charge of its daily operations function mainly in China; (ii) its financial and human resources decisions are subject todetermination or approval by persons or bodies in China; (iii) its major assets, accounting books, company seals, and minutes and files of its boardand shareholders’ meetings are located or kept in China; and (iv) more than half of the enterprise’s directors or senior management with votingrights reside in China.The EIT Law and its implementation rules are relatively new and ambiguities exist with respect to the interpretation of the provisionsrelating to resident enterprise issues. Although our offshore holding companies are not controlled by any PRC company or company group, wecannot assure you that we will not be deemed to be a PRC resident enterprise under the EIT Law and its implementation rules. If we wereconsidered a PRC resident enterprise, we would be subject to the PRC enterprise income tax at the rate of 25% on our worldwide income; dividendincome we receive from the PRC subsidiaries, however, may be exempt from PRC tax since such income is exempted under the EIT Law to a PRCresident recipient. However, as there is still uncertainty as to how the EIT Law and its implementation rules will be interpreted and implemented,and the PRC foreign exchange control authorities have not yet issued guidance with respect to the processing of outbound remittances to entitiesthat are treated as PRC resident enterprises, we cannot assure you that we are eligible for such PRC enterprise income tax exemptions orreductions. In addition, ambiguities also exist with respect to the interpretation of the provisions relating to identification of PRC-sourced income.If we were considered a PRC resident enterprise, any dividends payable to non-resident holders of our ordinary shares or ADSs, and the gains suchinvestors may realize from the transfer of our ordinary shares or ADSs, may be treated as PRC-sourced income and therefore be subject to a 10%PRC withholding tax (or 20% in the case of non-resident individual holders), unless otherwise exempted or reduced pursuant to treaties orapplicable PRC law.If we became a PRC resident enterprise under the new PRC tax system and received income other than dividends, our profitability andcash flows would be adversely affected due to our worldwide income being taxed in China under the EIT Law.Table of Contents44Additionally, we would incur an incremental PRC dividend withholding tax cost if we distributed our profits to our ultimate shareholders. There is,however, not necessarily an incremental PRC dividend withholding tax on the piece of the profits distributed from our PRC subsidiaries, since theywould have been subject to PRC dividend withholding tax even if we were not a PRC tax resident.Failure to obtain the approvals or complete the filings required for our real estate agency and brokerage business in China may limit ourability to provide real estate agency and brokerage services or establish new PRC operating entities.Currently, we mainly use City Rehouse, and its subsidiaries to provide support for our e-commerce business. Certain of the supportservices provided by City Rehouse and its subsidiaries may be regarded as real estate agency and brokerage services under PRC law. Pursuant tothe previous Foreign Investment Industrial Guidance Catalogue issued in 2011, foreign ownership of the real estate agency and brokerage businessin China is subject to government approval. Accordingly, the establishment of, or investment in any company with a registered business scope of,real estate agency and brokerage services in China by our PRC subsidiaries directly is, and by our PRC subsidiaries indirectly through theirsubsidiaries may be, subject to approval of the MOC or its relevant local counterparts which should be obtained before registering such companywith the SAMR or its local counterparts. Although City Rehouse has not obtained approval from the competent local branch of the MOC inconnection with its establishment of, or investment in, its subsidiaries with a registered business scope of real estate brokerage business, eachsubsidiary of City Rehouse has obtained and maintained a business license with such business scope, and none of such subsidiaries has receivedany notice of warning or penalties from the competent authorities for lacking such approval.The Foreign Investment Industrial Guidance Catalogue, effective April 2015, loosens the restrictions on foreign ownership of the realestate agency and brokerage business in China by removing it from the restricted category for foreign investment. Under the new catalogue, CityRehouse no longer needs the approval of the MOC or its relevant local counterparts for the establishment of, or investment in any new PRCsubsidiary with a registered business scope of real estate agency and brokerage services. However, we cannot assure you that the historical non-compliance of City Rehouse not obtaining the requisite government approval would not be found as a violation by relevant PRC governmentauthorities. If the historical non-compliance were found and determined by the relevant PRC government authorities as a violation, our relevantsubsidiaries would be subject to warnings, fines or even revocation of its licenses.In addition, pursuant to the relevant regulations regarding real estate agency and brokerage businesses, a real estate broker must conduct afiling with the real estate administrative authority within 30 days after issuance of its business license. We have completed the filing with thecompetent local real estate administrative authorities for our 42 PRC operating entities which currently provide support services considered to bereal estate agency and brokerage services under the PRC law. In addition, we are in the process of making such filings with the relevant local realestate administrative authorities for 14 entities. For the remaining entities, 8 entities are in the process of being liquidated, and none of the entitiesare not qualified to make such filings with the relevant local real estate administrative authorities. The requirements of the local real estateadministrative authority for such filing may vary in different cities and we cannot assure you that we will be able to complete such filing in a timelymanner or at all. If we fail to properly complete such filings, it may limit the ability of the relevant PRC operating entities to provide similarsupport service to our e-commerce business.Although our independent registered public accounting firm is registered with the PCAOB and currently subject to periodic PCAOBinspection, if it is later determined that the PCAOB is unable to inspect or investigate our auditor completely, investors would be deprivedof the benefits of such inspection and our ADSs may be delisted or prohibited from trading.We have appointed Yu Certified Public Account, P.C., or Yu CPA, for the audit of our consolidated financial statements since the fiscalyear ended December 31, 2019. Yu CPA is a U.S.-based accounting firm that is registered with the PCAOB and can be inspected by the PCAOB.Deloitte Touche Tohmatsu Certified Public Accounts LLP, or DTT, was our predecessor auditor and audited our consolidated financial statementsfor the fiscal years 2018 to 2018. DTT's audit work related to our operations in China was not inspected by the PCAOB.As an auditor of companies that are registered with the SEC and publicly traded in the United States and a firm registered with thePCAOB, our auditor is required under the laws of the United States to undergo regular inspections by the PCAOB to assess its compliance with thelaws of the United States and professional standards. There is no guarantee, however, that our current auditors or any future auditor engaged by uswould remain subject to full PCAOB inspection during the entire term of our engagement.Table of Contents45The PCAOB is currently unable to conduct inspections in China without the approval of Chinese government authorities. Since we havesubstantial operations in China, if it is later determined that the PCAOB is unable to inspect or investigate our auditor completely, investors may bedeprived of the benefits of such inspection. Any audit reports not issued by auditors that are completely inspected by the PCAOB, or a lack ofPCAOB inspections of audit work undertaken in China that prevents the PCAOB from regularly evaluating our auditors' audits and their qualitycontrol procedures, could result in a lack of assurance that our financial statements and disclosures are adequate and accurate.The Holding Foreign Companies Accountable Act, or the HFCAA, was signed into law on December 18, 2020. The HFCAA states if theSEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection for thePCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our shares or ADSs from being traded on a national securitiesexchange or in the over-the-counter trading market in the United States. On June 22, 2021, the U.S. Senate passed a bill which would reduce thenumber of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three years to two. On February 4,2022, the U.S. House of Representatives passed a bill which contained, among other things, an identical provision. If this provision is enacted intolaw, the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA will be reduced from three years totwo.On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB is unable to inspect orinvestigate completely registered public accounting firms headquartered in mainland China and Hong Kong. Yu CPA is not headquartered inmainland China or Hong Kong and was not identified in this report as a firm subject to the PCAOB’s determination. Whether the PCAOB will beable to continue conducting full inspections of our auditor's work related to our operations in China is subject to uncertainty and depends on anumber of factors out of our, and our auditor’s, control. The prohibition of our ordinary shares and ADSs from trading in the United States wouldsubstantially impair your ability to sell or purchase the ADSs when you wish to do so, and the risk and uncertainty associated with delisting wouldhave a negative impact on the price of the ADSs. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptableto us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.Risks Related to Our ADSsThe market price for our ADSs has been and may continue to be highly volatile.In 2021, the closing price of our ADSs on the NYSE, varied from a high of $3.95 to a low of $0.76. The market price for our ADSs hasbeen and may continue to be highly volatile and subject to wide fluctuations due to factors beyond our control, such as broad market and industryfactors. The securities markets in the United States, China and elsewhere have experienced significant price and volume fluctuations that are notrelated to the operating performance of particular companies, particularly in recent years. The securities of some PRC-based companies that havelisted their securities in the United States have experienced significant volatility since their initial public offerings, including, in some cases,substantial price declines in the trading prices of their securities. The trading performances of these PRC companies’ securities after their offeringsmay affect the attitudes of investors toward PRC companies listed in the United States, which consequently may impact the trading performance ofour ADSs, regardless of our actual operating performance. Since 2011, some PRC-based companies became targets of short sellers. Any negativenews or perceptions about inadequate corporate governance practices or fraudulent accounting, corporate structure or other matters of other PRCcompanies may also negatively affect the attitudes of investors towards PRC companies in general, including us, regardless of whether we haveconducted any inappropriate activities. Although we have confidence in our corporate governance practice and internal control over financialreporting, we cannot assure you that we will not be subject to such attack. Any negative news or perceptions about our corporate governance oraccounting practice in the future, regardless of its merits, will negatively affect the trading performance of our ADSs. In addition, the globalfinancial crisis and the ensuing economic recessions in many countries have contributed and may continue to contribute to extreme volatility in theglobal stock markets.In addition to the broad market and industry fluctuations, factors specific to our own operations may adversely affect the market price ofour ADSs, including the following:●variations in our net revenues, earnings and cash flow;●announcements of new investments, acquisitions, strategic partnerships, or joint ventures by us or our competitors;Table of Contents46●announcements of new services and expansions by us or our competitors;●changes in financial estimates by securities analysts;●fluctuations in our operating metrics;●additions or departures of key personnel;●release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities;●detrimental negative publicity about us, our competitors or our industry;●regulatory developments affecting us or our industry; and●potential litigation or regulatory investigations.Any of these factors may result in large and sudden changes in the volume and price at which our ADSs will trade.Our ADSs may be delisted from the New York Stock Exchange as a result of our failure of meeting the New York Stock Exchangecontinued listing requirements.We are required to meet certain quantitative tests as well as corporate governance and other qualitative standards to maintain the listing ofour ADSs on the NYSE. It is possible that we could fail to satisfy one or more of these requirements.Pursuant to NYSE rule 802.01C, a company is considered to be below compliance standards if the average closing price of a security asreported on the consolidated tape is less than $1.00 over a consecutive 30 trading-day period. We received a letter from the NYSE dated January 6,2022, notifying us that we were below the foregoing compliance standard. Pursuant to NYSE rule 802.01C, once notified, a company must bring itsshare price and average share price back above $1.00 within six months following receipt of the notification. If on the last trading day of anycalendar month during the cure period the company has a closing share price of at least $1.00 and an average closing share price of at least $1.00over the 30 trading-day period ending on the last trading day of that month, then the company can regain compliance at any time during the six-month cure period. In the event that at the expiration of the six-month cure period, both a $1.00 closing share price on the last trading day of thecure period and a $1.00 average closing share price over the 30 trading-day period ending on the last trading day of the cure period are not attained,the NYSE will commence suspension and delisting procedures. To address this issue, we are monitoring the market conditions of our listedsecurities and are still considering our options. There can be no assurance that we can cure the price deficiency in time to regain compliance.Furthermore, there can be no assurance that we will be able to maintain compliance with any other continued listing requirements of theNYSE. In the event of deficiency or non-compliance, we could receive notices from the NYSE and suffer loss of investor confidence and tradingprice decline. If we fail to regain compliance in time, we could face trading suspension or even delisting from the NYSE, which could make it moredifficult to obtain accurate quotations of and buy or sell our securities, and the price of our securities could suffer further significant decline.Delisting may also impair our ability to raise capital and harm our reputation.We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certainprovisions applicable to U.S. domestic public companies.Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules andregulations in the United States that are applicable to U.S. domestic issuers, including:●the rules under the Exchange Act requiring the filing with the SEC, of quarterly reports on Form 10-Q or current reports on Form 8-K;Table of Contents47●the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered underthe Exchange Act;●the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability forinsiders who profit from trades made in a short period of time; and●the selective disclosure rules by issuers of material nonpublic information under Regulation FD.We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publishour results on a quarterly basis as press releases, distributed pursuant to the rules and regulations of the NYSE. Press releases relating to financialresults and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to theSEC will be less extensive and less timely as compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may notbe afforded the same protections or information, which would be made available to you, were you investing in a U.S. domestic issuer.We are a “controlled company” within the meaning of the NYSE Listed Company Manual and, as a result, has relied and may continue torely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.Since November 2020, we have been a “controlled company” as defined under the NYSE Listed Company Manual because more than50% of the voting power of our company has been held by E-House Enterprise since November 2020. For so long as we remain a “controlledcompany” under that definition, we are permitted to elect to rely on exemptions from certain corporate governance rules, including an exemptionfrom the rule that a majority of our board of directors must be independent directors or that we have to establish a nominating committee and acompensation committee composed entirely of independent directors. If we elect to rely on one or more of the exemptions, you will not have thesame protection afforded to shareholders of companies that are subject to these corporate governance requirements. Currently, we do not have amajority of independent directors on our board.If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the marketprice for our ADSs and trading volume could decline.The trading market for our ADSs will depend in part on the research and reports that securities or industry analysts publish about us or ourbusiness. If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts who covers us downgradesour ADSs or publishes inaccurate or unfavorable research about our business, the market price for our ADSs would likely decline. If one or moreof these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which,in turn, could cause the market price or trading volume for our ADSs to decline.The sale or availability for sale, or perceived sale or availability for sale, of substantial amounts of our ADSs could adversely affect theirmarket price.Sales of our ADSs in the public market, or the perception that these sales could occur, could cause the market price of our ADSs todecline. As of March 31, 2022, we had 136,822,601 ordinary shares outstanding (excluding the 3,580,151 ordinary shares issued to our depositarybank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards granted under our share incentive plan). TMHome, SINA and Tencent held an aggregate of approximately 83.5% of our ordinary shares outstanding as of March 31, 2022. The sale orperceived sale of a substantial amount of our ADSs by any of these principal shareholders could adversely affect the prevailing market price for ourADSs. Such sales or perceived sales also might make it more difficult for us to sell equity or equity-related securities in the future at a time andprice that we deem appropriate. In addition, if we pay for our future acquisitions in whole or in part with additionally issued ordinary shares, yourownership interests in our company would be diluted and this, in turn, could have an adverse effect on the price of our ADSs.Table of Contents48Our articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of ourordinary shares and ADSs.Our memorandum and articles of association contain provisions to limit the ability of others to acquire control of our company or cause usto engage in change-of-control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to sell theirshares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer orsimilar transaction. For example, our board of directors has the authority, without further action by our shareholders, to issue preferred shares inone or more series and to fix their designations, powers, preferences, privileges, and relative participating, optional or special rights and thequalifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidationpreferences, any or all of which may be greater than the rights associated with our ordinary shares, in the form of ADS, or otherwise. Preferredshares could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of management moredifficult. If our board of directors decides to issue preferred shares, the price of our ADSs may fall and the voting and other rights of the holders ofour ordinary shares and ADSs may be materially and adversely affected.You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because weare incorporated under Cayman Islands law.We are an exempted company limited by shares incorporated under the laws of the Cayman Islands. Our corporate affairs are governed byour memorandum and articles of association, as amended and restated from time to time, the Companies Act (As Revised) of the Cayman Islandsand the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders andthe fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. Thecommon law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from theEnglish common law, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights ofour shareholders and the fiduciary duties of our directors under Cayman Islands law are not as clearly established as they would be under statutesor judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws thanthe United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than theCayman Islands. In addition, shareholders of Cayman Islands companies may not have standing to initiate a shareholder derivative action in afederal court of the United States.Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporaterecords (except for the memorandum and articles of association, our register of mortgages and charges and special resolutions of our shareholders)or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our existing articles of association to determinewhether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them availableto our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholdermotion or to solicit proxies from other shareholders in connection with a proxy contest.Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements forcompanies incorporated in other jurisdictions such as the United States. Currently, we do not plan to rely on home country practice with respect toany corporate governance matter. However, if we choose to follow home country practice in the future, our shareholders may be afforded lessprotection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken bymanagement, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated inthe United States.Judgments obtained against us by our shareholders may not be enforceable in our home jurisdiction.We are a Cayman Islands exempted company and a substantial majority of our assets are located outside the United States. A significantpercentage of our current operations are conducted in China. In addition, a significant majority of our current directors and officers are nationalsand residents of countries other than the United States. As a result, it may be difficult or impossible for you toTable of Contents49effect service of process within the United States upon us or these persons or to bring an action against us or against these individuals in the UnitedStates in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you aresuccessful in bringing an action of this kind, the laws of the Cayman Islands and of China may render you unable to enforce a judgment against ourassets or the assets of our directors and officers.There is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States, and theCayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments. A judgment obtained in suchjurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of theunderlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment (i)was given by a foreign court of competent jurisdiction, (ii) imposes on the judgment debtor a liability to pay a liquidated sum for which thejudgment has been given, (iii) is final, (iv) is not in respect of taxes, a fine or a penalty, and (v) was not obtained in a manner and is not of a kindthe enforcement of which is contrary to natural justice or the public policy of the Cayman Islands. However, the Cayman Islands courts are unlikelyto enforce a judgment obtained from the U.S. courts under civil liability provisions of the U.S. federal securities law if such judgment is determinedby the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature. Because such determinationhas not yet been made by a court of the Cayman Islands, it is uncertain whether such civil liability judgments from U.S. courts would beenforceable in the Cayman Islands.It may be difficult for overseas regulators to conduct investigation or collect evidence within China.Shareholder claims or regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law orpracticality in China. For example, in China, there are significant legal and other obstacles to providing information needed for regulatoryinvestigations or litigation initiated outside China. Although the authorities in China may establish a regulatory cooperation mechanism with thesecurities regulatory authorities of another country or region to implement cross-border supervision and administration, such cooperation with thesecurities regulatory authorities in the Unities States may not be efficient in the absence of mutual and practical cooperation mechanism.Furthermore, according to Article 177 of the PRC Securities Law, or Article 177, which became effective in March 2020, no overseas securitiesregulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. While detailed interpretationof or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conductinvestigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests. See also “—Risks Related to Our ADSs—You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts maybe limited, because we are incorporated under Cayman Islands law” for risks associated with investing in us as a Cayman Islands company.You, as holders of ADSs, may have fewer rights than holders of our ordinary shares and must act through the depositary to exercise thoserights.Holders of ADSs do not have the same rights of our shareholders and may only exercise the voting rights with respect to the underlyingordinary shares in accordance with the provisions of the deposit agreement. Under our memorandum and articles of association, the minimumnotice period required to convene a general meeting is seven calendar days. When a general meeting is convened, you may not receive sufficientnotice of a shareholders’ meeting to permit you to withdraw the underlying ordinary shares represented by your ADSs to allow you to cast yourvote with respect to any specific matter. In addition, the depositary and its agents may not be able to send voting instructions to you or carry outyour voting instructions in a timely manner. We will make all reasonable efforts to cause the depositary to extend voting rights to you in a timelymanner, but we cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote theunderlying ordinary shares represented by your ADSs. Furthermore, the depositary and its agents will not be responsible for any failure to carry outany instructions to vote, for the manner in which any vote is cast or for the effect of any such vote. As a result, you may not be able to exerciseyour right to vote and you may lack recourse if the underlying ordinary shares represented by your ADSs are not voted as you requested. Inaddition, in your capacity as an ADS holder, you will not be able to call a shareholders’ meeting.Table of Contents50The return of your investment our ADSs will primarily depend upon any future price appreciation of our ADS.Subject to our memorandum and articles of association and the laws of the Cayman Islands, our board of directors has complete discretionas to whether to distribute dividends. Our shareholders may by ordinary resolution declare a dividend, but not exceeding the amount recommendedby our board of directors. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of dividends willdepend on, among other things, our results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any,received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors.Accordingly, the return on your investment in our ADSs will likely depend primarily upon any future price appreciation of our ADSs. There is noguarantee that our ADSs will appreciate in value or even maintain the price at which you purchased the ADSs. You may not realize a return onyour investment in our ADSs and you may even lose your entire investment in our ADSs.You may not receive dividends or other distributions on our ordinary shares and you may not receive any value for them, if it is illegal orimpractical to make them available to you.The depositary of our ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on ordinaryshares or other deposited securities underlying our ADSs, after deducting its fees and expenses. You will receive these distributions in proportion tothe number of ordinary shares your ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical tomake a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists ofsecurities that require registration under the Securities Act but that are not properly registered or distributed under an applicable exemption fromregistration. The depositary may also determine that it is not feasible to distribute certain property through the mail. Additionally, the value ofcertain distributions may be less than the cost of mailing them. In these cases, the depositary may determine not to distribute such property. Wehave no obligation to register under U.S. securities laws any ADSs, ordinary shares, rights or other securities received through such distributions.We also have no obligation to take any other action to permit the distribution of ADSs, ordinary shares, rights or anything else to holders of ADSs.This means that you may not receive distributions we make on our ordinary shares or any value for them if it is illegal or impractical for us to makethem available to you. These restrictions may cause a material decline in the value of our ADSs.You may not be able to participate in rights offerings and may experience dilution of your holdings as a result.We may, from time to time, distribute rights to our shareholders, including rights to acquire securities. Under the deposit agreement, thedepositary will not distribute rights to holders of ADSs unless the distribution and sale of rights and the securities to which these rights relate areeither exempt from registration under the Securities Act with respect to all holders of ADSs, or are registered under the provisions of the SecuritiesAct. The depositary may, but is not required to, attempt to sell these undistributed rights to third parties, and may allow the rights to lapse. We maybe unable to establish an exemption from registration under the Securities Act, and we are under no obligation to file a registration statement withrespect to these rights or underlying securities or to endeavor to have a registration statement declared effective. Accordingly, holders of ADSs maybe unable to participate in our rights offerings and may experience dilution of their holdings as a result.You may be subject to limitations on transfer of your ADSs.Your ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from timeto time when it deems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer orregister transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deem itadvisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement,or for any other reason.We believe that we were a passive foreign investment company, or PFIC, for United States federal income tax purposes for the taxable yearended December 31, 2021, which could result in adverse U.S. federal income tax consequences to U.S. holders.We will be classified as a “passive foreign investment company”, or “PFIC” for U.S. federal income tax purposes for any taxable year, ifeither (i) 75% or more of our gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the value of our assets(generally determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production ofpassive income (“the asset test”). Although the law in this regard is unclear, we treat ourTable of Contents51consolidated variable interest entities as being owned by us for U.S. federal income tax purposes, not only because we exercise effective controlover the operation of such entities but also because we are entitled to substantially all of their economic benefits, and, as a result, we consolidatetheir operating results in our consolidated financial statements.Based upon the composition of our assets (in particular the retention of a substantial amount of cash), and the market price of our ADSs,we believe that we were a PFIC for United States federal income tax purposes for the taxable year ended December 31, 2021, and we will likely bea PFIC for our current taxable year unless the market price of our ADSs increases and/or we invest a substantial amount of the cash and otherpassive assets we hold in assets that produce or are held for the production of active income.If we are classified as a PFIC in any taxable year, a U.S. holder (as defined in “Taxation—U.S. Federal Income Tax Considerations”) mayincur significantly increased U.S. federal income tax on gain recognized on the sale or other disposition of the ADSs or ordinary shares and on thereceipt of distributions on the ADSs or ordinary shares to the extent such gain or distribution is treated as an “excess distribution” under the U.S.federal income tax rules. Further, if we are classified as a PFIC for any year during which a U.S. holder holds our ADSs or ordinary shares, wegenerally will continue to be treated as a PFIC for all succeeding years during which such U.S. holder holds our ADSs or ordinary shares. EachU.S. holder is urged to consult its tax advisor concerning the U.S. federal income tax consequences of an investment in our ADSs or ordinaryshares if we are treated as a PFIC for any taxable year, including the possibility of making a “mark-to-market” election.See the discussion under “Item 10. Additional Information—E. Taxation—U.S. Federal Income Tax Considerations—Passive ForeignInvestment Company Rules” concerning the U.S. federal income tax consequences of an investment in the ADSs or ordinary shares if we are orbecome classified as a PFIC, including the possibility of making a “mark-to-market” election.ITEM 4. INFORMATION ON THE COMPANYA.History and Development of the CompanyLeju Holdings Limited was incorporated as our holding company in November 2013 by E-House, a leading real estate services companyin China listed on the NYSE at the time. E-House had remained our parent company and controlling shareholder after our initial public offering inApril 2014 until December 30, 2016. Substantially all of our operations are conducted through the PRC subsidiaries and consolidated variableinterest entities under China Online Housing Technology Corporation, or China Online Housing, Omnigold Holdings Limited, or Omnigold, ChinaE-Real Estate Holdings Limited, or E-Real, and E-House China (Tianjin) Holdings Limited, or E-House Tianjin, each of which became oursubsidiary in December 2013 as part of a restructuring by E-House. China Online Housing was incorporated as a joint venture of SINA and E-House in 2008 to operate the SINA real estate and home furnishing website and related business, including online advertising services. ChinaOnline Housing became a consolidated subsidiary of E-House in 2009 and a wholly owned subsidiary of E-House in 2012. Omnigold wasincorporated by E-House in October 2010 to operate the home furnishing services business and is currently 84% owned by us. E-Real and E-HouseTianjin were incorporated by E-House in June 2011 and March 2012, respectively, and are wholly owned by us. E-Real was incorporated to operatethe real estate e-commerce business. E-House Tianjin supports our real estate e-commerce business.Due to PRC legal restrictions on foreign ownership and investment in the internet information services and advertising businesses, weconduct such activities through contractual arrangements with our consolidated variable interest entities in China. Our e-commerce business withrespect to new residential properties is operated through our contractual arrangements with Leju Hao Fang, formerly known as Shanghai Yi Xin E-Commerce Co., Ltd., and its shareholders. Our e-commerce business with respect to home furnishing is operated through our contractualarrangements with Beijing Jiajujiu and its shareholders. Our online advertising business for new residential properties websites and our secondarylistings business are operated through our contractual arrangements with Beijing Leju and its shareholders. We have entered into, through our PRCsubsidiaries, Shanghai SINA Leju, Shanghai Yi Yue and Beijing Maiteng, a series of contractual arrangements with Beijing Leju, Leju Hao Fang,Beijing Jiajujiu and their respective shareholders. As a result of these contractual arrangements, Leju Holdings Limited, through PRC subsidiaries,is the primary beneficiary of these PRC entities and accounts for them as variable interest entities, and consolidates the financial results of theseentities into our financial statements in accordance with U.S. GAAP. For a description of these contractual arrangements, see “Item 4. Informationon the Company—C. Organizational Structure”.On April 17, 2014, our ADSs commenced trading on the NYSE under the symbol “LEJU”. We raised from our initial public offeringapproximately $101.4 million in net proceeds after deducting underwriting commissions and the offering expenses payable byTable of Contents52us. Concurrently with our initial public offering, we also raised from Tencent in a private placement $18.9 million in net proceeds after deductingestimated fees and expenses payable by us.Our Relationship with E-House EnterpriseOn November 4, 2020, E-House Enterprise completed the acquisition of a controlling stake in our company. E-House Enterprisepurchased (i) 51,925,996 ordinary shares from Mr. Xin Zhou and certain of his affiliated entities (the “Zhou Parties”) by issuing to the Zhou Parties166,918,440 of its ordinary shares (“E-House Enterprise Shares”), and (ii) 24,475,251 ordinary shares of Leju from SINA Corporation and anaffiliated entity thereof (the “SINA Parties”) by issuing to the SINA Parties 78,676,790 E-House Enterprise Shares. Upon completion of thesetransactions, E-House Enterprise acquired the beneficial ownership of 76,401,247 ordinary shares of us, and we became a subsidiary of E-HouseEnterprise and our financial results have been consolidated into the accounts of E-House Enterprise since then. On November 24, 2021, TM HomeLimited, a company incorporated in the Cayman Islands with limited liability and owned as to 70.23% and 29.77% by E-House Enterprise andAlibaba Investment Limited, respectively (“TM Home”), completed the acquisition of an aggregate of 55.8% interest in our issued share capital.TM Home purchased 76,401,247 of our ordinary shares from E-House Enterprise by issuing to the E-House Enterprise 6,854,839 of its ordinaryshares. As of March 31, 2022, TM Home owned 76,401,247 ordinary shares of us, representing approximately 55.8% of our total outstandingordinary shares.In July 2020, E-House Enterprise entered into a business cooperation agreement with a subsidiary of Alibaba, and the two parties haveagreed to cooperate in areas including online-offline real estate transaction, digital marketing and after-sale services with the goal of enhancing thedigital and intellectual capabilities of the real estate service industry. Alibaba will closely collaborate with E-House Enterprise and us to build anonline real estate marketing platform and digital transaction network, with E-House Enterprise being the operator of online transaction services onthe platform and we being the operator of digital marketing services. To our knowledge, Alibaba beneficially owned 8.32% of E-HouseEnterprise’s outstanding shares as of March 31, 2022.We also have ongoing relationship with E-House, an affiliate of E-House Enterprise. Our agreements with E-House include a mastertransaction agreement, an offshore transitional services agreement (as amended), an onshore transitional services agreement (as amended), a non-competition agreement and an onshore cooperation agreement. See “Item 7. Major Shareholders and Related Party Transactions—B. Related PartyTransactions— Transactions and Agreements with E-House.”Our Relationship with SINAThrough an agreement entered into between SINA and E-House in 2009, we own SINA’s real estate operations. To a large extent, theoperations and revenues of our business rely on SINA’s cooperation with us. The domain names of some major websites of our business are ownedby SINA and licensed to us through agreements which we initially entered into with SINA in 2009 with terms through 2019 and which weamended and restated in 2014 to extend through 2024. A significant number of users of these websites are linked through other SINA websites.Pursuant to an advertising inventory agency agreement with SINA, we are the exclusive agent of SINA for selling advertising to the real estateadvertisers through 2024.On March 21, 2017, we entered into a registration rights agreement with SINA, which grants SINA the same registration rights withrespect to our ordinary shares as those granted to E-House and Tencent under an investor rights agreement dated March 31, 2014.See “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Transactions and Agreements withSINA” for more information.Our Relationship with TencentIn March 2014, pursuant to a share purchase and subscription agreement we entered into with E-House and Tencent, Tencent acquiredfrom E-House 19,201,800 of our ordinary shares, or 15% of our total outstanding shares on a fully diluted basis, including all options and restrictedshares and any other rights to acquire our shares that were granted and outstanding, for $180 million in cash. Concurrent with the consummation ofour initial public offering, Tencent purchased 2,029,420 ordinary shares from us at a price per ordinary share equal to the initial public offeringprice per ordinary shares to maintain a 15% equity interest in us on a fully diluted basis as of the consummation of our initial public offering. Inconnection with the sale of shares to Tencent, we have entered into anTable of Contents53investor rights agreement on March 31, 2014 with E-House and Tencent, which grants E-House and Tencent certain registration rights with respectto our ordinary shares owned by them, grants certain board representation rights to Tencent and places certain restrictions on the transfer of ourordinary shares by E-House or Tencent.In January 2019, we entered into a series of exclusive advertising agency agreements with Tencent. Pursuant to the exclusive advertisingagency agreements, we are the exclusive real property advertising agent of Tencent for selling advertising to real estate advertisers in certain areasof China, including, Tianjin and Sichuan, Anhui, Shanxi, Guangxi and Fujian provinces. In March 2019, we entered into an advertising agencyagreement with Tencent, pursuant to which we are the real property advertising agent of Tencent in certain other areas of China. In January 2020,we renewed and entered into advertising agency agreements with Tencent, pursuant to which we are the real property advertising agent of Tencentin many areas of China. Pursuant to the exclusive advertising agency agreements signed in April 2020, such areas of China were Heilongjiang,Shanxi, Tianjin, Fujian, Guangxi, Guizhou, Chongqing, Sichuan and some cities in Jiangsu Province. In early 2021, we renewed our advertisingagency agreements with Tencent, and the cooperative areas remain the same as those in 2020.See “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Transactions and Agreements withTencent” for more information.Corporate InformationOur principal executive offices are located at Level G, Building G, No.8 Dongfeng South Road, Chaoyang District, Beijing 100016,People’s Republic of China. Our telephone number at this address is +86 10 5895 1000. Our registered office in the Cayman Islands is located atthe offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. In addition, we have60 branch offices in mainland China and a branch office in Hong Kong. Our agent for service of process in the United States is Law DebentureCorporate Services Inc., located at 400 Madison Avenue, 4th Floor, New York, New York 10017.B.Business OverviewOverviewWe are a leading O2O real estate services provider in China. We offer real estate e-commerce, online advertising and online listingservices through our online platform, which comprises local websites covering 401 cities and various mobile applications. We integrate our onlineplatform with complementary offline services to facilitate residential property transactions. In addition to our own websites, we also operatevarious real estate and home furnishing websites of SINA.E-Commerce. We offer e-commerce services primarily in connection with new residential property sales. Our O2O services for newresidential properties include selling discount coupons and facilitating online property viewing, physical property visits, marketing events and pre-sale customer support. We earn revenue primarily from the sale of discount coupons used for property purchases. We also facilitate transactions onour platform for home furnishing business and earn commissions from merchants based on the value of merchandise sold by them generally.Online Advertising. In respect of the online advertising services, we mainly provide comprehensive advertisement placement services toadvertisers, mainly property developers, through a packaged online cross-media and cross-platform product portfolio, including those owned by usand other independent outlets. We currently sell advertising primarily on the SINA new residential properties and home furnishing websites, whichare operated by us. In addition, we are the exclusive advertising agent for the SINA home page and non-real estate websites with respect toadvertising sold to advertisers, including real estate developers and home furnishing suppliers. We also purchased advertising resources fromTencent and other independent media outlets. In late 2017, we launched Leju Finance, an online platform that provides information and news onthe real estate industry, market, and developers featuring their financial performances. We earn revenue primarily from advertising sales and brandpromotion services provided to advertisers, including real estate developers and home furnishing suppliers.Listing. We offer fee-based online property listing services to real estate agents and free services to individual property sellers. Wecurrently operate the SINA real estate websites for listings of existing residential properties for sale or lease.Table of Contents54We generated total revenues of $692.6 million, $719.5 million, and $534.1 million in 2019, 2020 and 2021, respectively. We incurred netincome of $10.9 million, $21.0 million, and net loss of $149.9 million in 2019, 2020 and 2021, respectively.Our O2O PlatformWe offer multiple online and offline access points for consumers. We reach consumers through our own websites, various real estate andhome furnishing related websites on sina.com.cn that are operated by us, Weibo, Weixin, and various mobile applications. These websites andmobile applications enable us to better reach potential purchasers for whom we are then able to provide our offline services. We also providecomplementary offline services to cultivate customer loyalty and ensure superior customer experience.WebsitesOur internet presence includes local real estate websites across China that we either operate directly or outsource to local outsourcingpartners. These local websites provide region-specific real estate news, information, property data and access to online communities to real estateconsumers and participants. We believe our local presence in each of these cities enables us to provide services that are tailored to local conditions,enhancing the attractiveness of our websites to consumer and to advertisers who seek targeted advertising opportunities.Through our direct operations and outsourcing to local partners we operate websites in every province of China. We operate the followingwebsites:●new residential property websites, including house.sina.com.cn and leju.com, where viewers are automatically directed to a local websitewith localized information and services, covering 401 cities; on house.sina.com.cn and leju.com, we offer customers the ability topurchase discount coupons for property purchases;●existing residential property focused websites, including esf.sina.com.cn and esf.leju.com, where viewers are automatically directed to alocal website with localized information and services, covering 300 cities;●home furnishings website, jiaju.sina.com.cn, which is a platform to offer information with respect to home furnishing and for distributorsto offer home furnishings to consumers; viewers have access to localized information on home furnishing; and●real estate media website, including news.leju.com and lejucaijing. com, a B2B platform, which provides information and news on thereal estate industry, market and developers featuring their financial performances.We sell online advertising on each of our direct-operated local websites covering 78 cities. We also outsource 323 local websites to thirdparties that pay us fixed fees for the right to operate the websites. The amount of user traffic on the websites that we own or operate, our ability toachieve user demographic characteristics that are attractive to advertisers, and our ability to demonstrate such user traffic and demographiccharacteristics through website traffic tracking tools and reporting systems are important factors in maintaining our advertising revenue fromwebsites that we operate directly and fixed fees from websites that we outsource to third parties. We track such data internally and identify cities toconvert to direct operations on an ongoing basis.Table of Contents55Mobile ApplicationsOur major mobile applications include “Leju Home Purchase” (an upgraded version of “Pocket Leju”), “Leju Er Shou Fang”, “Lai Ke”and “Leju Finance”, each of which has version for the iOS and Android operating systems.●Leju Home Purchase, an upgraded version of Pocket Leju, is a comprehensive and professional real estate e-commerce platform. Itprovides personalized services to consumers and potential buyers of new and existing homes, and potential residential renters. Theseservices include local market news, scheduling home visits, selection, access to purchase discounts, special offer recommendations, localhousing price interpretations, purchase guides, property assessment, tax calculation, housing loan calculation and others.●Leju Er Shou Fang provides services to potential home buyers of existing homes and potential residential renters with housinginformation provided by brokers, as well as housing loan calculation and chat tools.●Lai Ke is a communication tool between property consultants and potential home buyers. It pushes information to potential home buyersthrough real-time big data analytics and helps property consultants reach out to targeted clients.●Leju Finance is a mobile app, which provides information and news on the real estate industry, market and developers featuring theirfinancial performances.In March 2014, we launched our mobile e-commerce platform based on (i) existing mobile applications developed by our company,including “Leju Home Purchase” (an upgraded version of “Pocket Leju”), and (ii) Weibo and Weixin, two of China’s leading social mediaplatforms. Our mobile platform aims to connect home buyers and developers and real estate agents through mobile devices to allow potentialbuyers to view detailed information about real estate projects, conduct live chats with sales agents, make appointments for property viewing,reserve individual units, and purchase discount coupons. Our mobile e-commerce platform will also connect real estate sales personnel and agentswith potential home buyers and sellers, including through live chat services, in addition to providing updated customer data and analysis and afacility for making appointments for site visits.In June 2014, we officially launched the first “Weixin Home Promotion”, using the Weixin platform as an integral part of our mobile e-commerce platform. In July 2014, we upgraded our mobile e-commerce platform to consolidate all of our mobile resources to provide developerswith three unique groups of mobile promotional tools, including media channels, communication tools and e-commerce tools, to further enhancemobile marketing for our clients. Since then we have continually added new product offerings on our mobile platform, including various interactivemarketing games.In July 2015, we launched an innovative mobile product in cooperation with Didi Chuxing, a leading mobile transportation platform inChina, to arrange individual site visits for customers using private cars.Complementary Offline ServicesOur offline services include physical property visits and a call center, which enables our website viewers to contact us or representativesof property developers for information on new residential properties and our services. Our services are also available at developers’ show roomsand through real estate brokers. We also organize and conduct offline marketing events for property developers to promote their new residentproperties.Our ServicesWe offer e-commerce services in connection with new residential property sales and home furnishing; online advertising services inconnection with new residential property sales and home furnishing; and online listing services for existing residential properties.Table of Contents56E-CommerceOur e-commerce revenue is primarily derived from the sale of discount coupons for new residential properties that are promoted by developers. We commenced the sale of discount coupons from the first quarter of 2012. Our revenues generated from e-commerce services in 2019, 2020 and 2021 were $547.2 million, $547.9 million and $411.1 million, respectively, representing 79.0%, 76.2% and 77.0%, respectively, of our total revenues for those periods.O2O Services for New Residential PropertiesOur O2O offering includes selling discount coupons for new residential properties. Our O2O services can be accessed by prospectivepurchasers through the real estate website of SINA which we operate and our website, leju.com, as well as through our mobile applications.Prospective purchasers can also access our services at show houses for new residential properties and through real estate developers.Discount Coupons. A discount coupon entitles a purchaser to purchase a property from the property developer at a particular developmentat a discount from the advertised price. Discount coupons can be purchased by prospective property purchasers online at leju.com andhouse.sina.com.cn, and their respective local websites as well as offline in showrooms for new property developments. We enter into arrangementswith developers whereby we offer O2O services, including the sale of discount coupons, to promote and facilitate property sales. Each sucharrangement is specific to a particular development. The arrangement may terminate at a pre-agreed date or continue until all properties at thedevelopment have been sold, as agreed in advance by the developer and us. Coupons may expire on a stated expiry date, typically at the end of apromotional period, or when all properties at the development to which the coupon relates have been sold. When a prospective property purchaserpurchases a discount coupon as part of our O2O services, the purchaser remits the payment for the coupon to an account maintained by thepurchaser with an independent payment platform provider or to Leju’s Alipay or Weixin pay accounts directly. Upon confirmation from a purchaserthat a discount coupon is redeemed to purchase property, the payment for the discount coupon is transferred to us. However, if for any reason thecoupon is not redeemed, the payment is refunded to the purchaser and we do not earn revenue from the transaction.The following table sets forth certain operating metrics with respect to our sales of discount coupons for the periods specified. Three months Three months Three months Three months ended endedended March 31,ended June 30, September 30, December 31, 2021 2021 2021 2021Number of discount coupons issued to prospective purchasers (number oftransactions) 38,365 53,693 35,283 34,855Number of discount coupons redeemed (number of transactions)(1) 32,397 44,981 33,264 27,588Note:(1)The number of discount coupons issued to prospective purchasers that were used by the purchaser to obtain a discount in connection with aproperty purchase during the period. We recognize revenue from the sale of discount coupons that are redeemed. See “Item 5. Operating andFinancial Review and Prospects—A. Operating Results—Critical Accounting Policies”.We have entered into arrangements with China Unionpay to use its payment platform to collect payments for discount coupons. The termof this agreement has been extended to 2025. Either party may terminate the agreement upon 30 days written notice to the other party. Under theagreement, China Unionpay provides customers with the ability to make online or on-site payments.Online AdvertisingThe majority of our online advertising revenues are generated from sale of advertising on real estate and home furnishing websites toadvertisers including real estate developers and home furnishing suppliers. Since the second quarter of 2016, we started to generate advertisingrevenues from our contractor platform 7gz. com. Our revenues generated from advertising services in 2019, 2020Table of Contents57and 2021 were $143.8 million, $170.8 million and $122.5 million, respectively, representing 20.8%, 23.7% and 22.9%, respectively, of our totalrevenues for those periods.We operate the SINA real estate website, house.sina.com.cn, and the SINA home furnishings website, jiaju.sina.com.cn, and we areentitled to all advertising revenues from these websites. In addition, pursuant to an agency agreement with SINA, we are the exclusive advertisingagent of the SINA homepage and non-real estate websites, for advertising sold to advertisers, including real estate developers and home furnishingsuppliers. We are entitled to 85% of the revenue derived from advertising on these other websites. Leveraging SINA’s strong brand recognition,market influence in China’s online space and its large user base, we help real estate advertisers reach their target audiences in many of China’smajor cities. Real estate advertisers primarily include real estate developers, agents and brokers as well as suppliers and providers of homefurnishing and improvement products and services.Furthermore, as the exclusive real estate advertising agency for SINA non-real estate websites, we facilitate advertising by our real estateadvertising clients on the SINA real estate websites as well as non-real estate websites. Real estate advertising offerings on SINA websites includeonline advertising and sponsorship arrangements. Online advertising arrangements allow advertisers to place advertisements on particular areas ofSINA websites, in particular formats, such as banners and text links, and over particular periods of time. Sponsorship arrangements allowadvertisers to sponsor a particular area on SINA websites in exchange for a fixed payment over the contract period. Real estate advertising onSINA websites also includes revenue from outsourcing arrangements with local business partners. Revenues from outsourcing arrangements are ona fixed fee and recognized ratably over the term of the contract.We and SINA have entered into a number of agreements governing our relationship with SINA, including an advertising inventory agencyagreement, an amended and restated domain name and content license agreement, an amended and restated trademark license agreement and anamended and restated software license and support services agreement. For descriptions of these agreements, see “Item 7. Major Shareholders andRelated Party Transactions—B. Related Party Transactions—Transactions and Agreements with SINA”.In 2019, we entered into a series of advertising agency agreements with Tencent, pursuant to which we are the real property advertisingagent of Tencent, including having exclusive advertising rights in certain areas of China. We also generated advertising revenues from various otherwebsites and mobile applications such as Weixin, Weibo, Toutiao and UC Web from 2019 to 2021. We earn revenue from the sale of onlineadvertising on each of these websites. Revenues for online advertising are typically based on a fixed fee for the period of the advertising and arerecognized ratably.ListingWe offer online residential listing services for sales and leases of existing residential properties. Our listing services are currently offeredin 4 cities where we maintain a local sales force and in an additional 296 cities where we allow real estate agents to use our platform to post theirlistings. Our revenues generated from online listing services in 2019, 2020 and 2021 were $1.6 million, $0.8 million and $0.5 million, respectively,representing 0.2%, 0.1% and 0.1%, respectively, of our total revenues for those periods. Real estate brokers use our listing services. Payment of thelisting fees entitles them to post multiple listings for properties over the subscription period. Our listing subscription contracts are typically for aterm of up to one year with fixed fees payable on a monthly basis. The subscription fees are generally fixed and vary from city to city. Our listingcustomers submit property listings by logging on to our platform directly. Once a listing has been uploaded to our website, it can be viewed for freeby visitors to our website. All visitors to our website have access to listing information free of charge, 24-hours a day. With respect to listingssubmitted by agents or brokers, the name of the agent or broker appears as a link, offering viewers access to additional listings promoted by thesame agent or broker.Brand PromotionWe employ a variety of marketing and brand promotion methods to enhance our brand recognition and attract developer clients and realestate purchasers, including advertising arrangements and the Leju Membership Club. Membership in the Leju Membership Club is free. Users cansign up to join the Leju Membership Club online at our website, leju.com, and become members following email or phone number confirmationthrough text message.Table of Contents58We conduct advertising activities in 78 cities where we directly operate local websites through promotional events for developers andother industry participants, including industry award ceremonies, panel discussions and similar events.Sales and MarketingMost of our new home advertising revenue and home furnishing advertising revenue is derived from our direct sales force. We also derivenew home and home furnishing advertising revenue from sales through third party advertising agencies.We have built a sales and marketing team that is experienced in the online advertising, internet and real estate industries. Our sales andmarketing team comprised 540 personnel as of December 31, 2021. Our sales and marketing personnel work closely with our customers in localmarkets and help us gain insight into developments in these local markets, the competitive landscape and new market opportunities, which help usset our prices and strategies for each locality.To motivate our sales and marketing personnel, a majority of their compensation consists of performance incentives such as commissionsand bonuses. Sales quotas are assigned to all sales personnel according to monthly, quarterly and annual sales plans. In addition, we have adopted amerit-based promotion system to motivate our sales personnel.SeasonalityThe real estate sector in China is characterized by seasonal fluctuations, which may cause our revenues to fluctuate significantly fromquarter to quarter. The first quarter of each year generally contributes the smallest portion of our annual revenues due to reduced real estatetransactions, advertising and marketing activities of our customers in the PRC real estate industry during and around the Chinese New Year holiday,which generally occurs in January or February of each year and due to the cold winter weather in northern China. In contrast, the third and fourthquarters of each year generally contribute a larger portion of our annual revenues due to increased real estate transaction, advertising and marketingactivity during the months of September and October.CompetitionWe face competition from other companies in each of our primary business activities. We compete with these companies primarily on ourability to attract consumers to our websites. We compete for consumers principally on the basis of the quality and quantity of real estate listings andother information content and services. We also compete for developers’ business on the basis on website traffic volume, consumer loyalty,geographic coverage and service offerings. We also compete for qualified employees with skills and experience related to sales, real estate services,advertising, technology and the internet industry. We face various competitors with whom we may compete on one or more lines of business. Forexample, we compete with fang.com, formerly soufun.com, a leading real estate internet portal in China and compete with anjuke.com, which isoperated by 58.com, a major online real estate listing platform in China. In addition, we also compete with mobile-based providers of news, such astoutiao.com, for our online advertising business. Our competitors may have more established brand names, larger visitor numbers and moreextensive distribution channels than we do, either overall, or in specific regions in which we operate. We also compete with traditional advertisingmedia such as general-purpose and real estate-focused newspapers, magazines, television and outdoor advertising that compete for spending on realestate advertising and listings.Some of our competitors may have greater access to capital markets, more financial and other resources and a longer operating historythan us. For instance, major general-purpose websites, which provide real estate and real estate-related information services, may have anadvantage over us due to their more established brand name, larger user base and extensive internet distribution channels.Table of Contents59TechnologyTo better serve our customers, we have utilized our key proprietary technologies and developed a technology infrastructure that isspecifically used for our real estate and home related internet website services. The key components of our technology platform include:●Search platform. Our search platform is designed to support targeted searches of our listing databases. Besides the key word searchfunction, our search platform provides additional search functions that improve search accuracy with various search criteria, includingsearches based on the location, price and type of the property. In addition, our search engine is able to refine the search by conditionalfiltering and aggregation of the search results.●Large-scale system infrastructure. With a combination of proprietary in-house and third-party solutions, we have designed our system tohandle large amounts of data flow with a high degree of scalability and reliability. We use parallel computing technology and clusters oflow-cost computers to handle high-volume visitor traffic and process large amounts of information.●Anti-fraud and anti-spam technology. We have anti-fraud technology incorporated in our IT systems with a view to addressing thepotential for non-compliant activities at our local branch offices. We maintain advertising price and discount data in our customerrelationship management master file. Our system automatically triggers a risk alert for any deviation from pre-set discounts, in whichcase, a pre-approval email from our headquarters is required. Our system also generates a weekly report of any such exceptions for reviewby our headquarters. We also have an anti-spam system through which we are able to detect identify and filter spam messages with a viewto protecting our staff. We attempt to continuously improve the accuracy and effectiveness of our technology through machine-learningcapability and customizable rules.We maintain our servers and backup servers in Beijing. We believe our server hosting partners provide significant operating advantages,including high-quality bandwidth, constant room temperature and an enhanced ability to protect our systems from power loss, break-ins and otherexternal causes of service interruption. We have not experienced any material system failures.InsuranceWe maintain property insurance to cover potential damages to a portion of our property. In addition, we provide medical, unemploymentand other insurance to our employees in compliance with applicable laws, rules and regulations. We do not maintain insurance policies coveringlosses relating to our systems and do not have business interruption insurance.RegulationWe are subject to a number of laws and regulations in China relating to real estate service companies. This section summarizes theprincipal PRC laws and regulations that are currently applicable to our business and operations.GeneralThe telecommunications industry, including internet information services, is highly regulated by the PRC government. Regulations issuedor implemented by the State Council, the MIIT and other relevant government authorities cover virtually every aspect of telecommunicationsnetwork operations, including entry into the telecommunications industry, the scope of permissible business activities, tariff policy and foreigninvestment.Table of Contents60The MIIT, under the leadership of the State Council, is responsible for, among other things:●formulating and enforcing telecommunications industry policy, standards and regulations;●granting licenses to provide telecommunications and internet services;●formulating tariff and service charge policies for telecommunications and internet services;●supervising the operations of telecommunications and internet service providers; and●maintaining fair and orderly market competition among operators.In addition to the regulations promulgated by the central PRC government, some local governments have also promulgated local rulesapplicable to internet companies operating within their respective jurisdictions.In 1994, the Standing Committee of the National People’s Congress promulgated the PRC Advertising Law, which was amended inOctober 2018 and April 2021. In addition, the SAMR and other ministries and agencies have issued regulations that further regulate our advertisingbusiness, as discussed below.Restrictions on Foreign Investment in the Value-Added Telecommunication IndustryIn September 2000, the State Council promulgated the Telecommunications Regulations, as amended in July 2014 and February 2016,which categorize all telecommunications businesses in China as either basic telecommunications businesses or value-added telecommunicationsbusinesses. According to the Classification of Telecommunications Business effective March 1, 2016 and amended on June 6, 2019, internetinformation services are classified as value-added telecommunications businesses.The State Council promulgated the Administrative Rules on Foreign-invested Telecommunications Enterprises in December 2001, asamended in September 2008 and February 2016, or the FITE Regulations. The FITE Regulations set forth detailed requirements with respect tocapitalization, investor qualifications and application procedures in connection with the establishment of a foreign-invested telecommunicationsenterprise. Pursuant to these administrative rules, the ultimate capital contribution ratio of the foreign investor or investors in a foreign-investedtelecommunications enterprise that aims to provide value-added telecommunications services may not exceed 50.0%. In addition, pursuant to theSpecial Administrative Measures (Negative List) for the Access of Foreign Investment (Edition 2019) promulgated by the National Developmentand Reform Commission (the “NDRC”) and the MOC on June 30, 2019, the Special Administrative Measures (Negative List) for the Access ofForeign Investment (Edition 2020) promulgated by the NDRC and the MOC on June 23, 2020, the Special Administrative Measures (NegativeList) for the Access of Foreign Investment (Edition 2021) promulgated by the NDRC and the MOC on December 27, 2021 and the Catalog ofIndustries for Encouraging Foreign Investment (2020 Version) which was promulgated on December 27, 2020 and became effective on January 27,2021, other than E-commerce, domestic multiparty communication, store and forward, and call center services, the permitted foreign investment invalue-added telecommunications service providers may not be more than 50%. However, for a foreign investor to acquire any equity interest in avalue-added telecommunications business in China, it must satisfy a number of stringent performance and operational experience requirements,including demonstrating a track record and experience in operating a value-added telecommunications business overseas. Moreover, foreigninvestors that meet these requirements must obtain approvals from the MIIT or its authorized local counterparts, which retain considerablediscretion in granting approvals.In July 2006, the MIIT publicly released the Notice on Strengthening the Administration of Foreign Investment in Operating Value-addedTelecommunications Business, or the MIIT Notice, which reiterates certain provisions under the FITE Regulations. According to the MIIT Notice,if any foreign investor intends to invest in a PRC telecommunications business, a foreign-invested telecommunications enterprise must beestablished and such enterprise must apply for the relevant telecommunications business licenses. Under the MIIT Notice, domestictelecommunications enterprises are prohibited from renting, transferring or selling a telecommunications license to foreign investors in any form,and from providing any resources, premises, facilities and other assistance in any form to foreign investors for their illegal operation of anytelecommunications business in China.Table of Contents61Regulations relating to Internet Information ServicesGeneralThe provision of real estate and home-related and other content on internet websites is subject to applicable PRC laws, rules andregulations relating to the telecommunications industry and the internet, and regulated by various government authorities, including the MIIT andthe SAMR. Under the applicable regulations, internet information services are classified as value-added telecommunications businesses, and acommercial operator must obtain an ICP license from the MIIT or its relevant provincial counterparts in order to carry out commercial internetinformation service operations in China. If an internet information service provider is not engaged in commercial internet information service, it isonly required to file a record with the MIIT or its relevant provincial counterparts. In addition, the regulations also provide that operators involvedin internet content provision in sensitive and strategic sectors, including news, publishing, education, health care, medicine and medical devices,must obtain additional approvals from the relevant authorities in relation to those sectors.In compliance with these laws and regulations, Beijing Leju, our consolidated variable interest entity, Beijing Yisheng Leju InternetTechnology Co., Ltd., a subsidiary of our consolidated variable interest entity Beijing Jiajujiu, and Leju Hao Fang, our consolidated variableinterest entity, each hold a valid ICP license issued by the local provincial branch of the MIIT for the operation of our value-addedtelecommunication business.The MIIT Notice requires that a value-added telecommunications business operator (or its shareholders) must own domain names andtrademarks used by it in the value-added telecommunications business, and have premises and facilities appropriate for such business. To complywith the MIIT Notice, Beijing Leju, a consolidated variable interest entity, has been registered as the owner or is applying to be the owner of theChinese and English dual-language “Leju” trademark in several categories and has obtained the domain names of leju.com and leju.cn. BeijingYisheng Leju Online Technology Co., Ltd., a subsidiary of our consolidated variable interest entity Beijing Jiajujiu, has registered the domain nameof jiaju.com.On December 31, 2021, CAC and three other authorities issued Administrative Provisions on Algorithm Recommendation for InternetInformation Services, which will be taken into effect on March 1, 2022, or the Algorithm Provisions. Pursuant to the Algorithm Provisions,Algorithm recommendation service providers shall not take advantage of algorithm recommendation services to engage in activities prohibited bylaws and administrative regulations, such as endangering the national security and public interests, disturbing the economic order and social orderand infringing upon the legitimate rights and interests of others, and shall not take advantage of algorithm recommendation services to disseminateinformation prohibited by laws and administrative regulations. Instead, algorithm recommendation service providers shall take measures to preventand reject the dissemination of adverse information. In Addition, algorithm recommendation service providers shall fulfill their responsibilities assubjects for algorithm security, establish and improve the management systems and technical measures for algorithm mechanism and principlereview, scientific and technological ethics review, user registration, information release review, data security and personal information protection,anti-telecommunications and Internet fraud, security assessment and monitoring, and security incident emergency response, formulate and disclosethe relevant rules for algorithm recommendation services, and be equipped with professional staff and technical support appropriate to the scale ofthe algorithm recommendation service.Network Publication Service LicenseAccording to the Provisions on Network Publication Service Administration, jointly issued by the GAPPRFT and the MIIT in February2016, all entities that are engaged in network publication service in China must obtain the Network Publication Service License from theGAPPRFT. Network publication service is broadly defined in the Provisions on Network Publication Service Administration Regulation as the useof information networks to provide the public with digital works that have characteristics of publication such as editing, creation or processing. Ourconsolidated variable interest entities and their subsidiaries do not have network publication licenses. For content which we believe are subject tothe requirements of these licenses, such content is hosted by SINA through our contractual arrangement with SINA. In the case that SINA does notpossess the necessary licenses and permits, our content hosted by SINA is subject to the risk of being suspended by government authorities.Moreover, we cannot assure you that government would not require us to obtain these licenses separately for operation of our own websites andthose websites licensed to us even if the underlying hosting of the relevant content is provided by a qualified third party. See “Item 3. KeyInformation—D. Risk Factors—Risks related to Our Business—If we fail to obtain or keep licenses, permits or approvals applicable to the variousonline real estate services provided by us, we may incur significant financial penalties and other government sanctions”.Table of Contents62Online Transmission of Audio-Visual ProgramsThe GAPPRFT and the MIIT jointly promulgated the Administrative Provisions on Internet Audio-visual Program Service, or theAudiovisual Program Provisions, effective January 2008 and amended in August 2015. The Audio-visual Program Provisions apply to theprovision of audio-visual program services to the public via internet (including mobile network) within the territory of China. Providers of internetaudio-visual program services are required to obtain a License for Online Transmission of Audio-visual Programs issued by the GAPPRFT orcomplete certain registration procedures with the GAPPRFT. Providers of internet audio-visual program services are generally required to be eitherstate-owned or state-controlled by the PRC government, and the business to be carried out by such providers must satisfy the overall planning andguidance catalog for internet audio-visual program services determined by the GAPPRFT. In May 2008, the GAPPRFT issued a Notice onRelevant Issues Concerning Application and Approval of License for Online Transmission of Audio-visual Programs, as amended in August 2015,which further sets forth detailed provisions concerning the application and approval process regarding the License for Online Transmission ofAudio-visual Programs. The notice also provides that providers of internet audio-visual program services who engaged in such services prior to thepromulgation of the Audio-visual Program Provisions shall also be eligible to apply for the license so long as their violation of the laws andregulations (if any) is minor and can be rectified timely and they have no record of violation during the latest three months prior to thepromulgation of the Audio-visual Program Provisions. In April 2010, the GAPPRFT issued the Internet Audio/Visual Program Services Categories(Provisional), as amended in March 2017, which classified internet audio-visual programs into four categories. Our consolidated variable interestentities and their subsidiaries do not have Licenses for Online Transmission of Audio-visual Programs. For content which we believe are subject tothe requirements of these licenses, such content is hosted by SINA through our contractual arrangement with SINA. In the case that SINA does notpossess the necessary licenses and permits, our content hosted by SINA is subject to the risk of being suspended by government authorities.Moreover, we cannot assure you that government would not require us to obtain these licenses separately for operation of our own websites andthose websites licensed to us even if the underlying hosting of the relevant content is provided by a qualified third party. See “Item 3. KeyInformation—D. Risk Factors—Risks related to Our Business—If we fail to obtain or keep licenses, permits or approvals applicable to the variousonline real estate services provided by us, we may incur significant financial penalties and other government sanctions”.Regulations relating to Mobile Internet Application Information ServicesAccording to the Provisions on Administration of Mobile Internet Application Information Services promulgated by the CyberspaceAdministration of China on June 29, 2016, entities providing information services through mobile internet application shall obtain relevantqualifications according to laws and regulations. Mobile internet application provider shall not use mobile internet application program to carry outactivities prohibited by laws and regulations, such as endangering national security, disturbing public orders, and infringing other’s legal rights andinterests, or use mobile internet applications to produce, copy, publish and spread illegal information prohibited by laws and regulations. TheCyberspace Administration of China shall be responsible for the supervision and administration of information on mobile internet applications. Thelocal cyberspace administrations shall be responsible for the supervision and administration of information on mobile internet application programwithin the administrative regions.Regulations Relating to Internet PrivacyThe PRC Constitution states that PRC law protects the freedom and privacy of communications of citizens and prohibits infringement ofthese rights. In recent years, PRC government authorities have enacted legislation on internet use to protect personal information from anyunauthorized disclosure. The Network Information Protection Decision provides that electronic information that identifies a citizen or involvesprivacy of any citizen is protected by law and must not be unlawfully collected or provided to others. ICP operators collecting or using personalelectronic information of citizens must specify the purposes, manners and scopes of information collection and uses, obtain consent of the relevantcitizens, and keep the collected personal information confidential. ICP operators are prohibited from disclosing, tampering with, damaging, sellingor illegally providing others with, collected personal information. ICP operators are required to take technical and other measures to prevent thecollected personal information from any unauthorized disclosure, damage or loss. The Administrative Measures on Internet Information Servicesprohibit an ICP operator from insulting or slandering a third party or infringing upon the lawful rights and interests of a third party. According tothe Provisions on Protection of Personal Information of Telecommunication and Internet Users, which was promulgated by MIIT and becameeffective in September 2013, telecommunication business operators and ICP operators are responsible for the security of the personal informationof users they collect or use in the course of their provision of services. Without obtaining the consent from the users, telecommunication businessoperators and ICP operators may not collect or use the users’ personal information. The personalTable of Contents63information collected or used in the course of provision of services by the telecommunication business operators or ICP operators must be kept instrict confidence, and may not be divulged, tampered with or damaged, and may not be sold or illegally provided to others. The ICP operators arerequired to take certain measures to prevent any divulgence of, damage to, tampering with or loss of users’ personal information. In accordancewith the Cyber Security Law, network operators are required to collect and use personal information in compliance with the principles oflegitimacy, properness and necessity, and strictly within the scope of authorization by the subject of personal information unless otherwiseprescribed by laws or regulations. In the event of any unauthorized disclosure, damage or loss of collected personal information, network operatorsmust take immediate remedial measures, notify the affected users and report the incidents to the relevant authorities in a timely manner. If any userknows that a network operator illegally collects and uses his or her personal information in violation of laws, regulations or any agreement with theuser, or the collected and stored personal information is inaccurate or wrong, the user has the right to request the network operator to delete orcorrect the relevant collected personal information.The relevant telecommunications authorities are further authorized to order ICP operators to rectify unauthorized disclosure. ICP operatorsare subject to legal liability, including warnings, fines, confiscation of illegal gains, revocation of licenses or filings, closing of the relevantwebsites, administrative punishment, criminal liabilities, or civil liabilities, if they violate relevant provisions on internet privacy. Pursuant to theNinth Amendment to the Criminal Law issued by the Standing Committee of the National People’s Congress in August 2015 and becomingeffective in November 2015, the standards of crime of infringing citizens’ personal information were amended accordingly and the criminalculpability of unlawful collection, transaction, and provision of personal information has been reinforced. In addition, any ICP provider that fails tofulfill the obligations related to internet information security administration as required by applicable laws and refuses to rectify upon orders, willbe subject to criminal liability for (i) any dissemination of illegal information in large scale; (ii) any severe effect due to the leakage of the client’sinformation; (iii) any serious loss of evidence of criminal activities; or (iv) other severe situations, and any individual or entity that (x) sells orprovides personal information to others unlawfully, or (y) steals or illegally obtains any personal information, will be subject to criminal liability insevere situations. In addition, the Interpretations of the Supreme People’s Court and the Supreme People’s Procuratorate of the PRC on SeveralIssues Concerning the Application of Law in Handling Criminal Cases of Infringing Personal Information, effective in June 2017, have clarifiedcertain standards for the conviction and sentencing in relation to personal information infringement. The PRC government has the power andauthority to order ICP operators to turn over personal information if an internet user posts any prohibited content or engages in illegal activities onthe internet. The Civil Code further provides in a stand-alone chapter of right of personality and reiterate that the personal information of a naturalperson shall be protected by the law. Any organization or individual shall legitimately obtain such personal information of others in due course on aneed-to-know basis and ensure the safety and privacy of such information, and refrain from excessively handling or using such information.With respect to the security of information collected and used by mobile apps, pursuant to the Announcement of Conducting SpecialSupervision against the Illegal Collection and Use of Personal Information by Apps, which was issued on January 23, 2019, app operators shouldcollect and use personal information in compliance with the Cyber Security Law and should be responsible for the security of personal informationobtained from users and take effective measures to strengthen the personal information protection. Furthermore, app operators should not forcetheir users to make authorization by means of bundling, suspending installation or in other default forms and should not collect personalinformation in violation of laws, regulations or breach of user agreements. Such regulatory requirements were emphasized by the Notice on theSpecial Rectification of Apps Infringing upon User’s Personal Rights and Interests, which was issued by MIIT on October 31, 2019. On November28, 2019, the CAC, the MIIT, the Ministry of Public Security and the SAMR jointly issued the Methods of Identifying Illegal Acts of Apps toCollect and Use Personal Information. This regulation further illustrates certain commonly-seen illegal practices of apps operators in terms ofpersonal information protection, including “failure to publicize rules for collecting and using personal information”, “failure to expressly state thepurpose, manner and scope of collecting and using personal information”, “collection and use of personal information without consent of users ofsuch App”, “collecting personal information irrelevant to the services provided by such app in violation of the principle of necessity”, “provision ofpersonal information to others without users’ consent”, “failure to provide the function of deleting or correcting personal information as required bylaws” and “failure to publish information such as methods for complaints and reporting”. Among others, any of the following acts of an appoperator will constitute “collection and use of personal information without consent of users”: (i) collecting an user’s personal information oractivating the permission for collecting any user’s personal information without obtaining such user’s consent; (ii) collecting personal informationor activating the permission for collecting the personal information of any user who explicitly refuses such collection, or repeatedly seeking foruser’s consent such that the user’s normal use of such app is disturbed; (iii) any user’s personal information which has been actually collected bythe app operator or the permission for collecting any user’s personal information activated by the app operator is beyond the scope of personalinformation which such user authorizes such app operator to collect; (iv) seeking for any user’s consent in a non-explicit manner; (v) modifyingany user’s settings forTable of Contents64activating the permission for collecting any personal information without such user’s consent; (vi) using users’ personal information and anyalgorithms to directionally push any information, without providing the option of non-directed pushing such information; (vii) misleading users topermit collecting their personal information or activating the permission for collecting such users’ personal information by improper methods suchas fraud and deception; (viii) failing to provide users with the means and methods to withdraw their permission of collecting personal information;and (ix) collecting and using personal information in violation of the rules for collecting and using personal information promulgated by such appoperator.On August 22, 2019, the CAC promulgated the Children Information Protection Provisions, which took effect on October 1, 2019,requiring that before collecting, using, transferring or disclosing the personal information of a child, the Internet service operator should inform thechild’s guardians in a noticeable and clear manner and obtain their consents. Meanwhile, internet service operators should take measures likeencryption when storing children’s personal information. On March 12, 2021, the CAC and three other authorities jointly issued the Rules on theScope of Necessary Personal Information for Common Types of Mobile Internet Applications. The Rules specifies the scope of necessary personalinformation to be collected each for a variety of common mobile internet applications, such as maps and navigation apps, online ride-hailing apps,instant messaging apps, online community apps. Operators of such apps shall not refuse to provide basic services to users on the ground of users’refusal to provide their personal non-essential information. On April 26, 2021, the MIIT issued the Interim Administrative Provisions on PersonalInformation Protection in Internet Mobile Applications (Draft for Comment). The draft of the Interim Administrative Provisions on PersonalInformation Protection in Internet Mobile Applications sets forth two principles of collection and utilization of personal information, namely“explicit consent” and “minimum necessity.”In October 2020, the Standing Committee of the National People’s Congress issued the Draft Personal Information Protection Law forpublic comments. In April 2021, the Standing Committee of the National Peoples’ Congress issued a Second Draft for review of the PersonalInformation Protection Law, or the Draft Personal Information Protection Law, for public comments. The Draft Personal Information ProtectionLaw integrates provisions from several rules with respect to personal information rights and privacy protection. According to the Draft PersonalInformation Protection Law, personal information refers to information related to identified or identifiable natural persons which is recorded byelectronic or other means (excluding the anonymized information). The Draft Personal Information Protection Law provides the circumstancesunder which a personal information processor could process personal information, such as where the consent of the individual concerned isobtained and where it is necessary for the conclusion or performance of a contract to which such individual is a party to such contract. It alsostipulates certain specific provisions with respect to the obligations of a personal information processor. In addition, it imposes further obligationson a personal information processor that provides for basic internet platform services, has large amount of users, has complicated businessactivities, including formulating of an independent institution mainly comprising of outside members to supervise personal information processingactivities, termination of provision of services for product or service providers on the platform whose personal information processing activities arein material violation of laws and regulations, and issuing personal information protection social responsibilities reports regularly. As of the date ofthis document, the Draft Personal Information Protection Law has not come into effect. In addition, on August 20, 2021, the Standing Committeeof the National People’s Congress adopted the Personal Information Protection Law which took effect on November 1, 2021. The PersonalInformation Protection Law requires, among others, that (i) the processing of personal information should have a clear and reasonable purposewhich should be directly related to the processing purpose, in a method that has the least impact on personal rights and interests, and (ii) thecollection of personal information should be limited to the minimum scope necessary to achieve the processing purpose to avoid the excessivecollection of personal information. Different types of personal information and personal information processing will be subject to various rules onconsent, transfer, and security. Entities handling personal information shall bear responsibilities for their personal information handling activities,and adopt necessary measures to safeguard the security of the personal information they handle. The entities failing to comply could be ordered tocorrect, or suspend or terminate the provision of services, and face confiscation of illegal income, fines or other penalties.Table of Contents65Regulations on Overseas Offering and ListingOn July 6, 2021, the relevant PRC government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities inAccordance with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervisionon overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant regulatorysystems to deal with the risks and incidents faced by China-based overseas-listed companies.On December 27, 2021, the NDRC and the MOC jointly issued the Special Administrative Measures (Negative List) for ForeignInvestment Access (2021 Version), or the 2021 Negative List, which became effective on January 1, 2022. Pursuant to such Special AdministrativeMeasures, if a domestic company engaging in the prohibited business stipulated in the 2021 Negative List seeks an overseas offering and listing, itshall obtain the approval from the competent governmental authorities. Besides, the foreign investors of the company shall not be involved in thecompany’s operation and management, and their shareholding percentage shall be subject, mutatis mutandis, to the relevant regulations on thedomestic securities investments by foreign investors.On December 24, 2021, the State Council issued a draft of the Provisions of the State Council on the Administration of OverseasSecurities Offering and Listing by Domestic Companies, or the Draft Provisions, and the CSRC issued a draft of Administration Measures for theFiling of Overseas Securities Offering and Listing by Domestic Companies, or the Draft Administration Measures, for public comments. Accordingto the Draft Provisions and the Draft Administration Measures, the overseas offering and listing by a domestic company, whether directly orindirectly, shall be filed with the CSRC. Specifically, the determination of an indirect offering and listing will be conducted on a “substance overform” basis, and an offering and listing shall be considered as an indirect overseas offering and listing by a domestic company if the issuer meetsthe following conditions: (i) the operating income, gross profit, total assets, or net assets of the domestic enterprise in the most recent fiscal yearwas more than 50% of the relevant line item in the issuer's audited consolidated financial statement for that year; and (ii) senior managementpersonnel responsible for business operations and management are mostly PRC citizens or are ordinarily resident in the PRC, and the main place ofbusiness is in the PRC or carried out in the PRC. According to the Draft Administration Measures, an overseas offering and listing is prohibitedunder any of the following circumstances: (i) if the intended securities offering and listing is specifically prohibited by national laws andregulations and relevant provisions; (ii) if the intended securities offering and listing may constitute a threat to or endangers national security asreviewed and determined by competent authorities under the State Council in accordance with law; (iii) if there are material ownership disputesover the equity, major assets, and core technology, etc. of the issuer; (iv) if, in the past three years, the domestic enterprise or its controllingshareholders or actual controllers have committed corruption, bribery, embezzlement, misappropriation of property, or other criminal offensesdisruptive to the order of the socialist market economy, or are currently under judicial investigation for suspicion of criminal offenses, or are underinvestigation for suspicion of major violations; (v) if, in past three years, directors, supervisors, or senior executives have been subject toadministrative punishments for severe violations, or are currently under judicial investigation for suspicion of criminal offenses, or are underinvestigation for suspicion of major violations; (vi) other circumstances as prescribed by the State Council.According to the Draft Administration Measures, the issuer or its affiliated domestic company, as the case may be, shall file with theCSRC (i) with respect to its initial public offering and listing within three business days, after its initial filing of the listing application to theregulator in the place of the intended listing, (ii) with respect to its follow-on offering within three business days after completion of the follow-onoffering, (iii) with respect to its follow-on offering for purpose of acquiring specific assets, within three business days after the first publicannouncement of the transaction, and (iv) with respect to listing by means of reverse takeover, share swap, acquisition and similar transactions,within three business days after its initial filing of the listing application or the first public announcement of the transaction, as case may be. Non-compliance with the Draft Administration Measures or an overseas listing completed in breach of Draft Administration Measures may result in awarning on the relevant domestic companies or a fine of 1-10 million RMB on them. If the circumstances are serious, they may be ordered tosuspend their business or suspend their business pending rectification, or their permits or businesses license may be revoked. Furthermore, thecontrolling shareholder, actual controllers, directors, supervisors, and other legally appointed persons of the domestic enterprises may be warned, orfined between 500,000 - 5 million RMB either individually or collectively.Table of Contents66Regulations relating to Information Content and Confidentiality of User Identity and InformationInternet content in China is also regulated and restricted from a state security standpoint. Pursuant to the Decision Regarding theProtection of Internet Security enacted by the Standing Committee of the National People’s Congress, any effort to undertake the following actionsmay be subject to criminal punishment in China:●gain improper entry into a computer or system of national strategic importance;●disseminate politically disruptive information;●leak government secrets;●spread false commercial information; or●infringe intellectual property rights.The Ministry of Public Security has also promulgated measures that prohibit the use of the internet in ways that, among other things, resultin the leakage of government secrets or the spread of socially destabilizing content. The Ministry of Public Security and its local counterparts havesupervision and inspection powers in this regard, and we may be subject to the jurisdiction of the local security bureaus. If an internet informationservice provider violates these measures, the PRC government may revoke its license and shut down its website.On December 15, 2019, the Cyberspace Administration of China promulgated the Provisions of Ecological Governance of NetworkInformation Content, which came into effect on 1 March 2020. According to the Provisions, a network information content producer shall notmake, copy or publish any illegal information containing: (i) violation the fundamental principles set forth in the Constitution; (ii) jeopardizingnational security, divulging state secrets, subverting the state power, or undermining the national unity; (iii) damaging the reputation or interests ofthe state; (iv) infringing name, portrait, reputation or honor of a hero or a martyr; (v) advocating terrorism or extremism; (vi) inciting ethnic hatredor discrimination to undermine ethnic solidarity; (vii) detrimental to state religious policies, propagating heretical or superstitious ideas; (viii)spreading rumors to disturb economic and social order; (ix) disseminating obscenity, pornography, force, brutality and terror or crime-abetting; (x)humiliating or defaming others or infringing upon their reputation, privacy and other legitimate rights and interests. In addition, a networkinformation content platform shall set up the censorship and management mechanism of network information content, and develop relevantdetailed rule. The platform shall set up the person in charge, equip itself with the professional personnel commensurate with the business scope andservice scale, strengthen training and examination and improve the quality of practitioners, set up convenient channels for filing complaints andreports in prominent places and publish the ways of filing complaints and reports, and compile an annual report. If a network information contentproducer violates the provisions, the network information content platform shall take disposal measures including warning for rectification,restricting functions, suspending updates and closing accounts, eliminate illegal information and contents in a timely manner, keep relevant recordsand report to the relevant competent authorities. If a network information content platform violates the provisions, the cyberspace authorities shallhold interviews, give warnings, order it to suspend information update, take measures including restricting it from engaging in network informationservices, and impose online behavior restrictions and industry bans. The Measures for Cyber Security Review was promulgated on April 13, 2020and became effective on June 1, 2020, and was amended on December 28, 2021 and became effective on February 15, 2022, which repealed theMeasures for Security Reviews of Network Products and Services. According to the Measures for Cyber Security Review, a critical informationinfrastructure operator, before purchasing network products and services, shall prejudge the national security risks that may arise after the productsand services are put into use. If such products and services will or may affect national security, the operator shall apply to the cyber security reviewoffice for cyber security review. In Addition, the Measures for Cyber Security Review as amended in 2021 has inserted the procedures foradditional oversight of "foreign" listings in relation to cyber security. Critical information infrastructure operators and data processors that possessthe personal data of at least one million users must apply for a cybersecurity review by the Cyber Security Review Office, if they plan listing ofcompanies in foreign countries. The Cybersecurity Review Office may voluntarily conduct cyber security review if any network products andservices, activities of data process or listing of companies overseas affects or may affect national security. Pursuant to the Measures for CyberSecurity Review, any violation shall be punished in accordance with the Cybersecurity Law and the Data Security Law of the PRC, the sanctionsunder which include, among others, government enforcement actions and investigations, fines, penalties, suspension of our non-compliantoperations.Table of Contents67To comply with these laws and regulations, we require our users to accept the user terms or service agreement for registration with, anduse of, our websites, whereby they agree to comply with the applicable PRC laws and regulations in using our websites, and we also maintainconstant surveillance and monitoring on the information posted on our websites. However, the measures we take may not be adequate to ensure thatall the information posted on our websites are in compliance with these laws and regulations. See “Item 3. Key Information—D. Risk Factors—Risks related to Our Business—Regulation of the internet industry in China, including censorship of information distributed over the internet, maymaterially and adversely affect our business”.The security and confidentiality of information on the identity of internet users are also regulated in China. The Internet InformationService Administrative Measures promulgated by the PRC State Council require internet information service providers to maintain an adequatesystem that protects the security of user information. In December 2005, the Ministry of Public Security promulgated the Regulations on TechnicalMeasures of Internet Security Protection, requiring internet service providers to utilize standard technical measures for internet security protection.Moreover, the Rules for Regulating the Market Order of Internet Content Services enhance the protection of internet users’ personal information byprohibiting internet information service providers from unauthorized collection, disclosure or use of personal information of their users. InDecember 2012, the Standing Committee of the National People’s Congress passed the Decision on Strengthening Internet Information Protection,which provides that all internet service providers in China, including internet information service providers, should require their users to providereal identity information when entering into service agreements or providing services to the users. In July 2013, the MIIT issued Provisions onProtecting Personal Information of Telecommunication and Internet Users, under which Internet information service providers are subject to strictrequirements to protect personal information of internet users. The internet information service providers are prohibited from collecting personalinformation of internet users without obtaining consent from the users. Personal information collected shall be used only in connection with theservices to be provided by Internet information service providers to such users and shall be kept in strict confidence. To comply with these laws andregulations, we require our users to accept the user terms or service agreement for registration with and use of our websites whereby they agree toprovide certain personal information to us and agree to our use of their provided personal information under certain agreed circumstances, and wehave established information security systems to protect users’ privacy. In May 2017, the Supreme People’s Court and the Supreme People’sProcuratorate released the Interpretations of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning theApplication of Law in the Handling of Criminal Cases Involving Infringement of Citizens’ Personal Information, or the Interpretations, effectiveJune 2017. The Interpretations provide more practical conviction and sentencing criteria for the infringement to citizens’ personal information. InAugust 2019, the spokesman of the Law Working Committee of the Standing Committee of the National People’s Congress disclosed that PersonalInformation Protection Law was included in the legislative plan of the Standing Committee of the National People’s Congress, and an independentchapter on privacy right and personal information was contained in the draft of Personality Right Part in Civil Code.On September 30, 2021, the MIIT issued the Measures for Data Security Administration in the Industry and Information Technology Field(Trial Implementation) (Draft for Comments), or the Draft Data Security Measures, for public comments. In accordance with the draft measures,the industrial and telecommunication data processors shall classify data firstly based on the data's category and then based on its security level on aregular basis, to classify and identify data based on the industry requirements, business needs, data sources and purposes and other factors, and tomake a data, classification list. In addition, the industrial and telecommunication data processors shall establish and improve a sound dataclassification management system, take measures to protect data based on the levels, carry out key protection of critical data, implement strictermanagement and protection of core data on the basis of critical data protection, and implement the protection with the highest level of requirementif different levels of data are processed at the same time. The Draft Data Security Measures also impose certain obligations on industrial andtelecommunication data processors in relation to, among others, implementation of data security work system, administration of key management,data collection, data storage, data usage, data transmission, provision of data, publicity of data, data destruction, safety audit and emergency plans,etc. As of the Latest Practicable Date, the Draft Data Security Measures have not been formally adopted.On September 15, 2021, the CAC promulgated the Opinions on Further Enforcing Responsibilities on Website Platforms as the MainResponsible Party for Information Content Management. In accordance with the Opinions, website platforms are required to perform specificresponsibilities as the main responsible party for information content management, including, among others, enhancing the platform communityrules, strengthening the regulation and management of accounts, improving the content vetting mechanism, improving the quality of informationcontent, managing the dissemination of information content, and strengthening the management of key functions.Table of Contents68On October 26, 2021, CAC issued the Regulations on the Management of Internet User Account Name Information (Draft for comments)for public comment, or the Account Name Regulations. The Account Name Regulations provide that the Internet user account service platformshall, in accordance with the principle of "background real name and foreground voluntary", require internet user account users to provide realidentity information when registering an account. The Internet user account service platform shall take necessary measures to ensure the security ofthe personal information and account name information it collects and stores, and prevent unauthorized access and information disclosure,tampering and loss; Personal information and account name information shall not be collected, stored, used, processed, transmitted, provided ordisclosed without the authorization and consent of the user of the Internet user account. No illegal trading of Internet user account nameinformation is allowed. After the Internet user account user cancels his/her account, the Internet user account service platform shall delete hispersonal information and account name information according to law.Regulations Relating to Information SecurityThe National People's Congress has enacted legislation that prohibits use of the internet that breaches the public security, disseminatessocially destabilizing content or leaks state secrets. Breach of public security includes breach of national security and infringement on legal rightsand interests of the state, society or citizens. Socially destabilizing content includes any content that incites defiance or violations of PRC laws orregulations or subversion of the PRC government or its political system, spreads socially disruptive rumors or involves cult activities, superstition,obscenities, pornography, gambling or violence. State secrets are defined broadly to include information concerning PRC national defense, stateaffairs and other matters as determined by the PRC authorities.Pursuant to applicable regulations, ICP operators must complete mandatory security filing procedures and regularly update informationsecurity and monitoring systems for their websites with local public security authorities, and must also report any public dissemination ofprohibited content.In December 2015, the Standing Committee of the National People's Congress promulgated the Anti-Terrorism Law of the PRC, or theAnti-Terrorism Law, which took effect on January 1, 2016 and was amended on April 27, 2018. According to the Anti-Terrorism Law,telecommunication service operators or internet service providers shall (i) carry out pertinent anti-terrorism publicity and education to society; (ii)provide technical interfaces, decryption and other technical support and assistance for the competent departments to prevent and investigateterrorist activities; (iii) implement network security and information monitoring systems as well as safety and technical prevention measures toavoid the dissemination of terrorism information, delete the terrorism information, immediately halt its dissemination, keep relevant records andreport to the competent departments once the terrorism information is discovered; and (iv) examine customer identities before providing services.Any violation of the Anti-Terrorism Law may result in severe penalties, including substantial fines.In November 2016, the Standing Committee of the National People's Congress promulgated the Cyber Security Law of the PRC, or theCyber Security Law, which took effect on June 1, 2017. In accordance with the Cyber Security Law, network operators must comply withapplicable laws and regulations and fulfill their obligations to safeguard network security in conducting business and providing services. Networkservice providers must take technical and other necessary measures as required by laws, regulations and mandatory requirements to safeguard theoperation of networks, respond to network security effectively, prevent illegal and criminal activities, and maintain the integrity, confidentiality andusability of network data. On May 2, 2017, the Cyberspace Administration of China issued a trial version of the Measures for the Security Reviewof Network Products and Services (Trial), which took effect on June 1, 2017, to provide for more detailed rules regarding cybersecurity reviewrequirements. On August 20, 2021, the Standing Committee of the National Peoples' Congress promulgated the Personal Information ProtectionLaw, which integrates the scattered rules with respect to personal information rights and privacy protection.Table of Contents69For the further purposes of regulating data processing activities, safeguarding data security, promoting data development and utilization,protecting the lawful rights and interests of individuals and organizations, and maintaining national sovereignty, security, and developmentinterests, on June 10, 2021, Standing Committee of the PRC National People’s Congress published the Data Security Law of the People’s Republicof China, which took effect on September 1, 2021. The Data Security Law requires data processing, which includes the collection, storage, use,processing, transmission, provision, publication of data, to be conducted in a legitimate and proper manner. The Data Security Law provides fordata security and privacy obligations on entities and individuals carrying out data activities. The Data Security Law also introduces a dataclassification and hierarchical protection system based on the importance of data in economic and social development, and the degree of harm itmay cause to national security, public interests, or legitimate rights and interests of individuals or organizations if such data are tampered with,destroyed, leaked, illegally acquired or illegally used. The appropriate level of protection measures is required to be taken for each respectivecategory of data. For example, a processor of important data is required to designate the personnel and the management body responsible for datasecurity, carry out risk assessments of its data processing activities and file the risk assessment reports with the competent authorities. State coredata, i.e. data having a bearing on national security, the lifelines of national economy, people’s key livelihood and major public interests, shall besubject to stricter management system. Moreover, the Data Security Law provides a national security review procedure for those data activitieswhich affect or may affect national security and imposes export restrictions on certain data and information. In addition, the Data Security Law alsoprovides that any organization or individual within the territory of the PRC shall not provide any foreign judicial body and law enforcement bodywith any data without the approval of the competent PRC governmental authorities. As the Data Security Law was recently promulgated, we maybe required to make further adjustments to our business practices to comply with this law, as well as any adjustments that may be required by theultimate Personal Information Protection Law.On July 6, 2021, certain PRC regulatory authorities issued Opinions on Strictly Cracking Down on Illegal Securities Activities, which,among others, provides for improving relevant laws and regulations on data security, cross-border data transmission, and confidential informationmanagement. It provided that efforts will be made to revise the regulations on strengthening the confidentiality and file management relating to theoffering and listing of securities overseas, to implement the responsibility on information security of overseas listed companies, and to strengthenthe standardized management of cross-border information provision mechanisms and procedures.On December 28, 2021, the Cyberspace Administration of China amended the Measures for Cybersecurity Review, or the AmendedMeasures, which became effective on February 15, 2022. The scope of review under the Amended Measures extends to critical informationinfrastructure operators that intend to purchase internet products and services and data processing operators engaging in data processing activities,which affect or may affect national security. According to Article 7 of the Amended Measures, operators who possess personal information of overa million users shall apply to the Cybersecurity Review Office for cybersecurity reviews before listing in a foreign country. Besides, the AmendedMeasures also provides that if the relevant authorities consider that certain network products and services, data processing activities and listings inforeign countries affect or may affect national security, the authorities may initiate a cybersecurity review even if the operators do not have anobligation to report for a cybersecurity review under such circumstances. The Amended Measures also elaborated the factors to be considered whenassessing the national security risks of the relevant activities, including among others, risks of core data, important data or a large amount ofpersonal information being stolen, leaked, destroyed, and illegally used or exited the country and risks of critical information infrastructure, coredata, important data or a large amount of personal information data being affected, controlled and maliciously used by foreign governments in aforeign listing.Table of Contents70On November 14, 2021, the CAC released the Regulations on the Network Data Security (Draft for Comments), or the Draft Regulations.The Draft Regulations provide that data processors refer to individuals or organizations that autonomously determine the purpose and the mannerof processing data. In accordance with the Draft Regulations, data processors shall apply for a cybersecurity review for the following activities: (i)merger, reorganization or division of Internet platform operators that have acquired a large number of data resources related to national security,economic development or public interests to the extent that affects or may affect national security; (ii) listing abroad of data processors whichprocess over one million users’ personal information; (iii) listing in Hong Kong which affects or may affect national security; or (iv) other dataprocessing activities that affect or may affect national security. Besides, data processors that are listed overseas shall carry out an annual datasecurity assessment. The Draft Regulations remain unclear on whether the relevant requirements will be applicable to companies that have beenlisted in the United States and Hong Kong, such as us. We cannot predict the impact of the Draft Regulations, if any, at this stage, and we willclosely monitor and assess any development in the rule-making process. If the enacted versions of theDraft Regulations mandate clearance ofcybersecurity review and other specific actions to be completed by China-based companies listed on a U.S. stock exchange and Hong KongExchanges, such as us, we face uncertainties as to whether such clearance can be timely obtained, or at all. In addition, if a final version of theDraft Regulations is adopted, we may be subject to review when conducting data processing activities and annual data security assessment and mayface challenges in addressing its requirements and make necessary changes to our internal policies and practices in data processing. Based on theforegoing, our PRC legal counsel does not expect that, as of the date of this annual report, the current applicable PRC laws on cybersecurity wouldhave a material adverse impact on our business.On July 30, 2021, the State Council issued the Regulations on Protection of Critical Information Infrastructure, or the Regulations.Pursuant to the Regulations, critical information infrastructure shall mean the important network facilities or information systems of key industriesor fields such as public communication and information service, energy, transportation, water conservation, finance, public services, e-governmentaffairs and national defense science, and important network facilities or information systems which may endanger national security, people’slivelihood and public interest once there occur damage, malfunctioning or data leakage to them. The Regulations provide that no individual ororganization may carry out any illegal activity of intruding into, interfering with, or sabotaging any critical information infrastructures, or endangerthe security of any critical information infrastructures. The Regulations also require that critical information infrastructure operators shall establisha cybersecurity protection system and accountability system, and that the main responsible person of a critical information infrastructure operatorshall take full responsibility for the security protection of the critical information infrastructures operated by it. In addition, relevant administrationdepartments of each important industry and sector shall be responsible for formulating the rule of critical information infrastructure determinationapplicable to their respective industry or sector, and determine the critical information infrastructure operators in their industry or sector.On July 12, 2021, the MIIT and two other authorities jointly issued the Provisions on the Administration of Security Vulnerabilities ofNetwork Products, or the Provisions. The Provisions state that, no organization or individual may abuse the security vulnerabilities of networkproducts to engage in activities that endanger network security, or to illegally collect, sell, or publish the information on such securityvulnerabilities. Anyone who is aware of the aforesaid offences shall not provide technical support, advertising, payment settlement and otherassistance to the relevant offenders. According to the Provisions, network product providers, network operators, and platforms collecting networkproduct security vulnerabilities shall establish and improve channels for receiving network product security vulnerability information and keepsuch channels available, and retain network product security vulnerability information reception logs for at least six months. The Provisions alsobans provision of undisclosed vulnerabilities to overseas organizations or individuals other than to the product providers.On October 29, 2021, the CAC issued the Measures for Security Assessment of Cross-border Data Transfer (Draft for Comment).According to these measures, in addition to the self-risk assessment requirement for provision of any data outside China, a data processor shallapply to the competent cyberspace department for data security assessment and clearance of outbound data transfer in any of the following events:(i) outbound transfer of personal information and important data collected and generated by an operator of critical information infrastructure; (ii)outbound transfer of important data; (iii) outbound transfer of personal data by a data processor which has processed more than one million users’personal data; (iv) outbound transfer of more than one hundred thousand users’ personal information or more than ten thousand users’ sensitivepersonal information cumulatively; (v) such other circumstances where ex-ante security assessment and evaluation of cross-border data transfer isrequired by the CAC.Table of Contents71On August 20, 2021, the Standing Committee of the National People’s Congress of China promulgated the Personal InformationProtection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect on November1, 2021. The Personal Information Protection Law requires, among others, that (i) the processing of personal information should have a clear andreasonable purpose which should be directly related to the processing purpose and should be conducted in a method that has the minimum impacton personal rights and interests, and (ii) the collection of personal information should be limited to the minimum scope as necessary to achieve theprocessing purpose and avoid the excessive collection of personal information. Personal information processors shall adopt necessary measures tosafeguard the security of the personal information they handle. The offending entities could be ordered to correct, or to suspend or terminate theprovision of services, and face confiscation of illegal income, fines or other penalties.In addition, the State Secrecy Bureau has issued provisions authorizing the blocking of access to any website it deems to be leaking statesecrets or failing to comply with the relevant legislation regarding the protection of state secrets during online information distribution.Specifically, internet companies in the PRC with bulletin boards, chat rooms or similar services must apply for specific approval prior to operatingsuch services.Furthermore, the Provisions on Technological Measures for Internet Security Protection, promulgated by the Ministry of Public Securityand became effective in March 2006, require all ICP operators to keep records of certain information about its users (including user registrationinformation, log-in and log-out time, IP address, content and time of posts by users) for at least 60 days and submit the above information asrequired by laws and regulations. The Decision on Strengthening Network Information Protection, or the Network Information Protection Decision,which was promulgated by the PRC National People’s Congress in December 2012, states that ICP operators must request identity informationfrom users when ICP operators provide information publication services to the users. If ICP operators come across prohibited information, theymust immediately cease the transmission of such information, delete the information, keep relevant records, and report to relevant governmentauthorities.On October 21, 2019, the Supreme People’s Court and the Supreme People’s Procuratorate of the PRC jointly issued the Interpretations onCertain Issues Regarding the Applicable of Law in the Handling of Criminal Case Involving Illegal Use of Information Networks and AssistingCommitting Internet Crimes, which came into effect on November 1, 2019, and further clarifies the meaning of Internet service provider and thesevere situations of the relevant crimes.Regulations on Anti-Monopoly Matters related to Internet Platform CompaniesThe PRC Anti-monopoly Law, which took effect on August 1, 2008, prohibits monopolistic conduct such as entering into monopolyagreements, abusing market dominance and concentration of undertakings that may have the effect of eliminating or restricting competition. OnOctober 23, 2021, the Standing Committee of the National People’s Congress issued a second draft amendment to the amended Anti-MonopolyLaw for public comments, which proposes to increase the fines for illegal concentration of business operators to “no more than ten percent of itspreceding year’s sales revenue if the concentration of business operator has or may have an effect of excluding or limiting competition; or a fine ofup to RMB5 million if the concentration of business operator does not have an effect of excluding or limiting competition.” The draft also proposesfor the relevant authority to investigate transaction where there is evidence that the concentration has or may have the effect of eliminating orrestricting competition, even if such concentration does not reach the filing threshold.Table of Contents72On February 7, 2021, the Anti-monopoly Commission of the State Council officially promulgated the Guidelines to Anti-Monopoly in theField of Internet Platforms, or the Anti-Monopoly Guidelines for Internet Platforms. Pursuant to an official interpretation from the Anti-monopolyCommission of the State Council, the Anti-Monopoly Guidelines for Internet Platforms mainly covers five aspects, including general provisions,monopoly agreements, abusing market dominance, concentration of undertakings, and abusing of administrative powers eliminating or restrictingcompetition. The Anti-Monopoly Guidelines for Internet Platforms prohibits certain monopolistic acts of internet platforms so as to protect marketcompetition and safeguard interests of users and undertakings participating in internet platform economy, including, without limitation, prohibitingplatforms with dominant position from abusing their market dominance (such as discriminating customers in terms of pricing and othertransactional conditions using big data and analytics, coercing counterparties into exclusivity arrangements, using technology means to blockcompetitors’ interface, favorable positioning in search results of goods displays, using bundle services to sell services or products, compulsorycollection of unnecessary user data). In addition, the Anti-Monopoly Guidelines for Internet Platforms also reinforces antitrust merger review forinternet platform related transactions to safeguard market competition. On August 17, 2021, the SMAR issued the Provisions on Prohibition ofUnfair Competition on the Internet (Draft for Comments), which prohibits business operators from using data, algorithms and other technicalmeans to commit traffic hijacking, interference, malicious incompatibility and other improprieties to influence user choices or hinder or damage thenormal operation of network products or services offered by other business operators.Regulations relating to Advertising ServicesThe SAMR is responsible for regulating advertising activities in China. Pursuant to applicable regulations, companies that engage inadvertising activities in China must obtain from the SAMR or its local branches a business license which specifically includes operating anadvertising business within its business scope. Companies conducting advertising activities without such a license may be subject to penalties,including fines, confiscation of illegal revenues and orders to cease advertising operations. The business license of an advertising company is validfor the duration of its existence, unless the license is suspended or revoked due to a violation of any relevant law or regulation.The business scope of the business licenses of Beijing Leju and its subsidiaries includes operating an advertising business, which allowsthem to engage in the advertising business.PRC advertising laws and regulations also set forth certain content requirements for advertisements in China including, among otherthings, prohibitions on false or misleading content, superlative wording, socially destabilizing content or content involving obscenities,superstition, violence, discrimination or infringement of the public interest. Advertisers, advertising agencies, and advertising distributors arerequired by PRC advertising laws and regulations to ensure that the content of the advertisements they prepare or distribute is true and in fullcompliance with applicable law. In providing advertising services, advertising operators and advertising distributors must review the supportingdocuments provided by advertisers for advertisements and verify that the content of the advertisements complies with applicable PRC laws andregulations. Prior to distributing advertisements that are subject to government censorship and approval, advertising distributors are obligated toverify that such censorship has been performed and approval has been obtained. Violation of these regulations may result in penalties, includingfines, confiscation of advertising income, orders to cease dissemination of the advertisements and orders to publish an advertisement correcting themisleading information. In circumstances involving serious violations, the SAMR or its local branches may revoke violators’ licenses. To complywith these laws and regulations, we maintain a task force to review the advertising materials to ensure the content does not violate the relevant lawsand regulations before displaying such advertisements, and we also request relevant advertisers to provide proof of governmental approval if anadvertisement is subject to special government review.The Provisions on the Release of Real Estate Advertisements issued in December 2015 and amended in April 2021 require that real estateadvertisements must be truthful, legal, scientific and accurate, and must not deceive or mislead consumers, and make detailed provisions for thespecific requirements of real estate advertisements by real estate agencies and brokers.Table of Contents73On November 26, 2021, SAMR issued the Measures for the Administration of Internet Advertising (Draft for comment) for publiccomment, which requires that advertisers shall be responsible for the authenticity and legality of the content of Internet advertisements. In addition,the draft requires that operators and publishers of Internet advertisements comply with the following provisions: (i) establish and improve theInternet advertising business to undertake registration, audit, file management system in accordance with relevant state regulations; (ii) review,check and register the advertiser's name, address, effective contact information and other information, record and save the relevant electronic dataof advertising activities, establish registration files and verify and update them regularly. The storage time of relevant files shall not be less thanthree years from the date of termination of advertising release; (iii) check the relevant advertising supporting documents and verify the advertisingcontents. For advertisements with inconsistent contents, no administrative license where required, or lacking other supporting documents, Internetadvertising operators shall not provide design, production and agency services, and Internet advertising publishers shall not publish them; (iv) beequipped with advertising reviewers who are familiar with advertising laws and regulations, and if conditions permit, to set up a special agency tobe responsible for reviewing Internet advertisements; (v) participate in statistical surveys of the advertising industry in accordance with the law, andprovide statistical data in a true, accurate, complete and timely manner.Regulations relating to Real Estate Brokerage BusinessThe principal regulations governing the real estate brokerage business in China include the Law on Administration of the Urban RealEstate issued by the Standing Committee of National People’s Congress in July 1994 and revised in August 2009 and in August 2019, and theAdministrative Measures for Real Estate Brokerage issued in January 2011 and amended in March 2016. Pursuant to these laws, a company mustregister with local offices of the SAMR in each locality where it does business in order to operate real estate brokerage business. In addition, a realestate brokerage company and its branches shall file with the local real estate administrative authority within 30 days after it obtains the businesslicense.The previous Foreign Investment Industrial Guidance Catalogue issued in 2011 classified the real estate agency and brokerage serviceswithin the restricted category for foreign investment. Accordingly, a wholly foreign-owned enterprise in China was required to obtain approvalfrom the MOC or its local counterpart in order to establish or invest in any subsidiary to engage real estate agency and brokerage services. TheNDRC and the MOC issued a new Foreign Investment Industrial Guidance Catalogue, effective April 2015. The new Foreign Investment IndustrialGuidance Catalogue removed the real estate agency and brokerage services from the restricted category. The Foreign Investment IndustrialGuidance Catalogue as amended in June 2017 and the subsequent updates of Special Administrative Measures (Negative List) for ForeignInvestment Access did not cover real estate agency and brokerage services. Accordingly, the establishment of or the investment in a subsidiary toengage in real estate agency and brokerage services is no longer subject to the approval of the MOC or its local counterparts.On July 13, 2021, certain PRC authorities promulgated Notice on the Continuous Rectification and Regulation of the Real Estate MarketOrder, which provides for intensified punishment by local authorities for real estate agencies violating laws and regulations, including warning andinterview, suspension of business for rectification, revocation of business license and qualification certificate, exposure to the public, and referenceto security and judicial authorities for investigation and punishment in the case of criminal offence.We mainly use City Rehouse and its subsidiaries to provide support for our e-commerce business. Each subsidiary of City Rehouse hasobtained and maintained a business license with such business scope, and 42 of our PRC operating entities have completed the filing with thecompetent local real estate administrative authorities. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Failure to obtain the approvals or complete the filings required for our real estate agency and brokerage business in China may limit our abilityto provide real estate agency and brokerage services or establish new PRC operating entities”.Table of Contents74Regulations relating to E-commerceOn August 31, 2018, the Standing Committee of the National People’s Congress promulgated the E-Commerce Law, which becameeffective on January 1, 2019. The E-Commerce Law sets forth a series of requirements on e-commerce platform operators. According to the E-Commerce Law, e-commerce platform operators shall verify and register platform merchants, and cooperate with the market regulatoryadministrative department and tax administrative department to conduct industry and commerce registrations and tax registrations for merchants.The e-commerce platform operators shall also prepare a contingency plan for cybersecurity events and take technological measures and othermeasures to prevent online illegal and criminal activities. The E-Commerce Law also expressly requires platform operators to take necessaryactions to ensure fair dealing on their platforms to safeguard the legitimate rights and interests of consumers, including to prepare platform serviceagreements and transaction information record-keeping and transaction rules, to prominently display such documents on the platform’s website,and to keep such information for no less than three years following the completion of a transaction. To legally handle intellectual propertyinfringement disputes, upon receipt of the notice specifying preliminary evidence for alleged infringement, the platform operators are required totake necessary measures in a timely manner, such as deleting, blocking and disconnecting the hyperlinks, terminating transactions and services, andto forward notices to merchants on its platform. If an e-commerce platform operator fails to take necessary measures when it knows or should haveknown that a merchant on the platform infringes any third-party intellectual property rights, products or services provided by a merchant on itsplatform do not meet the requirements regarding personal or property safety, or any merchant otherwise impairs the lawful rights and interests ofconsumers, the e-commerce platform operator will be held jointly liable with the merchants on its platform.Moreover, the E-Commerce Law imposes a requirement on operators of e-commerce platforms to assist in tax collection with respect toincome generated by sellers from transactions conducted on e-commerce platforms, including among others, submitting to the tax authorityinformation on the identities of sellers on e-commerce platforms and other information relating to tax payment. Failure to comply with therequirement may result in operators of e-commerce platform being subject to fines and, in severe circumstances, suspension of business operationsof e-commerce platforms.Regulations relating to TrademarksBoth the PRC Trademark Law and the Implementation Regulation of the PRC Trademark Law, as currently in effect, provide protection tothe holders of registered trademarks and trade names. The PRC Trademark Office handles trademark registrations and grants a renewable term ofrights of ten years to registered trademarks. In addition, trademark license agreements must be filed with the PRC Trademark Office.After receiving a trademark registration application, the PRC Trademark Office will make a public announcement with respect to theproposed trademark registration application if the relevant trademark passes the preliminary examination. Any person may, within three monthsafter such public announcement, object to such trademark application. The PRC Trademark Office will then decide who is entitled to the trademarkregistration, and its decisions may be appealed to the PRC Trademark Review and Adjudication Board, whose decision may be further appealedthrough judicial proceedings. If no objection is filed within three months after the public announcement period or if the objection has beenoverruled, the PRC Trademark Office will approve the registration and issue a registration certificate, upon which the trademark is registered andwill be effective for a renewable ten-year period, unless otherwise revoked. As of March 31, 2022, we owned or licensed 331 registered trademarksin China, and had 29 trademark applications in various industry categories pending with the China Trademark Office.Table of Contents75Regulations relating to EmploymentUnder the PRC Labor Law, PRC Labor Contract Law and its implementing rules, employers must enter into written labor contracts withfull-time employees. All employers must compensate their employees with wages equal to at least the local minimum wage standards. Employersin China are required to provide employees with welfare schemes covering pension insurance, medical insurance, work-related injury insurance,unemployment insurance, maternity insurance and housing funds. Pursuant to the Reform Plan for Collection and Management System of Nationaland Local Taxes released by General Office of the Communist Party of China and the State Council on July 20, 2018, all social insurancepremiums, such as basic pension insurance premium, basic medical insurance premium, unemployment insurance premium, work-related injuryinsurance premium and maternity insurance premium, shall be collected uniformly by the relevant tax authorities starting from January 1, 2019.Employers in most cases are also required to provide a severance payment to their employees after their employment relationships are terminated.We have caused all of our full-time employees to enter into written labor contracts with us and provide our employees with the proper welfare andemployment benefits.Pursuant to the PRC Labor Contract Law and its amendments, dispatched employees are intended to be a supplementary form ofemployment and shall only apply to provisional, auxiliary or substitutive positions, and the fundamental form should be direct employment byenterprises and organizations that require employees. It is expressly stated that the number of dispatched employees an employer uses may notexceed a “certain percentage” of its total labor force. The Interim Provisions on Labor Dispatch effective March 2014, further set such percentageat 10% and provide a two-year transitional period for compliance with such requirement. Failure to comply with these requirements may result inorders of rectification and imposition of fines. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business—Increases in laborcosts in China may adversely affect our business and our profitability”.Regulations relating to Foreign InvestmentOn March 15, 2019, the PRC National People’s Congress adopted the Foreign Investment Law of the PRC, which became effective onJanuary 1, 2020. Pursuant to the Foreign Investment Law of the PRC, China grants national treatment to foreign invested entities, except for thoseforeign-invested entities that operate in “restricted” or “prohibited” industries prescribed in the “negative list”, which shall be released by orapproved by the State Council.On December 30, 2019, MOC and SAMR jointly promulgated the Measures for Reporting of Foreign Investment Information, whichbecame effective on January 1, 2020. According to the Measures for the Reporting of Foreign Investment Information, where foreign investorscarry out investment activities directly or indirectly within China, foreign investors or foreign-invested enterprises shall report investmentinformation to commerce departments in accordance with these Measures. A foreign investor who establishes a foreign-invested enterprise withinChina shall submit an initial report through the enterprise registration system when undergoing formation registration of the foreign-investedenterprise. In the case of any modification of the information in the initial report, which involves the enterprise’s modification registration(recordation), the foreign-invested enterprise shall submit the modification report through the enterprise registration system when undergoing theenterprise’s modification registration (recordation).On December 19, 2020, the NDRC and the MOC promulgated Measures for Security Review of Foreign Investment, which becameeffective on January 18, 2021. The foreign investment security review mechanism, or the security review mechanism, in charge of organization,coordination and guidance of foreign investment security review is thereunder established. A working mechanism office shall be established underthe NDRC and led by the NDRC and the MOC to undertake routine work on the security review of foreign investment. According to the Measuresfor Security Review of Foreign Investment, before making investment in important cultural products and services, important informationtechnologies and Internet products and services, important financial services, key technologies or any other important field related to nationalsecurity, resulting in the foreign investor’s acquisition of actual control of the enterprise invested in, the foreign investor or relevant parties shallproactively report to the working mechanism office.Table of Contents76Regulations relating to Foreign Exchange Control and AdministrationForeign Exchange AdministrationThe principal regulation governing foreign currency exchange in China is the Regulations of the PRC on Foreign ExchangeAdministration, as amended in August 2008. Under the Regulations of the PRC on Foreign Exchange Administration and other relevant PRCregulations and rules, the Renminbi is convertible into other currencies for the purpose of current account transactions, including the distribution ofdividends, interest payments, trade and service-related foreign exchange transactions. The conversion of the Renminbi into other currencies andremittance of the converted foreign currency outside China for capital account transactions, such as capital injections, loans, repatriation ofinvestments and investments in securities outside China, requires the prior approval from, or registration with, SAFE or its local branches.As an offshore holding company with PRC subsidiaries, Leju may (i) make additional capital contributions to its PRC subsidiaries; (ii)establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries; (iii) make loans to its PRC subsidiaries orconsolidated variable interest entities; or (iv) acquire offshore entities with business operations in China in an offshore transaction. However, mostof these uses are subject to PRC regulations and approvals, such as:●capital contributions to our PRC subsidiaries that operate in the industries that fall within the restricted category for foreign investmentmust be approved by the MOC or its local counterparts;●loans by us to our PRC subsidiaries cannot exceed the statutory limit which is the difference between the amount of total investment andthe amount of registered capital of such subsidiaries as approved by the MOC or its local counterpart or the limit calculated by theapproach set forth in the Notice of Matters Concerning the Macro-Prudential Management of Full-Covered Cross-Border Financingissued by the People’s Bank of China in January 2017, and must be registered with SAFE or its local branches; and●loans by us to our consolidated variable interest entities must be filed with the National Development and Reform Commission and mustalso be registered with SAFE or its local branches.Under SAFE Circular 19, effective June 2015, a foreign-invested enterprise may choose to convert its registered capital from foreigncurrency to Renminbi on a self-discretionary basis, and the Renminbi capital converted can be used for equity investments within China, which willbe regarded as the reinvestment of foreign-invested enterprise. In addition, SAFE Circular 19 prohibits a foreign-invested enterprise from usingRenminbi funds converted from its foreign currency registered capital to provide entrustment loans or repay loans borrowed from nonfinancialenterprises. Violation of these circulars could result in severe penalties, including heavy fines. These circulars may limit our ability to transferfunds to our consolidated variable interest entities and the subsidiaries of our wholly foreign-owned subsidiaries in China, and we may not be ableto convert foreign currency-denominated funds into Renminbi to invest in or acquire any other PRC companies, or establish other consolidatedvariable interest entities in China. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—PRC regulation ofloans and direct investment by offshore holding companies to PRC entities may delay or prevent us from making loans or additional capitalcontributions to our PRC operating subsidiaries”.In November 2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies onForeign Direct Investment, or SAFE Circular 59, as amended in October 2018 and December 2019, which substantially amends and simplifies thethen current foreign exchange procedures. Under SAFE Circular 59, the opening of various special purpose foreign exchange accounts (e.g. pre-establishment expenses account, foreign exchange capital account, guarantee account) no longer requires approval by SAFE. Reinvestment ofRenminbi proceeds by foreign investors in China no longer requires SAFE approval or verification.In May 2013, SAFE promulgated the Circular on Printing and Distributing the Provisions on Foreign Exchange Administration overDomestic Direct Investment by Foreign Investors and the Supporting Documents as amended in December 2019, which specifies that theadministration by SAFE or its local branches over direct investment by foreign investors in China shall be conducted by way of registration.Institutions and individuals shall register with SAFE and/or its local branches for their direct investment in China. Banks shall process foreignexchange business relating to the direct investment in China based on the registration information provided by SAFE and its branches.Table of Contents77In February 2015, SAFE promulgated the Circular of Further Simplifying and Improving the Policies of Foreign Exchange AdministrationApplicable to Direct Investment, or SAFE Circular 13, effective June 2015 and amended in December 2019. Under SAFE Circular 13, the currentforeign exchange procedures will be further simplified, and foreign exchange registrations of direct investment will be handled by banks instead ofSAFE and its branches.In January 2017, SAFE promulgated SAFE Circular 3, which stipulates several capital control measures on the outbound remittance ofprofit from domestic entities to offshore entities, including: (i) under the principle of genuine transaction, banks must check board resolutionsregarding profit distribution, original version of tax filing records and audited financial statements; and (ii) domestic entities must hold income toaccount for previous years’ losses before remitting the profits.On April 10, 2020, SAFE promulgated the Notice of the SAFE on Optimizing Foreign Exchange Administration to Support theDevelopment of Foreign-related Business, or SAFE Circular 8, which provides that under the condition that the use of the funds is genuine andcompliant with current administrative provisions regarding the use of income relating to capital account, enterprises are allowed to use incomeunder capital account such as capital funds, foreign debts and overseas listings for domestic payment, without submission of materials evidencingthe veracity of such payment to the bank prior to each transaction.Foreign Exchange Registration of Offshore Investments by PRC ResidentsSAFE Circular 75 requires PRC residents to register with the relevant local branch of SAFE before establishing or controlling anycompany outside China, referred to as an offshore special purpose company, for the purpose of raising funds from overseas to acquire or exchangethe assets of, or acquiring equity interests in, PRC entities held by such PRC residents and to update such registration in the event of any significantchanges with respect to that offshore company. SAFE promulgated SAFE Circular 37 in July 2014, which replaced SAFE Circular 75. SAFECircular 37 requires PRC residents to register with local branches of SAFE in connection with their direct establishment or indirect control of anoffshore entity, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interests in domesticenterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special purpose vehicle”. The term “control” under SAFE Circular37 is broadly defined as the operation rights, beneficiary rights or decision-making rights acquired by the PRC residents in the offshore specialpurpose vehicles by such means as acquisition, trust, proxy, voting rights, repurchase, convertible bonds or other arrangements. SAFE Circular 37further requires amendment to the registration in the event of any changes with respect to the basic information of the special purpose vehicle, suchas changes in a PRC resident individual shareholder, name or operation period; or any significant changes with respect to the special purposevehicle, such as increase or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event.If the shareholders of the offshore holding company who are PRC residents do not complete their registration with the local SAFE branches, thePRC subsidiaries may be prohibited from distributing their profits and proceeds from any reduction in capital, share transfer or liquidation to theoffshore company, and the offshore company may be restricted in its ability to contribute additional capital to its PRC subsidiaries. Moreover,failure to comply with the SAFE registration and amendment requirements described above could result in liability under PRC law for evasion ofapplicable foreign exchange restrictions.We have requested our beneficial owners who are PRC residents to make the necessary applications, filings and amendments required bySAFE. However, we cannot provide any assurances that all of our beneficial owners who are PRC residents will continue to make, obtain or amendany applicable registrations or approvals required by these SAFE regulations. The failure or inability of our PRC resident beneficial owners tocomply with the registration procedures set forth therein may subject us to fines and legal sanctions, restrict our cross-border investment activities,or limit our ability to contribute additional capital into our PRC subsidiaries, or limit our PRC subsidiaries’ ability to pay dividends or make otherdistributions to our company or otherwise adversely affect our business. Moreover, failure to comply with the SAFE registration requirementscould result in liability under PRC laws for evasion of foreign exchange restrictions.Table of Contents78Foreign Exchange Registration of Employee Stock Incentive PlansIn February 2012, SAFE issued the Stock Option Rules, which replaced the Application Procedures of Foreign Exchange Administrationfor Domestic Individuals Participating in Employee Stock Ownership Plans or Stock Option Plans of Overseas Publicly-Listed Companies issuedby SAFE in March 2007. Under the Stock Option Rules, a PRC entity’s directors, supervisors, senior management officers, other staff orindividuals who have an employment or labor relationship with a PRC entity and are granted stock options by an overseas publicly listed companyare required, through a qualified PRC domestic agent which could be a PRC subsidiary of such overseas publicly listed company, to register withSAFE and complete certain other procedures. Such PRC resident participants must also retain an overseas entrusted institution to handle matters inconnection with their exercise of stock options, purchase and sale of corresponding stocks or interests, and fund transfer. The PRC agent shall,among other things, file on behalf of such PRC resident participants an application with SAFE to conduct the SAFE registration with respect tosuch stock incentive plan and obtain approval for an annual allowance with respect to the purchase of foreign exchange in connection with theexercise or sale of stock options or stock such participants hold. In addition, the PRC agent is required to amend the SAFE registration with respectto the stock incentive plan if there is any material change to the stock incentive plan, the PRC agent or the overseas entrusted institution or othermaterial aspects. Such participating PRC residents’ foreign exchange income received from the sale of stock and dividends distributed by theoverseas publicly-listed company must be fully remitted into a PRC collective foreign currency account opened and managed by the PRC agentbefore distribution to such participants. We and our PRC resident employees who have been granted stock options or other share-based incentivesof our company are subject to the Stock Option Rules as our company has become an overseas listed company upon the completion of initial publicoffering. If we or our PRC resident participants fail to comply with these regulations in the future, we and/or our PRC resident participants may besubject to fines and legal sanctions.Regulations relating to Dividend DistributionsUnder applicable regulations, wholly foreign-owned enterprises in China may pay dividends only out of their accumulated profits, if any,as determined in accordance with PRC accounting standards and regulations. In addition, a wholly foreign-owned enterprise in China is required toset aside at least 10% of its after-tax profit based on PRC accounting standards each year to its general reserves until its cumulative total reservefunds reaches 50% of its registered capital. These reserve funds, however, may not be distributed as cash dividends.Table of Contents79C.Organizational StructureThe following diagram illustrates our corporate structure, including our principal subsidiaries and variable interest entities as of the date ofthis annual report:Note:(1)Beijing Yisheng Leju Information Services Co., Ltd., or Beijing Leju, is a variable interest entity established in China in 2008 and is currently80% owned by Mr. Xudong Zhu and 20% owned by Mr. Yinyu He, and each of Shanghai Leju Hao Fang Information Service Co., Ltd., orLeju Hao Fang and Beijing Jiajujiu E-Commerce Co., Ltd., or Beijing Jiajujiu is a variable interest entity established in China in 2011 and iscurrently 70% owned by Mr. Yinyu He and 30% owned by Mr. Weijie Ma. We effectively control Beijing Leju, Leju Hao Fang and BeijingJiajujiu through contractual arrangements. See more information below in this section. The registered business scope of each of Shanghai YiYue, Leju IT, Shanghai SINA Leju, Shanghai Fangxin and Beijing Maiteng contains the business of development of computer software, whichfalls in the encouraged category for foreign investment in the currently effective Foreign Investment Industrial Guidance Catalogue. Theregistered business scope of each of City Rehouse and all its subsidiaries contains the business of real estate brokerage service, which wasremoved from the restricted category for foreign investment in the Foreign Investment Industrial Guidance Catalogue. Therefore, the businessof real estateTable of Contents80brokerage service now fall in the permitted category for foreign investment under PRC law, along with the other businesses listed in theregistered business scope of each of Shanghai Yi Yue, Leju IT, Shanghai SINA Leju, Shanghai Fangxin, Beijing Maiteng, and City Rehouseand all its subsidiaries, which are not listed in the new Foreign Investment Industrial Guidance Catalogue.PRC laws and regulations currently prohibit foreign investors from holding more than 50% of a foreign-invested telecommunicationsenterprise that provides commercial internet information services, which are one type of value-added telecommunications services. Because of suchrestriction, our internet information services are conducted through consolidated variable interest entities in China, namely Beijing Leju, Leju HaoFang and Beijing Jiajujiu, or the consolidated variable interest entities.We have entered into, through our PRC subsidiaries, Shanghai SINA Leju, Shanghai Yi Yue and Beijing Maiteng, a series of contractualarrangements with Beijing Leju, Leju Hao Fang, Beijing Jiajujiu and their respective shareholders. These contractual arrangements enable us to (i)direct the activities that most significantly affect the economic performance of Beijing Leju, Leju Hao Fang, Beijing Jiajujiu and their subsidiariesand branches; (ii) receive substantially all of the economic benefits from the three consolidated variable interest entities and their subsidiaries inconsideration for the services provided by our PRC subsidiaries; and (iii) have an exclusive option to purchase all or part of the equity interests inthe consolidated variable interest entities, when and to the extent permitted by PRC law, or request any existing shareholder of the consolidatedvariable interest entities to transfer all or part of the equity interest in the consolidated variable interest entities to another PRC person or entitydesignated by us at any time in our discretion.As a result of these contractual arrangements, we, through our PRC subsidiaries, have become the primary beneficiary of these PRCentities and account for them as variable interest entities, and consolidate the financial results of these entities into our financial statements inaccordance with U.S. GAAP. Substantially all of our revenues are derived from our consolidated variable interest entities and we rely on dividendsand service fees paid to us by our PRC subsidiaries and our consolidated variable interest entities in China. Entities apart from our consolidatedvariable interest entities contributed in aggregate 0.1%, 0.1% and 0.1% of our total net revenues in 2019, 2020 and 2021, respectively. Ouroperations not conducted through contractual arrangements with the consolidated variable interest entities primarily consist of outsourcingarrangements business, support services for online advertising business and agency services included with our e-commerce business. In 2019, 2020and 2021, the total amount of service fees that our PRC subsidiaries received from our consolidated variable interest entities under all the serviceagreements between our PRC subsidiaries and consolidated variable interest entities was $4.3 million, $20.1 million and $17.5 million,respectively. As of December 31, 2021, the amount of service fees payable to us by the consolidated variable interest entities was $86.5 million.In November 2020, the contractual arrangements with Beijing Leju, Leju Hao Fang and Beijing Jiajujiu were amended and restated bynew sets of VIE contractual arrangements, more details of which are summarized below.Table of Contents81The following is a summary of the currently effective contractual arrangements relating to the consolidated variable interest entities:Agreements that Provide Us with Effective Control over the consolidated variable interest entitiesExclusive Call Option Agreement. Our wholly owned indirect subsidiary, Shanghai SINA Leju, has entered into an exclusive optionagreement with our variable interest entity, Beijing Leju, and its shareholders. Our wholly owned indirect subsidiary, Shanghai Yi Yue, has enteredinto an exclusive call option agreement with our variable interest entity, Leju Hao Fang, and its shareholders. Our PRC subsidiary, Beijing Maiteng,has entered into an exclusive option agreement with our variable interest entity, Beijing Jiajujiu, and its shareholders. In each case, under theexclusive call option agreement each PRC subsidiary of our Company has the rights to require shareholders of the applicable variable interest entityto transfer any or all their equity interests in the applicable variable interest entity to the respective PRC subsidiary of our Company and/or a thirdparty designated by it, in whole or in part at any time and from time to time, for considerations equivalent to the respectively outstanding loansowed to applicable shareholders of the variable interest entity (or part of the loan amounts in proportion to the equity interests being transferred) or,if applicable, for a nominal price, unless the relevant government authorities or the China laws request that another amount be used as the purchaseprice, in which case the purchase price shall be the lowest amount under such request. Each exclusive call option agreement shall remain effectiveunless terminated in the event that the entire equity interests held by shareholders in the applicable variable interest entity have been transferred tothe applicable PRC subsidiary of our Company or their appointee(s).Loan Agreement. Pursuant to a loan agreement among Shanghai SINA Leju, Mr. Xudong Zhu and Mr. Yinyu He, Shanghai SINA Lejugranted an interest-free loan of RMB8.0 million to Mr. Xudong Zhu and RMB2.0 million to Mr. Yinyu He, respectively, solely for their investmentin Beijing Leju. Pursuant to a loan agreement among Shanghai Yi Yue, Mr. Yinyu He and Mr. Weijie Ma, Shanghai Yi Yue granted an interest-freeloan of RMB10.5 million to Yinyu He and RMB4.5 million to Weijie Ma, respectively, solely for their investment in Leju Hao Fang. Pursuant to aloan agreement among Beijing Maiteng, Mr. Yinyu He and Mr. Weijie Ma, Beijing Maiteng granted an interest-free loan of RMB10.5 million toYinyu He and RMB4.5 million to Weijie Ma, respectively, solely for their investment in Beijing Jiajujiu.The term of each loan commences from the date of the agreement and ends on the date the lender exercises its exclusive call option underthe relevant exclusive call option agreement, or when certain defined termination events occur, such as if the lender sends a written noticedemanding repayment to the borrower, or upon the default of the borrower, whichever is earlier.After the lender exercises his exclusive call option, the borrower may repay the loan by transferring all of its equity interest in the relevantvariable interest entity to the lender, or a person or entity nominated by the lender, and use the proceeds of such transfer as repayment of the loan. Ifthe proceeds of such transfer is equal to or less than the principal of the loan under the relevant loan agreement, the loan is considered interest-free.If the proceeds of such transfer is higher than the principal of the loan under the relevant loan agreement, any surplus is considered interest for theloan under the relevant loan agreement.Powers of Attorney. Our wholly owned indirect subsidiary, Shanghai SINA Leju, has entered into a powers of attorney with our variableinterest entity, Beijing Leju, and its shareholders. Our wholly owned indirect subsidiary, Shanghai Yi Yue, has entered into a powers of attorneywith our variable interest entity, Leju Hao Fang, and its shareholders. Our PRC subsidiary, Beijing Maiteng, has entered into a powers of attorneywith our variable interest entity, Beijing Jiajujiu, and its shareholders.Under each powers of attorney, the shareholders of each variable interest entity irrevocably appointed the applicable PRC subsidiary ofour Company and its designated persons (including but not limited to directors and their successors and liquidators replacing the directors butexcluding those non-independent or who may give rise to conflict of interest) as their attorneys-in-fact to exercise on their behalf, and agreed andundertook not to exercise without such attorneys-in-fact’s prior written consent, any and all right that they have in respect of their equity interests inthe applicable variable interest entity.Each powers of attorney shall remain effective for so long as each shareholder holds equity interest in the applicable variable interestentity.Table of Contents82Equity Pledge Agreement. Our wholly owned indirect subsidiary, Shanghai SINA Leju, has entered into an equity pledge agreement withour variable interest entity, Beijing Leju, and its shareholders. Our wholly owned indirect subsidiary, Shanghai Yi Yue, has entered into an equitypledge agreement with our variable interest entity, Leju Hao Fang, and its shareholders. Our PRC subsidiary, Beijing Maiteng, has entered into anequity pledge agreement with our variable interest entity, Beijing Jiajujiu, and its shareholders. Under each such equity pledge agreement,shareholders of each variable interest entity agreed to pledge all their respective equity interests in the applicable variable interest entity that theyown, including any interest or dividend paid for the shares, to the applicable PRC subsidiary of our Company as a security interest to guarantee theperformance of the contractual obligations and the payment of outstanding debts. The pledge in respect of the applicable variable interest entitytakes effect upon the completion of registration with the relevant administration for industry and commerce and shall remain valid until after all thecontractual obligations of the applicable variable interest entity and its shareholders under the relevant contractual arrangements have been fullyperformed and all the outstanding debts of the applicable variable interest entity and its shareholders under the relevant contractual arrangementshave been fully paid.Upon the occurrence and during the continuance of an event of default (as defined in each equity pledge agreement), each PRC subsidiaryof our Company shall have the right to require the applicable variable interest entity’s shareholders to immediately pay any amount payable by theapplicable variable interest entity under the relevant exclusive business cooperation agreement, repay any loans and pay any other due payments,and each PRC subsidiary of our Company shall have the right to exercise all such rights as a secured party under any applicable China law and theapplicable equity pledge agreement, including without limitations, being paid in priority with the equity interests based on the monetary valuationthat such equity interests are converted into or from the proceeds from auction or sale of the equity interest upon written notice to the shareholdersof the applicable variable interest entity.The registration of each equity pledge agreement as required by the relevant laws and regulations will be completed in accordance withthe terms of the equity pledge agreement and China laws and regulations.Others. Each of the shareholders of variable interest entities has confirmed to the effect that: (i) his spouse does not have the right to claimany interests in the respective variable interest entity (together with any other interests therein) or exert influence on the day-to-day management ofthe respective variable interest entity; and (ii) in the event of his death, incapacity, divorce or any other event which causes his inability to exercisehis rights as a shareholder of the respective variable interest entity, he will take necessary actions to safeguard his interests in the respectivevariable interest entity (together with any other interests therein) and his successors (including his spouse) will not claim any interests in therespective variable interest entity (together with any other interests therein) to the effect that the shareholders’ interests in the respective variableinterest entity shall not be affected.The spouse of each of the shareholders of variable interest entities, where applicable, has signed an undertaking to the effect that (i) therespective shareholder’s interests in the respective variable interest entity (together with any other interests therein) do not fall within the scope ofcommunal properties, and (ii) she has no right to or control over such interests of the respective shareholder and will not have any claim on suchinterests.Agreements that Transfer Economic Benefits of the consolidated variable interest entities to UsExclusive Business Cooperation Agreement. Our wholly owned indirect subsidiary, Shanghai SINA Leju, has entered into an exclusivebusiness cooperation agreement with our variable interest entity, Beijing Leju. Our wholly owned indirect subsidiary, Shanghai Yi Yue, has enteredinto an exclusive business cooperation agreement with our variable interest entity, Leju Hao Fang. Our PRC subsidiary, Beijing Maiteng, hasentered into an exclusive business cooperation agreement with our variable interest entity, Beijing Jiajujiu.Pursuant to each such exclusive business cooperation agreement the applicable PRC subsidiary of our Company provides the applicablevariable interest entity with a series of technical support, consultation and other services, the services fee shall consist of 100% of the totalconsolidated profit of the applicable variable interest entity after the deduction of any accumulated deficit of the consolidated variable interestentities in respect of the preceding financial year(s), operating costs, expenses, taxes and other statutory contributions. Notwithstanding theforegoing, each PRC subsidiary of our Company may adjust the scope and amount of services fees according to China tax law and tax practices,and the applicable variable interest entity will accept such adjustments. The PRC subsidiary of our Company shall calculate the service fee on amonthly basis and issue a corresponding invoice to the applicable variable interest entity. Notwithstanding the payment arrangements in eachexclusive business cooperation agreements, the PRCTable of Contents83subsidiary of our Company may adjust the payment time and payment method, and the applicable variable interest entity will accept any suchadjustment.In addition, absent the prior written consent of each PRC subsidiary of our Company, during the term of the applicable exclusive businesscooperation agreement, with respect to the services subject to the exclusive business cooperation agreement and other matters, the applicablevariable interest entity shall not directly or indirectly accept the same or any similar services provided by any third party and shall not establishcooperation relationships similar to that formed by the applicable exclusive business cooperation agreement with any third party. Each PRCsubsidiary of our Company may appoint other parties, who may enter into certain agreements with the applicable variable interest entity, to providethe applicable variable interest entity with the services under the applicable exclusive business cooperation agreement.Each exclusive business cooperation agreement also provides that the applicable PRC subsidiary of our Company has the exclusiveproprietary rights and interests in any and all intellectual property rights developed or created by the applicable variable interest entity during theperformance of the applicable exclusive business cooperation agreement.Each exclusive business cooperation agreement shall remain effective unless terminated (a) in accordance with the provisions of theapplicable exclusive business cooperation agreement; (b) in writing by the applicable PRC subsidiary of our Company; or (c) renewal of theexpired business period of either the applicable PRC subsidiary of our Company or the applicable variable interest entity is denied by relevantgovernment authorities, at which time the applicable exclusive business cooperation agreement will terminate upon termination of that businessperiod.In the opinion of Fangda Partners, our PRC legal counsel:●The ownership structures of Beijing Leju, Leju Hao Fang and Beijing Jiajujiu described above are in compliance with existing PRC lawsand regulations; and●Each of the contractual arrangements described above, in each case governed by PRC law, is valid and binding and enforceable inaccordance with their respective terms based on currently effective PRC laws and regulations, and do not violate PRC laws or regulationscurrently in effect.However, as advised by Fangda Partners, our PRC legal counsel, there are substantial uncertainties regarding the interpretation andapplication of current or future PRC laws, rules and regulations, and accordingly, there can be no assurance that the PRC regulatory authorities willnot ultimately take a contrary view from that of our PRC legal counsel. We have been further advised by our PRC legal counsel that if the PRCregulatory authorities determine that our contractual arrangements for operating our internet and advertising business in China do not comply withPRC government restrictions on foreign investment in such industries, we could be subject to severe penalties. See “Item 3. Key Information —D.Risk Factors—Risks Related to Our Corporate Structure—If the PRC government finds that the agreements that establish the structure foroperating our advertising services business and real estate online business in China do not comply with PRC governmental restrictions on foreigninvestment in the advertising industry or the internet information service industry, we could be subject to severe penalties.” and “—Our ability toenforce the equity pledge agreements between us and the shareholders of Beijing Leju, Leju Hao Fang or Beijing Jiajujiu may be subject tolimitations based on PRC laws and regulations”. In addition, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business InChina—Substantial uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and how it mayimpact the viability of our current corporate structure, corporate governance and business operations”.D.Property, Plants and EquipmentOur principal executive offices are located at Level G of Building G, Building H and Building J, No.8 Dongfeng South Road, withapproximately 10,853 square meters of office space. As of March 31, 2022, we leased properties with an aggregate gross floor area ofapproximately 21,913 square meters for our 60 local offices across China and at our Hong Kong office. Our leased properties mainly consist ofoffice premises, a portion of which are leased from related parties. We believe our existing leased premises are adequate for our current businessoperations and that additional space can be obtained on commercially reasonable terms to meet our future requirements.Table of Contents84ITEM 4A. UNRESOLVED STAFF COMMENTNot applicable.ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTSYou should read the following discussion and analysis of our financial condition and results of operations in conjunction with ourconsolidated financial statements and the related notes included elsewhere in this annual report on Form 20-F. This discussion may containforward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from thoseanticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information—D. RiskFactors” or in other parts of this annual report on Form 20-F.A.Operating ResultsOverviewWe are a leading O2O real estate services provider in China. We offer real estate e-commerce, online advertising and online listingservices through our online platform, which comprises local websites covering 401 cities and various mobile applications. We integrate our onlineplatform with complementary offline services to facilitate residential property transactions. In addition to our own websites, we also operatevarious real estate and home furnishing websites of SINA.E-Commerce. We offer e-commerce services primarily in connection with new residential property sales. Our O2O services for newresidential properties include selling discount coupons and facilitating online property viewing, physical property visits and pre-sale customersupport. We earn revenue primarily from the sale of discount coupons used for property purchases. Our revenues from e-commerce services in2019, 2020 and 2021 were $547.2 million, $547.9 million and $411.1 million, respectively, representing 79.0%, 76.2% and 77.0%, respectively, ofour total revenues for those periods.Online Advertising. We currently sell advertising primarily on the SINA new residential properties and home furnishing websites, whichare operated by us. In addition, we are the exclusive advertising agent for the SINA home page and non-real estate websites with respect toadvertising sold to advertisers, including real estate developers and home furnishing suppliers. We also sell advertising on our contractor platformwebsite and on various mobile applications. Our revenues from online advertising services in 2019, 2020 and 2021 were $143.8 million, $170.8million and $122.5 million, respectively, representing 20.8%, 23.7% and 22.9%, respectively, of our total revenues for those periods.Listing. We offer fee-based online property listing services to real estate agents and free services to individual property sellers. Wecurrently operate the SINA real estate websites for listings of existing residential properties for sale or lease. Our revenues from listing services in2019, 2020 and 2021 were $1.6 million, $0.8 million and $0.5 million, respectively, representing 0.2%, 0.1% and 0.1%, respectively, of our totalrevenues for those periods.We generated total revenues of $692.6 million, $719.5 million and $534.1 million in 2019, 2020 and 2021, respectively. We incurred netincome of $10.9 million, $21.0 million and net loss of $149.9 million in 2019, 2020 and 2021, respectively.Significant Factors Affecting Our Results of OperationsThe PRC real estate industryOur results of operations have been, and are expected to continue to be, affected by the general performance of China’s real estateindustry. Conditions in China’s real estate industry have a significant impact on each of our business segments, and in particular on our new homebusiness, which relies significantly on the volume of new property launches by property developments and market transaction volume.The COVID-19 pandemic has adversely affected our business operations and financial conditions. See “Item 3. Key Information—D. RiskFactors—Risks Related to Our Business and Industry— The COVID-19 pandemic has had and continues to have a material adverse impact on ourbusiness, operating results and financial condition.”Table of Contents85The following factors typically have a significant impact on China’s real estate industry:●Economic growth, speed of urbanization and demand for residential and commercial properties in China. China’s economic growth hasbeen primarily concentrated in China’s urban areas, and economic growth, higher standards of living, population growth and urbanizationare primary drivers of demand for the purchase or rental of residential properties. Because we focus on China’s urban areas, China’seconomic growth and urbanization are important to our operations. The PRC property industry is dependent on the overall economicgrowth in China and the associated demand for residential properties.●Government policies. The PRC government exercises considerable direct and indirect influence over the real estate industry through itspolicies and other economic measures. The PRC government regulates real estate purchases and taxation associated with real estatetransactions. For greater detail see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business—Our business issusceptible to fluctuations in China’s real estate industry, which may materially and adversely affect our results of operations” and “Item3. Key Information—D. Risk Factors—Risks Related to Our Business—Our business may be materially and adversely affected bygovernment measures aimed at China’s real estate industry”. The imposition of new policies, laws and regulations, or changes to currentpolices, laws and regulations, could have a material impact on the real estate market in China, which would affect our business, financialcondition and results of operations.●Availability and cost of credit. The availability and cost of credit have a substantial effect on customers’ ability to purchase properties andthe prices they can afford to pay. This impacts the number of properties that developers are able to market and sell, which is a significantfactor affecting our results of operations. The PRC government regulates the proportion of the purchase price of a property that may befinanced with credit and the price of credit is generally a function of benchmark interest rates. To the extent that fluctuations in interestrates or regulatory changes impact the availability and cost of financing for property purchases, conditions in the real estate industry, andour results of operations, would be affected.●Supply of new residential real estate projects. The growth of the PRC real estate industry depends largely on the launch of new residentialreal estate projects at affordable prices. Factors such as the overall economy, competition and government land policies can affect theprice and availability of new projects. The PRC government and relevant local authorities control various aspects of new projects,including the amount and cost of land for development, each of which affects the supply of new developments and our results ofoperations.The PRC internet industryWe are an internet company and a majority of our revenue is generated from our e-commerce and online advertising services provided onour websites. Therefore, our results of operations are heavily dependent on the continued development of China’s internet industry. The internet hasemerged as an increasingly attractive and cost-effective advertising channel in China. However, the internet industry in China is heavily regulated.PRC laws, rules and regulations cover virtually every aspect of the internet industry, including entry into the industry, the scope of permissiblebusiness activities and foreign investment. Furthermore, the PRC government levies business taxes, value-added taxes, surcharges and culturalconstruction fees on advertising-related sales in China, such as sales of our e-commerce, online advertising, listing and other value-added services.In addition, because one of our PRC subsidiaries currently qualifies as “high and new technology enterprises”, it enjoys favorable statutory tax ratefrom the relevant PRC tax authorities or under local governmental policies. The imposition of new laws and regulations, or changes to current lawsand regulations, could have a material impact on our business, financial condition and results of operations.Our ability to innovate and market acceptance of our servicesWe operate in a competitive industry and the extent to which we are able to provide innovative e-commerce and advertising services thatare attractive to developers and prospective property purchasers has a material effect on our results of operations. For example, we pioneered e-commerce services in China’s real estate market in April 2011 by offering online auctions as a promotional tool for our partner developers. In early2012, we introduced property price discount coupons as a means of generating buyers for our partner developers in conjunction with onlineadvertising and offline customer origination. In 2015 and 2016, we continually upgraded the site visit experience of prospective propertypurchasers by launching new services including site visits through private car or virtual reality technology. In December 2016 we launched newadvertising products based on cross-utilizing databases we and our strategic partners have, allowing for more accurate targeting of potential buyers.In 2017, we introduced our new marketing product, Zai Xian Xuan Fang, to simplify the transaction process. During this period, our new suite ofbig data-empowered advertisingTable of Contents86products became increasingly popular among our developer clients, and our mobile marketing strategy has started to yield positive results. Ourresults of operations will continue to be significantly affected by the extent to which our evolving e-commerce and advertising services, includingany future innovations that we may introduce, achieve success in the market.Our ability to maintain and expand our online platformConsumers are able to access our services through various websites and mobile applications, our telephone call center and at propertyshowrooms and other physical locations. Our internet presence includes local websites across China that we either operate directly or outsource tolocal outsourcing partners. We operate a variety of websites pursuant to our arrangements with SINA. Since many of our customers in our newhome business are one-time property buyers, we depend on our online platform as a key driver for bringing in new business. The costs ofmaintaining and expanding our online platform in order to continue to reach a broad base of customers, and our ability to maintain our relationshipswith SINA, has a significant effect on our results of operations.Our ability to compete effectivelyWe face competition in each of our main business activities. We compete with other e-commerce providers for market share in keymarkets, relationships with developers and for the acquisition of web traffic. We compete for talent with other online businesses and to a lesserextent with traditional businesses. Our industry has become increasingly competitive, and such competition may continue to intensify in futureperiods. As the barriers to entry for establishing internet-based businesses are typically low, it is possible for new entrants to emerge and rapidlyscale up their operations. We expect additional companies to enter the online real estate and home-related internet service industry in China and awider range of online services in this area to be introduced.Our ability to expand into new geographic areas in ChinaA significant portion of our revenues is concentrated in China’s major urban centers. We expect them to continue to represent a significantportion of our revenues in the near term. We also may expand into new geographic areas and sectors and increase our market share in areas andsectors where we currently operate. As of December 31, 2021, we had established real estate-related content, search services, marketing and listingcoverage of 401 cities across China. Our ability to succeed in newly penetrated cities and cities where we intend to increase our presence will havea substantial impact on our results of operations, and we may incur significant additional operating expenses, including hiring new sales and otherpersonnel, in order to expand our operations.Selected Statement of Operations ItemsRevenuesE-commerce. We offer individual property buyers discount coupons that enable them to purchase specified properties from real estatedevelopers at discounts greater than the face value of the fees charged by us. Discount coupons are collected initially upfront from the propertybuyers and are refundable at any time before they are used to purchase the specified properties. As such, these fees are recorded as advance fromcustomers in our consolidated balance sheets. In this context, we determine our customers to be individual property buyers and have identified onesingle performance obligation to be the sale of discount coupons. We determine the sale of discount coupons to be satisfied at a point in time onlywhen confirmation letters are obtained from our customers or developers that prove the use of the coupons. The transaction price is the discountcoupon fees charged by us which is fixed in the contract with individual property buyers.Online advertising. In respect of the online advertising services, we mainly provide comprehensive advertisement placement services to the advertisers (i.e., property developers) through a packaged online cross-media and cross-platform product portfolio, including those owned by us and other independent outlets. We consider we act as principal in this arrangement when we are a contracting party to our advertisers and are primarily responsible for delivering the specified service to the advertisers. We control the specified service before that service is transferred to an advertiser, because (i) we have the discretion to decide which media outlets to use and what type of the advertisements to be placed, (ii) we are subject to certain risk of loss to the extent that the cost paid to the media outlets, which is charged to us based on a number of methodology, including viewership (CPM) or click (CPC) or others, cannot be compensated by the total consideration obtained from the advertisers, and (iii) we have the discretion to determine the fee charged to the advertisers, which affects our margin as the costs incurred might vary. Therefore we report revenue earned from the advertisers and costs paid to media outlets related to these transactions on a gross basis.Table of Contents87In addition, we consider we act as an agent for those arrangements that we only earn agreed rebates from certain media outlets and recognize such rebates as revenue on a net basis. Media outlets grant us rebates in the form of prepayments for the media outlets’ services or cash, mainly based on the gross spending of the advertisers. In some circumstances, we will share with our advertisers certain amount of the rebates earned from the media outlets, which is accounted for as a reduction of the rebates, and we recognize such net amount of rebates as revenue.Listing. Listing services entitle real estate brokers to post and make changes to information for properties in a particular area on thewebsite for a specified period of time, in exchange for a fixed fee.In this context, we determine our customers to be real estate brokers and have identified a single performance obligation that is recognizedover time on a straight-line basis over the contract period of display and when collection is probable. The transaction price is the fixed fee outlinedin the contract. No rebates or discounts are given to the real estate brokers.Cost of revenuesCost of revenue consists of costs associated with the production of websites, which includes fees paid to third parties for internetconnection, content and services, editorial personnel related costs, amortization of intangible assets, depreciation associated with websiteproduction equipment and fees paid to media outlets for advertising resources.Selling, general and administrative expensesSelling, general and administrative expenses comprise marketing expenses, compensation and benefits for personnel other than editorialpersonnel, expenses of third-party professional services, rental payments relating to office and administrative functions and depreciation ofproperty and equipment used in our corporate offices and other administrative expenses. Our selling, general and administrative expenses alsoinclude amortization of intangible assets that do not relate to internet content, including our license agreement with SINA. Selling general andadministrative expenses also include bad debt expenses. Bad debt can result from developer customers not paying amounts owing to us for servicesrendered and in cases where third parties to whom we outsource certain websites fail to pay fixed fees owed to us.Marketing and advertising expenses consist primarily of targeted online and offline marketing costs for promoting our e-commerceprojects and our own brand building, such as Leju property visit, sponsored marketing campaigns, online or print advertising, public relations andsponsored events. We expense all marketing advertising costs as incurred and record these costs within “Selling, general and administrativeexpenses” on the consolidated statements of operations when incurred. Our direct marketing activities are intended to attract subscribers for onlineadvertising and potential property buyers to purchase the discount coupon.Share-based compensation expensesIn November 2013, we adopted a share incentive plan, or the Leju Plan, which allows us to offer a variety of share-based incentive awardsto employees, officers, directors and individual consultants who render services to us. The plan permits the grant of three types of awards: options,restricted shares and restricted share units. The maximum number of shares that may be issued pursuant to all awards under the Leju Plan, or theLeju Award Pool, is 10,434,783 ordinary shares initially, and shall be increased automatically by 5% of the then total outstanding shares on an as-converted fully diluted basis on each of the third, sixth and ninth anniversaries of the effective date of the Leju Plan. On December 1, 2016 the LejuAward Pool was automatically increased by 7,553,422 ordinary shares. On December 1, 2019, the Leju Award Pool was automatically increased by7,833,224 ordinary shares. Accordingly, the size of the Leju Award Pool is currently 25,821,429 ordinary shares.Pursuant to the Leju Plan, we granted (i) options to certain of our employees for the purchase of 501,000 ordinary shares at an exerciseprice of $9.68 per share, on April 28, 2015, (ii) options to certain of our employees for the purchase of 30,000 ordinary shares at an exercise priceof $7.00 per share, on August 7, 2015, (iii) options to certain of our employees and certain of E-House’s employees for the purchase of 1,986,000ordinary shares at an exercise price of $5.54 per share, on December 14, 2015. The options expire ten years from the date of grant and vest ratablyat each anniversary of the grant date over a period of three years.Table of Contents88On May 28, 2019, we granted 250,000 restricted shares to our employees. The restricted shares vest ratably at each grant date anniversaryover a period of three years.On June 17, 2020, we granted 800,000 restricted shares to our senior management team. The restricted shares vest ratably at each vestingcommencement date anniversary over a period of three years.On April 23, 2021, we granted to certain of our employees and directors options to purchase an aggregate of 3,667,000 ordinary shares atthe exercise price of $1.00 per share and 600,000 ordinary shares at the exercise price of $0.10 per share, pursuant to the Leju Plan. The optionsexpire ten years from the date of grant and vest over a period of three years.As of March 31, 2022, the aggregate number of our ordinary shares underlying outstanding options granted under the Leju Plan is15,550,652, and 616,668 restricted shares granted under the Leju Plan are outstanding.In 2021, we recorded compensation expenses of $1.7 million for the options and restricted shares granted to our employees and directorsunder the Leju Plan, and nil in dividends to E-House for the options and restricted shares granted to employees and directors of E-House under theLeju Plan. As of December 31, 2021, we had $4.2 million of total unrecognized compensation expenses related to unvested share options andrestricted shares granted under the Leju Plan, which we expect to be recognize over a weighted-average period of 2.30 years.In 2015, our subsidiary, Omnigold adopted a share incentive plan, or the Omnigold Plan, pursuant to which (i) the maximum number ofshares of Omnigold available for issuance pursuant to all awards under the Omnigold Plan, or the Omnigold Award Pool, is initially 5,000,000 asof the date on which the Omnigold Plan was approved and adopted by the board of directors of Omnigold, or the Omnigold Plan Effective Date,and (ii) the Omnigold Award Pool is increased automatically by 5% of the then total issued and outstanding shares of Omnigold on an as-convertedfully diluted basis on each of the third, sixth and ninth anniversary of the Omnigold Plan Effective Date.In 2021, no compensation expense was recorded for the options granted to our employees and directors under the Omnigold Plan. As ofDecember 31, 2021, there was no unrecognized compensation expense given that all share options granted under the Omnigold Plan had beenvested.Other operating incomeOur other operating income primarily relates to cash subsidies received by our subsidiaries in China from local governments to encourageus to operate in certain local districts.Interest income, netWe earn interest income primarily from bank deposits and interest income recognized relating to the financing component of thetransaction price of the services delivered.Other income, netOther income, net relates to realized gain on marketable securities, unrealized gain on marketable securities, foreign exchange loss/(gain),income from sales of properties held for sales and reimbursement from the depositary for our expenses incurred in connection with theestablishment and maintenance of the ADS program.Our reporting currency is the U.S. dollar, while certain of our subsidiaries have functional currencies other than the U.S. dollar, such as theRenminbi and the Hong Kong dollar. Transactions in other currencies are recorded at the rates of exchange prevailing when the transactions occur.Transaction gains and losses are recognized in the consolidated statements of operations.Income taxesWe are incorporated in the Cayman Islands as an exempted company. Under the current law of the Cayman Islands, we are not subject toincome or capital gains tax in the Cayman Islands. Our subsidiaries in the British Virgin Islands are not subject toTable of Contents89income or capital gains tax in the British Virgin Islands. Our subsidiaries in Hong Kong are subject to a profit tax at the rate of 16.5% on assessableprofit determined under relevant Hong Kong tax regulations.The EIT Law applies a uniform 25% enterprise income tax rate to both foreign-invested enterprises and domestic enterprises, exceptwhere a special preferential rate applies. In addition, the EIT Law also provides a five-year transitional period starting from its effective date forthose enterprises that were established before March 16, 2007, the date of promulgation of the EIT Law, and that were entitled to preferentialincome tax rates under the then effective tax laws or regulations.Shanghai SINA Leju was designated a “high and new technology enterprise” entitled to a favorable statutory tax rate of 15% from 2013 through 2017. Shanghai SINA Leju renewed its qualification of “high and new technology enterprise” in 2018 and 2021, and is entitled to enjoy a favorable statutory tax rate of 15% from 2018 through 2023. We have a tax benefit due to losses incurred in past years. Under PRC tax law we are permitted to carry forward losses for up to ten yearsfor entities qualified as a “high and new technology enterprise” and up to five years for entities that do not qualify as a “high and new technologyenterprise”. We may have a tax benefit for periods for which we were profitable on a consolidated basis to the extent our consolidated entities thatincurred losses during the period were subject to income tax at a higher effective tax rate as compared with consolidated entities that earned profitsduring the period.Under the EIT Law, dividends payable to a non-PRC resident enterprise from our PRC subsidiaries are subject to a withholding tax whichmay be as high as 20%, although under the detailed implementation rules of the EIT Law promulgated by the PRC authorities the effectivewithholding tax is currently 10%. Dividends of PRC subsidiaries that are directly held by Hong Kong entities may benefit from a reducedwithholding tax rate of 5% pursuant to the Arrangement between Mainland China and Hong Kong for the Avoidance of Double Taxation andPrevention of Fiscal Evasion with respect to Taxes on Income, subject to the approval from the relevant local branch of the SAT in accordance withthe Administrative Measures on Tax Treaty Treatment of Nonresidents (Trial) and other relevant tax rules. Our Hong Kong subsidiaries have notsought approval for such preferential withholding tax rate, given that no dividends have been paid by their respective PRC subsidiaries. Dividendsfrom our Hong Kong subsidiaries are exempt from withholding tax. Dividend payments are not subject to withholding tax in the British VirginIslands or the Cayman Islands.Under the EIT Law, enterprises that are established under the laws of foreign countries or regions and whose “de facto managementbodies” are located within the PRC territory are considered PRC resident enterprises, and will be subject to the PRC enterprise income tax at therate of 25% on their worldwide income. Under the implementation rules of the EIT Law, “de facto management bodies” are defined as the bodiesthat have material and overall management and control over the manufacturing and business operations, personnel and human resources, financesand treasury, and acquisition and disposition of properties and other assets of an enterprise. It remains unclear how the PRC tax authorities willinterpret such a broad definition. We cannot assure you that we will not be deemed to be a PRC resident enterprise under the EIT Law and besubject to the PRC enterprise income tax at the rate of 25% on our worldwide income. See “Item 3. Key Information—D. Risk Factors —RisksRelated to Doing Business in China—Dividends payable to us by our PRC subsidiaries may be subject to PRC withholding taxes or we may besubject to PRC taxation on our worldwide income, and dividends distributed to our investors may be subject to PRC withholding taxes under theEIT Law and our investors may be subject to PRC withholding tax on the transfer of our ordinary shares or ADSs”.Income/(loss) from equity in affiliatesAffiliate companies are entities over which we have significant influence but do not control. Investment in affiliates is accounted for usingthe equity method of accounting. Under this method, our share of the post-acquisition profits or loss of affiliated companies is recognized asincome/(loss) from equity in affiliates in the income statement.Net income (loss) attributable to non-controlling interestsNet income attributable to non-controlling interest relates to the minority interest in non-wholly-owned subsidiaries that we consolidate.Table of Contents90Results of OperationsThe following table sets forth a summary of our consolidated results of operations for the periods indicated. This information should beread together with our consolidated financial statements and related notes included elsewhere in this annual report. The operating results in anyperiod are not necessarily indicative of the results that may be expected for any future period.Year Ended December 31, 2019 2020 2021 (in thousands of $, except share and per share data)Revenues: E-commerce 547,184 547,895 411,097Online advertising 143,779 170,783 122,522Listing 1,642 848 498Total net revenues 692,605 719,526 534,117Cost of revenues (68,298) (73,762) (55,801)Selling, general and administrative expenses (607,165) (622,026) (645,623)Other operating income 598 381 560Income (loss) from operations 17,740 24,119 (166,747)Interest income, net 152 7,268 3,130Other income (loss), net 1,979 300 209Income (loss) before income taxes and loss from equity in affiliates 19,871 31,687 (163,408)Income tax (expenses) benefits (8,990) (10,665) 13,498Income (loss) before loss from equity in affiliates 10,881 21,022 (149,910)Loss from equity in affiliates (9) (24) (14)Net income (loss) 10,872 20,998 (149,924)Less: Net income (loss) attributable to non-controlling interest (650) 1,696 1,010Net income (loss) attributable to Leju Holdings Limited shareholders 11,522 19,302 (150,934)Income (loss) per share: Basic 0.08 0.14 (1.10)Diluted 0.08 0.14 (1.10)Weighted average numbers of shares used in computation: Basic 135,770,793 136,070,785 136,652,162Diluted 135,811,751 137,564,567 136,652,162Year Ended December 31, 2021 Compared to Year Ended December 31, 2020Total revenues. Total revenues decreased by 26% to $534.1 million in 2021 from $719.5 million in 2020, primarily due to a decrease inrevenues from e-commerce services and online advertising services. E-commerce revenues decreased by 25% to $411.1 million in 2021 from$547.9 million in 2020, primarily due to a decrease in the number of discount coupons redeemed. We sold a total of 162,196 discount coupons in2021, 138,230 of which were redeemed. Online advertising revenues decreased by 28% to $122.5 million in 2021 from $170.8 million in 2020,primarily due to a decrease in property developers’ demand for online advertising. Listing revenues decreased by 41% to $0.5 million in 2021 from$0.8 million in 2020, primarily due to a decrease in secondary real estate brokers’ demand.Cost of revenues. Cost of revenues decreased by 24% to $55.8 million in 2021 from $73.8 million in 2020, primarily due to decreased costof advertising resources purchased from media platforms.Selling, general and administrative expenses. Selling, general and administrative expenses increased by 4% to $645.6 million in 2021from $622.0 million in 2020, primarily due to bad debt provision which increased by $106.4 million compared to 2020, partially offset by thedecreased marketing expenses related to the Company's e-commerce business. The bad debt provision recorded in 2021 was mainly attributable tothe recognition of additional loss allowance on expected credit loss of our outstanding online advertising related receivables from some customers,whose credit quality has worsened.Table of Contents91Other operating income. Other operating income was $0.6 million in 2021, compared to $0.4 million in 2020, due to increased cashsubsidies received from local governments.Income(loss) from operations. As a result of the foregoing, we generated $166.7 million of loss from operations in 2021, compared toincome from operations of $24.1 million in 2020.Interest income, net. Interest income was $3.1 million in 2021, compared to $7.3 million in 2020, mainly due to the decreased interestincome recognized relating to the financing component of the transaction price of the services delivered.Other income, net. We had other net income of $0.2 million in 2021, compared to $0.3 million in 2020.Income tax benefits (expenses). Income tax benefits were $13.5 million in 2021, compared to Income tax expense of $10.7 million in2020, due to the loss before taxes and equity in affiliates of $163.4 million in 2021.Net income (loss). We generated net loss of $149.9 million in 2021, compared to net income of $21.0 million in 2020.Year Ended December 31, 2020 Compared to Year Ended December 31, 2019Total revenues. Total revenues increased 4% to $719.5 million in 2020 from $692.6 million in 2019, primarily due to an increase inrevenues from online advertising services. Online advertising revenues increased 19% to $170.8 million in 2020 from $143.8 million in 2019,primarily due to an increase in property developers’ demand for online advertising. E-commerce revenues slightly increased to $547.9 million in2020 from $547.2 million in 2019, primarily due to an increase in the number of discount coupons redeemed, partially offset by a decrease in theaverage price per discount coupon redeemed. We sold a total of 243,836 discount coupons in 2020, 192,716 of which were redeemed. Listingrevenues decreased 48% to $0.8 million in 2020 from $1.6 million in 2019, primarily due to a decrease in demand from secondary real estatebrokers’ demand.Cost of revenues. Cost of revenues increased 8% to $73.8 million in 2020 from $68.3 million in 2019, primarily due to increased cost ofadvertising resources purchased from media platforms related to our online advertising business.Selling, general and administrative expenses. Selling, general and administrative expenses increased 2% to $622.0 million in 2020 from$607.2 million in 2019, primarily due to increased advertising expenses relating to promotion activities for 2020, partially offset by decreased laborcost.Other operating income. Other operating income was $0.4 million in 2020, compared to $0.6 million in 2019, due to decreased cashsubsidies received from local governments.Income from operations. As a result of the foregoing, we generated $24.1 million of income from operations in 2020, compared to $17.7million in 2019.Interest income, net. Net interest income was $7.3 million in 2020, compared to $0.2 million in 2019, mainly due to the increased interestincome recognized relating to the financing component of the transaction price of the services delivered and the increased cash in the bank.Other income, net. We had other net income of $0.3 million in 2020, compared to $2.0 million in 2019, primarily due to $0.8 million offoreign exchange loss recognized in 2020 while $0.4 million of foreign exchange gain recognized in 2019.Income tax expenses. Income tax expenses were $10.7 million in 2020, compared to $9.0 million in 2019, due to the increase in theincome before taxes and equity in affiliates.Net income. We generated net income of $21.0 million in 2020, compared to $10.9 million in 2019.Table of Contents92Critical Accounting PoliciesWe prepare our financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions. Wecontinually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and variousother assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financialreporting process, actual results could differ from our expectations as a result of changes in our estimates.An accounting policy is considered critical if it requires an accounting estimate to be made based on assumptions about matters that arehighly uncertain at the time such estimate is made and if different accounting estimates that reasonably could have been used, or changes in theaccounting estimates that are reasonably likely to occur, could materially impact the consolidated financial statements. We believe that thefollowing accounting policies involve a higher degree of judgment and complexity in their application and require us to make significantaccounting estimates. The following descriptions of critical accounting policies, judgments and estimates should be read in conjunction with ourconsolidated financial statements and other disclosures included in this annual report.Revenue RecognitionWe generate real estate online revenues principally from e-commerce, online advertising, and listing services and enter into separatecontracts with its customers under each revenue stream. Revenues are recorded, after considering reductions by estimates for refund allowancesand sales related taxes.We have adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and all subsequent ASUs that modified ASC 606 onJanuary 1, 2018 and have elected to apply it retrospectively for the year ended December 31, 2018.Table of Contents93The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services tocustomers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achievethat core principle, we apply the following steps:●Step 1: Identify the contract(s) with a customer●Step 2: Identify the performance obligations in the contract●Step 3: Determine the transaction price●Step 4: Allocate the transaction price to the performance obligations in the contract●Step 5: Recognize revenue when (or as) the entity satisfies a performance obligationE-commerceWe offer individual property buyers discount coupons that enable them to purchase specified properties from real estate developers atdiscounts greater than the face value of the fees charged by us. Discount coupons are collected initially upfront from the property buyers and arerefundable at any time before they are used to purchase the specified properties. As such, these fees are recorded as advance from customers in ourconsolidated balance sheets. In this context, we determine our customers to be individual property buyers and have identified one singleperformance obligation to be the sale of discount coupons. We determine the sale of discount coupons to be satisfied at a point in time only whenconfirmation letters are obtained from our customers or developers that prove the use of the coupons. The transaction price is the discount couponfees charged by us which is fixed in the contract with individual property buyers.Online advertisingIn respect of the online advertising services, we mainly provide comprehensive advertisement placement services to the advertisers (i.e.,property developers) through a packaged online cross-media and cross-platform product portfolio, including those owned by us and otherindependent outlets.Our management consider we act as principal in this arrangement when we are a contracting party to our advertisers and our primarily responsible for delivering the specified service to the advertisers. We control the specified service before that service is transferred to an advertiser, because (i) we have the discretion to decide which media outlets to use and what type of the advertisements to be placed; (ii) we are subject to certain risk of loss to the extent that the cost paid to the media outlets, which is charged to us based on a number of methodology, including viewership (CPM) or click (CPC) or others, cannot be compensated by the total consideration obtained from the advertisers; and (iii)we have the discretion to determine the fee charged to the advertisers, which affects our margin as the costs incurred might vary. Therefore, we report revenue earned from the advertisers and costs paid to media outlets related to these transactions on a gross basis.In addition, we consider we act as an agent for those arrangements that we only earn agreed rebates from certain media outlets and recognize such rebates as revenue on a net basis. Media outlets grant us rebates in the form of prepayments for the media outlets’ services or cash, mainly based on the gross spending of the advertisers. In some circumstances, we will share with its advertisers certain amount of the rebates earned from the media outlets which is accounted for as a reduction of the rebates, and we recognize such net amount of rebates as revenue.ListingListing services entitle real estate brokers to post and make changes to information for properties in a particular area on the website for aspecified period of time, in exchange for a fixed fee.Table of Contents94In this context, we determine our customers to be real estate brokers and have identified a single performance obligation that is recognizedover time on a straight-line basis over the contract period of display and when collection is probable. The transaction price is the fixed fee outlinedin the contract. No rebates are given to the real estate brokers.Contract balancesWe do not have unconditional right to the consideration for advertising or listing services until all promises have been fulfilled andtherefore initially records a contract asset when recognizing revenue. Upon fulfillment of all advertising or listing services, contract assets will bereclassified as a receivable. Contract assets recognized were $1.9 million and $1.4 million for the years ended December 31, 2020 and 2021,respectively.Disaggregation of revenueIn accordance with ASC 606-10-50, we believe the disaggregation of revenue from contracts with customers by e-commerce, onlineadvertising and listing to sufficiently achieve the disclosure objective of depicting how the nature, amount, timing, and uncertainty of revenue andcash flows are affected by economic factors.Practical Expedients and ExemptionsFor our contracts that have an original duration of one year or less, we use the practical expedient applicable to such contracts and havenot disclosed the transaction prices for the remaining performance obligations as of the end of the reporting period or when we expect to recognizethis revenue.Financing ComponentIn determining the transaction price, we adjust the promised amount of consideration to determine the cash selling price of the service tobe delivered and reflect the time value of money if the contract has a significant financing component. As a result of the adjustment to thetransaction price, we recognized interest income amounting to $0.3 million, $4.5 million and nil for the years ended December 31,2019, 2020 and2021, respectively.Variable Interest EntitiesPRC laws and regulations currently restrict foreign entities without the required operating track record from investing in companies thatprovide internet content and advertising services in China. Since we have not been involved in internet information services or advertising servicesoutside China to satisfy the track record requirement, to comply with the PRC laws and regulations, we conduct substantially all of our onlineadvertising and e-commerce business through Beijing Leju, Leju Hao Fang and Beijing Jiajujiu, our consolidated variable interest entities, and theirsubsidiaries and branches. We have, through three of our subsidiaries in China, entered into contractual arrangements with Beijing Leju, Leju HaoFang, Beijing Jiajujiu and their shareholders such that Beijing Leju, Leju Hao Fang and Beijing Jiajujiu are considered variable interest entities forwhich we are considered their primary beneficiary. We believe we have substantive kick-out rights pursuant to the terms of the exclusive calloption agreements, which give us the power to control the shareholders of these consolidated variable interest entities. More specifically, webelieve that the terms of the exclusive call option agreements are currently exercisable and legally enforceable under PRC laws and regulations. Wealso believe that the minimum amount of consideration permitted by the applicable PRC law to exercise the option does not represent a financialbarrier or disincentive for us to exercise our rights under the exclusive call option agreements. Under our shareholder voting rights proxyagreements with the consolidated variable interest entities and their shareholders, each of the shareholders of the consolidated variable interestentities irrevocably grants any person designated by us the power to exercise all voting rights to which he is entitled to as shareholder of theconsolidated variable interest entities at that time. Therefore, we believe this gives us the power to direct the activities that most significantlyimpact the consolidated variable interest entities’ economic performance. We believe that our ability to exercise effective control, together with theexclusive technical support agreements and the equity pledge agreements, give us the rights to receive substantially all of the economic benefitsfrom the consolidated variable interest entities in consideration for the services provided by our subsidiaries in China. Accordingly, as the primarybeneficiary of the consolidated variable interest entities and in accordance with U.S. GAAP, we consolidate their financial results and assets andliabilities in our consolidated financial statements.Table of Contents95In 2019, 2020 and 2021, entities apart from our consolidated variable interest entities contributed in aggregate 0.1%, 0.1% and 0.1%,respectively, of our total net revenues. Our operations not conducted through contractual arrangements with our consolidated variable interestentities primarily consist of outsourcing arrangements business, support services for online advertising business and agency services included withour e-commerce business. The following tables set forth our revenues, cost of revenues and net income for the consolidated variable interestentities and other group entities which are not our consolidated variable interest entities for the years indicated, after elimination of inter-companytransactions:2021 Variable interest entities Other entities Total (in thousands of $)Total revenues 533,619 498 534,117Cost of revenues (47,730) (8,071) (55,801)Net income (loss) (81,530) (68,394) (149,924)2020 Variable interest entities Other entities Total (in thousands of $)Total revenues 718,861 665 719,526Cost of revenues (65,613) (8,149) (73,762)Net income (loss) 14,278 6,720 20,9982019 Variable interest entities Other entities Total(in thousands of $)Total revenues 691,566 1,039 692,605Cost of revenues (59,823) (8,475) (68,298)Net income (loss) (2,844) 13,716 10,872As of December 31, 2019, 2020 and 2021, entities apart from our consolidated variable interest entities accounted for an aggregate of27.4%, 17.9% and 24.6%, respectively, of our total assets. The assets not associated with our consolidated variable interest entities primarilyconsist of cash, deferred assets and intangible assets. The total assets held by the consolidated variable interest entities and other group entitieswhich are not our consolidated variable interest entities were $380.5 million and $144.0 million, respectively, as of December 31, 2019, $527.3million and $114.7 million, respectively, as of December 31, 2020, and $329.7 million and $107.5 million, respectively, as of December 31, 2021.All above figures were after elimination of inter-company.Pursuant to contractual arrangements that Shanghai SINA Leju, Shanghai Yi Yue and Beijing Maiteng have with our consolidated variableinterest entities, the earnings and cash of our consolidated variable interest entities are used to pay service fees in Renminbi to three of our PRCsubsidiaries in the manner and amount set forth in these agreements. After paying the applicable withholding taxes and making appropriations forits statutory reserve requirement, the remaining net profits of our PRC subsidiaries would be available for distribution to our offshore companies.As of December 31, 2021, the net assets of our PRC subsidiaries and our consolidated variable interest entities which were restricted due tostatutory reserve requirements and other applicable laws and regulations, and thus not available for distribution, was in aggregate $35.8 million. Asan offshore holding company of its PRC subsidiaries and consolidated variable interest entities, Leju may make loans to its PRC subsidiaries andconsolidated variable interest entities. Any loans to its PRC subsidiaries are subject to registrations with relevant governmental authorities in China.It may also finance its subsidiaries by means of capital contributions. See “Item 3. Key Information—D. Risk Factors— Risks Related to DoingBusiness in China—PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us frommaking loans or additional capital contributions to our PRC operating subsidiaries”.Furthermore, cash transfers from our PRC subsidiaries to our offshore companies are subject to PRC government control of currencyconversion. Restrictions on the availability of foreign currency may affect the ability of our PRC subsidiaries and our consolidated variable interestentities to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency denominatedobligations. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Governmental control of currencyconversion may affect the value of your investment”. Cash and cash equivalents (including restricted cash) held by the consolidated variableinterest entities was denominated in Renminbi and amounted to RMB862 million ($123.9 million, based on an exchange rate of RMB6.9618 to$1.00 as of December 31, 2019), RMB1,553 million ($237.9 million,Table of Contents96based on an exchange rate of RMB6.5250 to $1.00 as of December 31, 2020) and RMB1,286 million ($201.8 million, based on an exchange rate of RMB6.3757 to $1.00 as of December 31, 2021) as of December 31, 2019, 2020 and 2021, respectively.We believe that our contractual arrangements with the consolidated variable interest entities are in compliance with PRC law and arelegally enforceable. However, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements and theinterests of the shareholders of the consolidated variable interest entities may diverge from that of our company and that may potentially increasethe risk that they would seek to act contrary to the contractual terms, for example by influencing the consolidated variable interest entities not topay the service fees when required to do so.Concentration of credit riskFinancial instruments that potentially expose us to concentrations of credit risk consist primarily of cash and cash equivalents, accountsreceivable and customer deposits. We deposit our cash and cash equivalents in the reputable financial institutions.Prior to January 1, 2020, we regularly review the creditworthiness of its customers, and requires collateral or other security from itscustomers in certain circumstances when accounts receivables’ aging is over one year. We establish an allowance for credit losses primarily basedupon factors surrounding the credit risk of specific customers, including creditworthiness of the clients, aging of the receivables and other specificcircumstances related to the accounts. Accounts receivable balances are written off after all collection efforts have been exhausted.We adopted Accounting Standard Update (ASU) 2016-13, Financial Instruments-Credit Losses (codified as Accounting StandardCodification Topic 326), since January 1, 2020, which requires measurement and recognition of current expected credit losses for financialinstruments held at amortized cost.Our accounts receivable and contract assets, customer deposits, other receivables recorded in prepayments and other current assets andamount due from related parties are within the scope of ASC Topic 326.To estimate expected credit losses, we have identified the relevant risk characteristics of its customers and these receivables are assessedon an individual basis for customers with good credit rating (strategic type customers), with pledged credit risk (pledged type customers), with highcredit risk (high risk type customers) and the remaining (normal risk type customers). For each customer, we consider historical settlement pattern,past default experience of the debtor, overall economic environment in which the debtors operate, and also the assessment of both current andfuture development of environment as of the date when this report issued. This is assessed at each quarter based on our specific facts andcircumstances.Balances of the allowance for credit losses for accounts receivable and contract assets by each risk category are as follows: As of December 31, 2020 2021(in thousands of $)Balances of customers with good credit rating 45 —Balances of customers with pledged credit risk 1,936 1,126Balances of customers with high credit risk 6,165 112,183Balances of customers with normal risk 4,538 2,066Total 12,684 115,375The carrying value of accounts receivable, contract assets, customer deposit, amount due from related parties and other receivablesrecorded in the prepayments and other current assets is reduced by an allowance to reflect the expected credit losses.Details of the accounts receivable and contract assets from customers accounting for 10% or more of total net accounts receivable andcontract assets are as follows:Table of Contents97 As of December 31,20202021(in thousands of $)Customer AAccounts receivable, gross 146,285 96,510Allowance for credit losses (44) (96,510)Accounts receivable, net 146,241 —Evaluation of GoodwillWe evaluate the recoverability of goodwill annually or more frequently if an event occurs or circumstances change in the interim thatwould more likely than not reduce the fair value of the asset below its carrying amount. Goodwill is considered to be impaired when the carryingvalue of a reporting unit or asset exceeds its fair value. We currently have only one reporting unit: Leju online segment.In evaluating goodwill for impairment, we first assess qualitative factors to determine whether it is more likely than not that the fair valueof a reporting unit is less than its carrying value. If we determine that it is not more likely than not for a reporting unit’s fair value to be less than itscarrying value, a calculation of the fair value is not performed. If we determine that it is more likely than not for a reporting unit’s fair value to beless than its carrying value, a calculation of the reporting unit’s fair value is performed and compared to the carrying value of that unit.Generally, we measure fair value of reporting units based on a present value of future discounted cash flows and an income valuationapproach. The discounted cash flow models indicate the fair value of the reporting units based on the present value of the cash flows that thereporting units are expected to generate in the future. When determining the fair value of the company, we are required to make significantjudgments that we believe are reasonable and supportable considering all available internal and external evidence at that time.However, these estimates and assumptions by their nature require a higher degree of judgment. Fair value determinations are sensitive tochanges in the underlying assumptions and factors including (i) those relating to estimating future operating cash flows to be generated from thecompany, which is dependent upon internal forecasts and projections developed as part of our routine, long-term planning process; (ii) our strategicplans; and (iii) estimates of long-term growth rates taking into account our assessment of the current economic environment and the timing anddegree of any economic recovery.The assumptions with the most significant impact on the fair value of the company are those relating to (i) future operating cash flows,which are forecasted for a five-year period from management’s budget and planning process; (ii) the terminal value, which is included for theperiod beyond five years from the balance sheet date based on the estimated cash flow in the fifth year and a terminal growth rate of 3%; and (iii)discount rates, which are identified and applied by market-based inputs based on an estimation of weighted average cost of capital considering costof debt, risk-free rate, equity risk premium, beta, size premium, company-specific risk premium and capital structure.Examples of events or circumstances that could reasonably be expected to negatively affect the underlying key assumptions and ultimatelyimpact the estimated fair values of the company may include: (i) deterioration of local economies or further slowdown of China’s real estate marketunder the government’s continued restrictive policies and further credit tightening measures, which could lead to changes in projected cash flows ofus; (ii) an economic recovery that significantly differs from our assumptions, which could change the future growth rate and the terminal growthrate; and (iii) higher cost of capital in the markets, which could result in a higher discount rate. If the assumptions used in the impairment analysisare not met or materially change, we may be required to recognize a goodwill impairment loss which may be material to the financial condition ofus.Toward the end of the second quarter of 2017, China’s real estate market showed signs of further slowdown under the government’scontinued restrictive policies and further credit tightening. Our revenue growth started to slow down as developers became more pessimistic aboutsales volume and more cautious with their advertising spending. We believed that this resulted in slower than previously expected growth for ourbusiness over the next several years. These circumstances prompted our management to perform an interim qualitative and quantitative test ongoodwill as of June 30, 2017. Based on the impairment assessment reviewTable of Contents98performed, we concluded that the carrying amount was higher than our fair value and consequently recorded a goodwill impairment of $41.2million. We had no goodwill balance as of December 31, 2020 and 2021, respectively.Income taxesDeferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities, and their reported amountsin the financial statements, net operating loss carry forwards and credits by applying enacted statutory tax rates applicable to future years when thereported amounts of the asset or liability are expected to be recovered or settled, respectively.Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that someportion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevanttaxing authorities.We only recognize tax benefits related to uncertain tax positions when such positions are more likely than not of being sustained uponexamination. For such positions, the amount of tax benefit that we recognize is the largest amount of tax benefit that is more than fifty percentlikely of being sustained upon the ultimate settlement of such uncertain position. We record interest and penalties as a component of income taxexpense.We recognized a valuation allowance against deferred tax assets on tax loss carry-forwards of $5.2 million and $20.9 million for the yearsended December 31, 2019 and 2021, respectively. We reversed a valuation allowance against deferred tax assets on tax loss carry forwards of $0.3million for the year ended December 31, 2020.We assess available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existingdeferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period endedDecember 31, 2021. Such objective evidence limits our ability to consider other subjective evidence such as its projections for future growth.On the basis of this evaluation, as of December 31, 2021, a valuation allowance of $26.7 million of which $24.1 million was for bad debtprovision and $2.6 million was for net operating loss carry-forwards, was recorded to reflect only the portion of the deferred tax assets that is notmore likely than not to be realized. The amount of the deferred tax assets considered realizable, however, could be adjusted if estimates of futuretaxable income during the carry forwards period are reduced or increased or if objective negative evidence in the form of cumulative losses is nolonger present and additional weight may be given to subjective evidence such as our projections for growth.Recent Accounting PronouncementsSee “Notes to Consolidated Financial Statements for the Years Ended December 31, 2019, 2020 and 2021—2. Summary of PrincipalAccounting Policies—(ac) Recently issued accounting pronouncements”.InflationTo date, inflation in China has not materially impacted our results of operations. According to the National Bureau of Statistics of China, the annual average percent changes in the consumer price index in China for 2019, 2020 and 2021 were 2.9%, 2.5% and 0.9%, respectively. The year-over-year percent change in the consumer price index for January 2020, 2021 and 2022 was an increase of 5.4%, a decrease of 0.3% and an increase of 0.9%, respectively. Although we have not been materially affected by inflation in the past, we can provide no assurance that we will not be affected by higher rates of inflation in China in the future.Impact of Foreign Currency FluctuationSee “Item 3. Key Information-D. Risk Factors-Risks Related to Doing Business in China-Fluctuation in the value of the Renminbi mayhave a material and adverse effect on your investment”. and “Item 11. Quantitative and Qualitative Disclosures About Market Risk-ForeignExchange Risk”.Table of Contents99Impact of Governmental PoliciesSee “Item 3. Key Information-D. Risk Factors-Risks Related to Our Business-Our business may be materially and adversely affected bygovernment measures aimed at China’s real estate industry”, “Item 3. Key Information-D. Risk Factors-Risks Related to Doing Business in China”and “Item 4. Information on the Company-B. Business Overview-Regulation”.B.Liquidity and Capital ResourcesOur principal sources of liquidity have been capital contributions from E-House, our initial public offering and concurrent privateplacement to Tencent, and cash generated from operating activities. Our cash and cash equivalents consist of cash on hand and deposits placed withbanks, which are unrestricted as to withdrawal or use and have original maturities of three months or less. We currently anticipate that we will beable to meet our needs to fund operations for at least the next twelve months with operating cash flow and existing cash balances. We believe thatour working capital is sufficient for our present requirements, taking into consideration the potential impact the COVID-19 pandemic may have onour business and operations.The following table sets forth a summary of our cash flows for the periods indicated:Year Ended December 31, 2019 2020 2021(in thousands of $)Net cash provided by (used in) operating activities 19,696 108,495 (39,889)Net cash provided by (used in) investing activities (5,561) 102 (318)Net cash provided by financing activities 41 540 1,033Net increase/(decrease) in cash and cash equivalents 11,749 126,695 (33,311)Cash, cash equivalents and restricted cash at the beginning of the year 147,263 159,012 285,707Cash, cash equivalents and restricted cash at the end of the year 159,012 285,707 252,396Operating ActivitiesNet cash used in operating activities in 2021 was $39.9 million, primarily comprising net loss of $149.9 million adjusted for non-cashtransactions including allowance for credit losses of $111.3 million, a $44.3 million decrease in other current liabilities and accrued expenses, and a$17.2 million increase in prepaid expenses and other current assets, partially offset by a $61.9 million decrease in accounts receivable and contractassets.Net cash provided by operating activities in 2020 was $108.5 million, primarily comprising net income of $21.0 million adjusted for non-cash transactions including depreciation and amortization of $14.3 million, allowance for credit losses of $4.9 million, noncash lease expense of$4.5 million, a $70.3 million increase in other current liabilities and accrued expenses, a $11.1 million decrease in deferred tax assets, and a $44.8million decrease in customer deposits, partially offset by a $66.2 million increase in accounts receivable and contract assets.Net cash provided by operating activities in 2019 was $19.7 million, primarily comprising net income of $10.9 million adjusted for non-cash transactions including depreciation and amortization of $15.2 million, allowance for credit losses of $5.5 million, noncash lease expense of$7.6 million, a $60.2 million increase in other current liabilities and accrued expenses, a $12.2 million decrease in deferred tax assets, and a $7.2million increase in other tax payable, partially offset by a $50.8 million increase in accounts receivable and contract assets, and a $46.6 millionincrease in customer deposits.Investing ActivitiesNet cash used in investing activities in 2021 was $0.3 million, primarily comprised of $1.1 million for the purchase of property andequipment as well as intangible assets, partially offset by $0.8 million for the proceeds from disposal of property and equipment.Table of Contents100Net cash provided by investing activities in 2020 was $0.1 million, primarily comprised of $1.7 million for the proceeds from disposal ofproperty and equipment, partially offset by $1.6 million for the purchase of property and equipment as well as intangible assets.Net cash used in investing activities in 2019 was $5.6 million, mainly comprised of a payment of $8.0 million for property and equipment,mainly due to the decoration of our new headquarters.Financing ActivitiesNet cash provided by financing activities in 2021 was $1.0 million, mainly due to the proceeds from short-term borrowings of $0.8million.Net cash provided by financing activities in 2020 was $0.5 million, mainly due to the proceeds from exercise of options.Net cash provided by financing activities in 2019 was $40,545, mainly due to the proceeds from exercise of options.Holding Company StructureIn the future, we may rely significantly on dividends and other distributions paid by our PRC subsidiaries for our cash and financingrequirements. There may be potential restrictions on the dividends and other distributions by our PRC subsidiaries. The PRC tax authorities mayrequire us to adjust our taxable income under the contractual arrangements that each of Shanghai SINA Leju, Shanghai Yi Yue and Beijing Maitengcurrently has in place with the relevant consolidated variable interest entity in a way that could materially and adversely affect the ability ofShanghai SINA Leju, Shanghai Yi Yue and Beijing Maiteng to pay dividends and make other distributions to us. In addition, under PRC laws andregulations, our PRC subsidiaries including Shanghai SINA Leju, Shanghai Yi Yue and Beijing Maiteng, each as a wholly foreign-ownedenterprise in China, may pay dividends only out of their accumulated profits as determined in accordance with PRC accounting standards andregulations. In addition, our PRC subsidiaries are required to set aside at least 10% of their accumulated after-tax profits each year, if any, to fund astatutory reserve fund, until the aggregate amount of such fund reaches 50% of their respective registered capital. At their discretion, our PRCsubsidiaries may allocate a portion of their after-tax profits based on PRC accounting standards to staff welfare and bonus funds. These reservefunds and staff welfare and bonus funds are not distributable as cash dividends. Furthermore, our investments made as registered capital andadditional paid in capital of our PRC subsidiaries, consolidated variable interest entities and consolidated variable interest entities’ subsidiaries arealso subject to restrictions on their distribution and transfer according to PRC laws and regulations.As a result, our PRC subsidiaries, consolidated variable interest entities and consolidated variable interest entities’ subsidiaries in Chinaare restricted in their ability to transfer their net assets to us in the form of cash dividends, loans or advances. As of December 31, 2021, the amountof the restricted net assets, which represents registered capital and additional paid-in capital cumulative appropriations made to statutory reserves,was $35.8 million.As an offshore holding company, Leju is permitted under PRC laws and regulations to provide funding from the proceeds of its offshorefund raising activities to its PRC subsidiaries only through loans or capital contributions, and to our consolidated variable interest entities onlythrough loans, in each case subject to the satisfaction of the applicable government registration and approval requirements. As a result, there isuncertainty with respect to Leju’s ability to provide prompt financial support to its PRC subsidiaries and consolidated variable interest entitieswhen needed. Notwithstanding the foregoing, Leju’s PRC subsidiaries may use their own retained earnings (rather than Renminbi converted fromforeign currency denominated capital) to provide financial support to our consolidated variable interest entities either through entrustment loansfrom the PRC subsidiaries to the consolidated variable interest entities, or direct loans to such variable interest entities’ nominee shareholders,which would be contributed to the variable interest entities as capital injections. Such direct loans to the nominee shareholders would be eliminatedin our consolidated financial statements against the consolidated variable interest entities’ share capital.Material cash requirementsOur material cash requirements as of December 31, 2021 and any subsequent interim period primarily include our capital expendituresand operating lease commitments.Table of Contents101We intend to fund our existing and future material cash requirements with our existing cash balance and other financing alternatives. Wewill continue to make cash commitments, including capital expenditures, to support the growth of our business.Capital expenditures. Our capital expenditures amounted to $8.0 million, $1.6 million and $1.1 million in 2019, 2020 and 2021,respectively. In the past, our capital expenditures consisted principally of purchases of property and equipment and intangible assets used in ouroperations. We funded our capital expenditures primarily with cash on hand and cash generated from operating activities.Operating lease obligations. Our operating lease obligations relate to our obligations under lease agreements with lessors of our corporateoffices. As of December 31, 2021, the amount of total future lease payments under operating leases, whose weighted average remaining lease termis 5.8 years, was $29.3 million, of which $5.7 million is short-term.Long-term debt obligations. As of December 31, 2021, there were no long-term debt obligations consisting of the principal amount andcash interests.We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. Wehave not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity, or that are not reflected in ourconsolidated financial statements. Furthermore, we do not have retained or contingent interests in assets transferred to an unconsolidated entity thatserves as credit, liquidity or market risk support to such entity. We have not entered into contractual arrangements that support the credit, liquidityor market risk for transferred assets. We do not have obligations that arise or could arise from variable interests held in an unconsolidated entity, orobligations related to derivative instruments that are both indexed to and classified in our own equity, or not reflected in the statement of financialposition.Other than as discussed above, we did not have any significant capital and other commitments, long-term obligations or guarantees as ofDecember 31, 2021.C.Research and Development, Patents and Licenses, etc.Research and DevelopmentWe believe that the continual development of our technology will be vital to maintaining our long-term competitiveness. As of December31, 2021, we employed 313 software developers and other technology-related personnel. We have developed a technology infrastructure that isspecifically used for our real estate and home related internet website services. In addition, we have also developed our proprietary mobileapplications including “Leju Home Purchase” (an upgraded version of “Pocket Leju”), “Leju Er Shou Fang”, “Lai Ke” and “Leju Finance”. Weplan to further develop new, proprietary mobile applications tailored to the needs of home purchasers, developer partners and real estate agents. Wewill develop our mobile applications with a focus on enhancing mobile user experience and engagement and to achieve seamless integration withthe websites we operate.Intellectual PropertyOur copyrights, trademarks, trade secrets, domain names and other intellectual property are important to our business. We rely onintellectual property laws and contractual arrangements with our key employees and certain of our customers, collaborators and others to protectour intellectual property rights. Despite these measures, we cannot assure you that we will be able to prevent unauthorized use of our intellectualproperty, which would adversely affect our business.As of March 31, 2022, we owned 147 registered copyrights, owned or licensed 331 registered trademarks in China, had 29 trademarkapplications in various industry categories pending with the China Trademark Office, had one patent application in China and owned or licensed101 registered domain names.We own the software copyrights of our mobile applications “Leju Home Purchase” (an upgraded version of “Pocket Leju”), “Leju Er ShouFang”, “Lai Ke” and “Leju Finance”. We have registered our software copyrights of substantially all of our mobile applications.Table of Contents102D.Trend InformationOther than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events forthe year 2021 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capitalresources, or that caused the disclosed financial information to be not necessarily indicative of future results of operations or financial conditions.E.Critical Accounting EstimatesWe prepare our financial statements in conformity with U.S. GAAP, which requires us to make estimates and assumptions that affect ourreporting of, among other things, assets and liabilities, contingent assets and liabilities and total revenues and expenses. On an on-going basis, weevaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances,the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from othersources. Since our financial reporting process inherently relies on the use of estimates and assumptions, our actual results could differ from whatwe expect.We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that werehighly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period toperiod or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financialcondition or results of operations. Such critical estimates are discussed below. For further information on our other significant accountingestimates, see Note 2 to our consolidated financial statements included elsewhere in this annual report.Allowance for current expected credit losses on accounts receivables and contract assets, deposits, other receivables and amounts due from relatedparties.We have estimated an allowance for current expected credit losses on accounts receivables, contract assets, deposits, other receivables, andamounts due from related parties based on the credit risk of the respective receivables. Significant judgment is required in assessing the riskcharacteristics of our customers. The allowance amount has been measured as the difference of the asset’s carrying amount and the estimates ofpresent value of future cash flows based on historical settlement pattern, past default experience of the debtor, overall economic environment inwhich the debtors operate, and also the assessment of both current and future development of environment as of the date when this report issued.These procedures also included the involvement of professionals with specialized skills engaged by the Group.Provision of income tax and valuation allowance for deferred tax assetSignificant judgment is required in determining income tax expense based on tax laws in the various jurisdictions in which we operate. Incalculating our effective income tax rate, estimates are required regarding the timing and amount of taxable and deductible items which will adjustthe pre-tax income earned in various tax jurisdictions. Through our interpretation of local tax regulations, adjustments to pretax income for incomeearned in various tax jurisdictions are reflected within various tax filings. Although we believe that our estimates and judgments discussed hereinare reasonable, actual results may be materially different than the estimated amounts.We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. Significantjudgment is required in determining the valuation allowance. In assessing the need for a valuation allowance, we consider all sources of taxableincome, including projected future taxable income, reversing taxable temporary differences and ongoing tax planning strategies. If it is determinedthat we are able to realize deferred tax assets in excess of the net carrying value or to the extent we are unable to realize a deferred tax asset, wewould adjust the valuation allowance in the period in which such a determination is made, with a corresponding increase or decrease to earnings.Safe HarborThis annual report on Form 20-F contains forward-looking statements. These statements are made under the “safe harbor” provisions ofSection 21E of the Exchange Act. These forward-looking statements can be identified by terminology such as “will”,Table of Contents103“expects”, “anticipates”, “future”, “intends”, “plans”, “believes”, “estimates”, “may”, “intend”, “is currently reviewing”, “it is possible”, “subjectto” and similar statements. Among other things, the sections titled “Item 3. Key Information—D. Risk Factors”, “Item 4. Information on theCompany”, and “Item 5. Operating and Financial Review and Prospects” in this annual report on Form 20-F, as well as our strategic andoperational plans, contain forward-looking statements. We may also make written or oral forward-looking statements in our filings with the SEC, inour annual report to shareholders, in press releases and other written materials and in oral statements made by our officers, directors or employeesto third parties. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements andare subject to change, and such change may be material and may have a material and adverse effect on our financial condition and results ofoperations for one or more prior periods. Forward-looking statements involve inherent risks and uncertainties A number of important factors couldcause actual results to differ materially from those contained, either expressly or impliedly, in any of the forward-looking statements in this annualreport on Form 20-F. Potential risks and uncertainties include, but are not limited to, continued low real estate transaction volume in China,government measures that may materially and adversely affect our business, a further slowdown in the growth of China’s economy, failure of thereal estate services industry in China to develop or mature as quickly as expected, diminution of the value of our brand or image due to our failureto satisfy customer needs and/or other reasons, our inability to successfully execute the strategy of expanding into new geographical markets inChina or the business plans for strategic alliances and other new business initiatives, our failure to manage growth, our loss of competitiveadvantage, and other risks outlined in our filings with the SEC. All information provided in this annual report on Form 20-F and in the exhibits isas of the date of this annual report on Form 20-F, and we do not undertake any obligation to update any such information, except as required underapplicable law.ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEESA.Directors and Senior ManagementThe following table sets forth information regarding our directors and executive officers as of the date of this annual report.Directors and Executive Officers Age Position/TitleXin Zhou 54 Executive ChairmanYinyu He 47 Chief Executive OfficerCharles Chao 56 DirectorCanhao Huang 64 DirectorMinyi Zhang 48 DirectorDavid Jian Sun 57 Independent DirectorMin Fan 56 Independent DirectorWinston Jin Li 55 Independent DirectorHongchao Zhu 62 Independent DirectorQiong Zuo 42 Chief Operating OfficerLi-Lan Cheng 57 Acting Chief Financial OfficerXin Zhou has served as our Executive Chairman since our inception. Mr. Zhou currently is an executive director and chairman of E-HouseEnterprise. He is one of the co-founders of E-House, an affiliate of E-House Enterprise, and has served as E-House’s chairman since its inception.Mr. Zhou served as E-House’s chief executive officer from 2003 to 2009, and has been serving as E-House’s chief executive officer since April2012. Mr. Zhou currently is also a director of Jupai Holdings Limited (NYSE: JP). He also served as co-chairman and chief executive officer of E-House’s subsidiary, China Real Estate Information Corporation, from 2009 to April 2012. Mr. Zhou has over 25 years of experience in China’s realestate industry. From 1997 to 2003, he served as director and general manager of Shanghai Real Estate Exchange Co., Ltd., and as deputy generalmanager of Shanghai Jinfeng Investments Co., Ltd., a company listed on the Shanghai Stock Exchange. Mr. Zhou was named as the “Person of theYear of Chinese Economy” jointly by SINA and People’s Daily in 2016, received the “China Business Leader Award” from the Eighth ChinaBusiness Leader Forum in 2016, received the “Outstanding Entrepreneur Award” from Enterprise Asia in 2010, awarded the “Special ContributionAward in China’s Real Estate Services Industry” in 2005, and named one of the “ten most influential people in the real estate services industry in2005” from China City Property Exposition Commission. Mr. Zhou currently serves as vice chairman of China Real Estate Association, director ofThe Nature Conservancy China, vice chairman of China Real Estate Developers and Investors Associations, and chairman of Real Estate ServiceCommittee of China Real Estate Association. He is also the rotating chairman of Shanghai Entrepreneur Association. Mr. Zhou received hisbachelor degree from Shanghai University in China.Table of Contents104Yinyu He has served as our chief executive officer since March 2014 and vice-president from January 2011 to August 2011. He served asour director of strategic planning from August 2008 to December 2010. Prior to joining Leju, Mr. He was the publisher and chief editor of UBM’sInformationWeek China from 2004 to 2008. From 2000 to 2004, he served as a senior reporter and researcher covering China’s IT, telecom,financial, and media industries at Interfax (China) News Agency, where he was a founding member. He also worked as a journalist, reporter,commentator, and anchor for a number of media outlets including the China Business Network (CBN), Shanghai Television, Eastern Radio,Securities Herald, Eastday.com, and Finance Director magazine (part of The Economist Group). He received his bachelor’s degree and master’sdegree from Shanghai University.Charles Chao has served as our director since April 2014. Mr. Chao currently serves as the chairman and chief executive officer of SINAand the chairman of Weibo Corporation, a leading social media platform in China and a majority owned subsidiary of SINA. Since joining SINA inSeptember 1999, Mr. Chao has served various managerial positions, including as vice president of finance, chief financial officer, co-chiefoperating officer and president. Prior to that, Mr. Chao served as an audit manager at PricewaterhouseCoopers, LLP in Silicon Valley, California.Mr. Chao is currently an independent director of NetDragon Websoft Inc., a Hong Kong Stock Exchange listed company providing technology foronline games. Mr. Chao received his master’s degree in professional accounting from University of Texas at Austin. He also holds a master’sdegree in journalism from University of Oklahoma and a bachelor’s degree in journalism from Fudan University in China.Canhao Huang has served as our director since March 2014. Mr. Huang currently serves as executive director and vice chairman of E-House Enterprise and a director of E-House, an affiliate of E-House Enterprise. He was E-House’s chief operating officer from September 2007 toDecember 2009, and vice president from 2000 to 2007. Prior to joining E-House, Mr. Huang served as a manager at Shanghai No. 1 DepartmentStore Co., Ltd. from 1985 to 2000. Mr. Huang received a bachelor’s degree from Shanghai University.Minyi Zhang has served as our director since August 2021. Mr. Zhang currently serves as General Manager of Vertical Sales & OperationDepartment of Tencent Marketing Solution and a director of Yiche Holding Limited. Mr. Zhang is in charge of the department’s overall businessstrategy and development, and leads various teams including vertical sales, operations and marketing insights service teams. He joined Tencent in2009. Mr. Zhang received his bachelor’s degree in automation from Shanghai Jiao Tong University and his MBA from China Europe InternationalBusiness School (CEIBS).David Jian Sun has served as our independent director since April 2014. Mr. Sun has been an executive director and the general managerof BTG Hotels (Group) Co., Ltd. (Shanghai Stock Exchange Stock Code: 600258), a tourism service company in China, since September 2016.Prior to joining BTG Hotels Group, Mr. Sun served as an executive director and the chief executive office of Home Inns Group, a leading economyhotel chain in China. Mr. Sun has served as an independent director and a member of the compensation committee of eHai Car Services Ltd., anNYSE-listed car service provider. Mr. Sun has served as an independent director and a member of the compensation committee of 111 Inc.(NASDAQ: YI), a leading integrated online and offline healthcare platform in China. Mr. Sun received a bachelor’s degree in management fromShanghai Medical University.Min Fan has served as our independent director since April 2014. Mr. Fan is the co-founder of Trip.com Group Limited (formerly knownas Ctrip.com International, Ltd.), a leading one-stop travel platform globally (Nasdaq: TCOM), and has served as the vice chairman of its boardsince March 2013 and its president since February 2009. He also served as the chief executive officer, from January 2006 to March 2013, the chiefoperating officer, from November 2004 to January 2006, and the executive vice president, from 2000 to November 2004, of Trip.com GroupLimited. From 1997 to 2000, Mr. Fan served as the chief executive officer of Shanghai Travel Service Company, a leading domestic travel agencyin China. From 1990 to 1997, he served as the deputy general manager and in a number of other senior positions at Shanghai New Asia HotelManagement Company, which was one of the leading hotel management companies in China. Mr. Fan received his Master’s and Bachelor’sdegrees in industrial engineering and management from Shanghai Jiao Tong University.Winston Jin Li has served as our independent director since April 2014. He currently serves as an independent director of E-HouseEnterprise and an independent director of Kingbo Strike Limited. Mr. Li was the chief financial officer of Inke Limited, a leading PRC-basedmobile live streaming company from March 2018 to February 2019. Mr. Li served as chief financial officer of Sungy Mobile Ltd., a provider ofmobile internet products and services in China, from July 2013 to August 2014. Mr. Li served as a partner at the Hong Kong office of LinklatersLLP from 2002 to 2004 and an attorney at the Hong Kong office of Skadden Arps Slate Meagher & Flom LLP from 1997 to 2002. Mr. Li receivedhis bachelor’s degree in biochemistry from Peking University and master of science degree from the University of Michigan, Ann Arbor. Hereceived his juris doctor degree from Columbia Law School.Table of Contents105Hongchao Zhu has served as our independent director since March 2017. Mr. Zhu is the managing partner of Shanghai United Law Firmand has been practicing with Shanghai United Law Firm since 1986. Mr. Zhu is a guest professor of East China University of Political Science andLaw and Shanghai University, and is also an arbitrator of Shanghai Arbitration Association and China International Economic Trade ArbitrationCommission. Mr. Zhu currently serves as an independent director of E-House Enterprise, an independent director of Sansheng Holdings (Group)Co.Ltd., an independent director of Shanghai Bailian Group Co.,Ltd., an independent director of Bright Real Estate Grouop Co.,Limited, anindependent director of Jupai Holdings Limited, an NYSE-listed third-party wealth management service provider in China, and an independentdirector of Haitong Securities Co., Ltd. (SEHK: 06837; SSE: 600837), a company listed on the Hong Kong Stock Exchange and Shanghai StockExchange. Mr. Zhu once served as vice chairman of the All China Bar Association and chairman of the Shanghai Bar Association. Mr. Zhureceived his master’s and bachelor’s degrees in law from Fudan University in China.Qiong Zuo has served as our chief operating officer since March 2018. She previously was chief executive officer of the Innovation andResearch Center of E-House (China) Holdings Limited, Leju’s major shareholder, from January 2015. From 2012 to 2015, Ms. Zuo served as vicepresident of human resources at Rastar Group, a leading culture and entertainment company listed on China’s A-share market. From 2007 to 2012,Ms. Zuo served as the deputy general manager of the southern China branch of SINA.com, a leading Internet portal in China. Ms. Zuo received abachelor’s degree in business administration from Hubei University of Economics.Li-Lan Cheng has served as our acting chief financial officer since June 2017. Mr. Cheng also served as our executive director from March2014 to March 2017. Mr. Cheng has been an executive director of E-House Enterprise since March 2018. Mr. Cheng currently serves as the chiefoperating officer of E-House, an affiliate of E-House Enterprise, a position he has held since April 2012. He was E-House’s chief financial officerfrom November 2006 to April 2012. Prior to joining E-House, Mr. Cheng served as the chief financial officer of SouFun Holdings Limited, a realestate internet company in China, from 2005 to 2006. From 2002 to 2004, Mr. Cheng served as an executive director and the chief financial officerof SOHO China Limited, a real estate developer in Beijing. Mr. Cheng was an assistant director and the head of the Asian transportation sectorinvestment banking group of ABN AMRO Asia from 1997 to 2002. Mr. Cheng is an independent director of 51job, Inc. (Nasdaq: JOBS), a humanresource service provider listed on Nasdaq, an independent director of LAIX Inc. (NYSE: LAIX), an NYSE-listed artificial intelligence companyfor English language training and an independent director of Yunji Inc. (Nasdaq: YJ), a Nasdaq-listed leading social e-commerce platform in China.Mr. Cheng received a bachelor’s degree in Economics from Swarthmore College and a Ph.D. degree in Economics from the Massachusetts Instituteof Technology. Mr. Cheng is a chartered financial analyst (CFA).B. Compensation of Directors and Executive OfficersFor the year ended December 31, 2021, we paid an aggregate of approximately $1.3 million in cash to our executive officers, and we granted 800,000 options to our executive officers at an exercise price of $0.10 per share on April 23, 2021. We paid an aggregate of approximately $0.2 million in cash to our directors. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors. Our PRC subsidiaries and consolidated variable interest entities are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund.Employment Agreements and Indemnification AgreementsWe have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officersis employed for a specified time period. We may terminate employment for cause, at any time, without advance notice or remuneration, for certainacts of the executive officer, such as conviction or plea of guilty to a felony or any crime involving moral turpitude, gross negligence or dishonestacts to our detriment, or misconduct or a failure to perform agreed duties. We may also terminate an executive officer’s employment without causeupon sixty days advance written notice. In such case of termination by us, we will provide severance payments to the executive officer as set forthin the employment agreement. The executive officer may resign at any time with a one-month advance written notice.Table of Contents106Each executive officer has agreed to hold, both during and after the termination or expiry of his or her employment agreement, in strictconfidence and not to use, except as required in the performance of his or her duties in connection with the employment or pursuant to applicablelaw, any of our confidential information or trade secrets, any confidential information or trade secrets of our clients or prospective clients, or theconfidential or proprietary information of any third party received by us and for which we have confidential obligations. The executive officershave also agreed to disclose in confidence to us all inventions, designs and trade secrets which they conceive, develop or reduce to practice duringthe executive officer’s employment with us and to assign all right, title and interest in them to us, and assist us in obtaining and enforcing patents,copyrights and other legal rights for these inventions, designs and trade secrets.In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his orher employment and typically for one year following the last date of employment. Specifically, each executive officer has agreed not to (i) solicitfrom any of our customers, business of the same or similar nature to our business; (ii) solicit from any known potential customer, business which ofthe same or similar nature to business which has been the subject or substantially prepared to be subject of a written or oral bid, offer or proposalby us; (iii) solicit the employment or service of any person who is known to be employed or engaged by us; or (iv) otherwise interfere with ourbusiness or accounts including, but not limited to, any relationship or agreement between us and any vendor or supplier.We have also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agreeto indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims madeby reason of their being a director or officer of our company.Share Incentive PlanIn November 2013, we adopted the Leju Plan, which allows us to offer a variety of share-based incentive awards to employees, officers,directors and individual consultants who render services to us. The plan permits the grant of three types of awards: options, restricted shares andrestricted share units. The maximum number of shares that may be issued pursuant to all awards under the Leju Plan is 10,434,783 ordinary sharesof Leju initially, and will be increased automatically by 5% of the then total outstanding shares on an as-converted fully diluted basis on each of thethird, sixth and ninth anniversaries of the effective date of the Leju Plan. The Leju Plan was amended and replaced in July 2014 containingsubstantially the same terms as the original Leju Plan. On December 1, 2016, the award pool under the Leju Plan was automatically increased by7,553,422 ordinary shares. On December 1, 2019 the Leju Award Pool was automatically increased by 7,833,224 ordinary shares. Accordingly, thesize of the award pool under the Leju Plan is currently 25,821,429 ordinary shares.The following paragraphs describe the principal terms of the Leju Plan.Plan Administration. Our board of directors, or a committee designated by our board or directors, will administer the plan. The committeeor the full board of directors, as appropriate, will determine the provisions and terms and conditions of each option grant.Table of Contents107Award Agreements. Options and other awards granted under the plan are evidenced by an award agreement that sets forth the terms,conditions and limitations for each grant. In addition, the award agreement may also provide that securities granted are subject to a 180-day lockupperiod following the effective date of a registration statement filed by us under the Securities Act, if so requested by us or any representative of theunderwriters in connection with any registration of the offering of any of our securities. The exercise price of granted options may be amended oradjusted in the absolute discretion of our board of directors, or a committee designated by our board of directors, without the approval of ourshareholders or the recipients of the options.Eligibility. We may grant awards to employees, directors and consultants of our company or any of our related entities, which include oursubsidiaries or any entities in which we hold a substantial ownership interest.Acceleration of Awards upon Corporate Transactions. The outstanding awards will terminate and accelerate upon occurrence of a change-of-control corporate transaction where the successor entity does not assume our outstanding awards under the plan. In such event, each outstandingaward will become fully vested and immediately exercisable, and the transfer restrictions on the awards will be released and the repurchase orforfeiture rights will terminate immediately before the date of the change-of-control transaction provided that the grantee’s continuous service withus shall not be terminated before that date.Term of the Options. The term of each option grant shall be stated in the award agreement, provided that the term shall not exceed tenyears from the date of the grant.Vesting Schedule. In general, our board of directors, or a committee designated by our board of directors, determines, or the awardagreement specifies, the vesting schedule.Transfer Restrictions. Awards may not be transferred in any manner by the recipient other than by will or the laws of succession andincentive share options may be exercised during the lifetime of the optionee only by the optionee.Termination of the Plan. Unless terminated earlier, the plan will terminate automatically in 2023. Our board of directors has the authorityto amend or terminate the plan subject to shareholder approval to the extent necessary to comply with applicable law. However, no such action mayimpair the rights of any award recipient unless agreed by the recipient.As of March 31, 2022, the aggregate number of our ordinary shares underlying outstanding options granted under the Leju Plan is15,550,652, and 616,668 restricted shares granted under the Leju Plan are outstanding.Table of Contents108The following table summarizes, as of March 31, 2022 the options and restricted shares granted under the plan to our executive officersand directors and to other individuals as a group (including certain of our employees and E-House’s employees), without giving effect to theoptions that were exercised or restricted shares that had vested, if any. Ordinary UnderlyingExerciseOptions/RestrictedPrice (2)NameShares($/Share)Date of GrantDate of Expiration (2)Xin Zhou 360,000*(1)4.6December 1, 2013 N/A 100,000 5.54December 14, 2015December 13, 2025 60,000 3.24March 30, 2017March 29, 2027 60,000 1.55March 21, 2018March 20, 2028 30,000 1.41June 27, 2018June 26, 2028 120,0001.00April 23, 2021April 22, 2031Yinyu He 720,000 4.6December 1, 2013November 30, 2023 100,000*N/AMarch 18, 2014N/A 120,000 5.54December 14, 2015December 13, 2025 250,000 3.24March 30, 2017March 29, 2027 150,000 1.55March 21, 2018March 20, 2028 150,000 1.41June 27, 2018June 26, 2028 150,000*N/AMay 28, 2019N/A 500,000*N/AJune 17, 2020N/A 400,0000.10April 23, 2021April 22, 2031Charles Chao 360,000 4.6December 1, 2013November 30, 2023 50,000 5.54December 14, 2015December 13, 2025 60,000 3.24March 30, 2017March 29, 2027 60,000 1.55March 21, 2018March 20, 2028 30,000 1.41June 27, 2018June 26, 2028 60,0001.00April 23, 2021April 22, 2031Canhao Huang 30,000 4.6December 1, 2013November 30, 2023 15,000 5.54December 14, 2015December 13, 2025 30,000 1.55March 21, 2018March 20, 2028 30,000 1.41June 27, 2018June 26, 2028 60,0001.00April 23, 2021April 22, 2031David Jian Sun 40,000*N/AMarch 18, 2014N/A 15,000 5.54December 14, 2015December 13, 2025 20,000 3.24March 30, 2017March 29, 2027 20,000 1.55March 21, 2018March 20, 2028 20,000 1.41June 27, 2018June 26, 2028 60,0001.00April 23, 2021April 22, 2031Min Fan 40,000*N/AMarch 18, 2014N/A 15,000 5.54December 14, 2015December 13, 2025 20,000 3.24March 30, 2017March 29, 2027 20,000 1.55March 21, 2018March 20, 2028 60,0001.00April 23, 2021April 22, 2031 20,000 1.41June 27, 2018June 26, 2028Winston Jin Li 40,000*N/AMarch 18, 2014N/A 15,000 5.54December 14, 2015December 13, 2025 20,000 3.24March 30, 2017March 29, 2027 20,000 1.55March 21, 2018March 20, 2028 20,000 1.41June 27, 2018June 26, 2028 90,0001.00April 23, 2021April 22, 2031Hongchao Zhu 20,000 4.6December 1, 2013November 30, 2023 10,000 5.54December 14, 2015December 13, 2025 20,000 3.24March 30, 2017March 29, 2027 20,000 1.55March 21, 2018March 20, 2028 20,000 1.41June 27, 2018June 26, 2028 60,0001.00April 23, 2021April 22, 2031Li-Lan Cheng 240,000*4.6December 1, 2013N/A 30,000 5.54December 14, 2015December 13, 2025 30,000 3.24March 30, 2017March 29, 2027 100,000 1.55March 21, 2018March 20, 2028 90,000 1.41June 27, 2018June 26, 2028 100,0001.00April 23, 2021April 22, 2031Qiong Zuo 150,000 1.55March 21, 2018March 20, 2028 120,000 1.41June 27, 2018June 26, 2028 100,000*N/AMay 28, 2019N/A 300,000*N/AJune 17, 2020N/A 200,0000.10April 23, 2021April 22, 2031Other individuals as a group 13,240,501**0.10 to 9.68December 1, 2013 to April 23, 2021November 30, 2023 to April 22, 2031 or N/ANotes:Table of Contents109(1)These options were subsequently surrendered for cancellation in exchange for the same number of restricted shares having the same vestingschedule and a purchase price equal to the original option exercise price.(2)The options and most of our restricted shares are subject to a three-year vesting schedule, with one-third of the underlying ordinary sharesvesting on each of the first, second and third anniversary of the grant date.* Represents restricted shares.** Includes options and restricted shares.C. Board PracticesOur board of directors consists of eight directors. A director is not required to hold any shares in our company by way of qualification. Adirector who to his knowledge is in any way, whether directly or indirectly, interested in a contract or arrangement or proposed contract orarrangement with our company must declare the nature of his interest at a meeting of the directors at which the question of entering into thecontract or arrangement is first considered, if he knows his interest then exists, or in any other case at the first meeting of the directors after heknows that he is or has become so interested. Subject to the NYSE rules and disqualification by the chairman of the relevant board meeting, adirector may vote in respect of any contract or arrangement or proposed contract or arrangement notwithstanding that he may be interested thereinand if he does so his vote shall be counted and he may be counted in the quorum at the relevant board meeting at which such contract orarrangement or proposed contract or arrangement is considered. The directors may exercise all the powers of the company to borrow money, tomortgage or charge all or any part of its undertaking, property and assets (present and future) and uncalled capital, and subject to the CompaniesAct of the Cayman Islands, to issue debentures, bonds or other securities, whether outright or as collateral security for any debt, liability orobligation of our company or of any third party. None of our non-executive directors has a service contract with us that provides for benefits upontermination of service.In 2021, our board of directors held meetings or passed unanimous written resolution in lieu of meeting five times.Committees of the Board of DirectorsWe have three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporategovernance committee. We have adopted a charter for each of the three committees.A company of which more than 50% of the voting power is held by a single entity is considered a “controlled company” under Section303A of the Corporate Governance Rules of the NYSE. A controlled company need not comply with the applicable NYSE corporate governancerules requiring its board of directors to have a majority of independent directors. Because more than 50% of the voting power of our company hasbeen held by E-House Enterprise since November 2020, we qualify as a “controlled company” under the Corporate Governance Rules of theNYSE, and can rely on the controlled company exception provided under those rules. Currently, we do not have a majority of independent directorson our board.Table of Contents110Audit Committee. Our audit committee consists of Mr. Winston Li, Mr. Min Fan and Mr. Jian Sun, and is chaired by Mr. Winston Li. Wehave determined that Messrs. Li, Fan and Sun each satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules ofthe NYSE and Rule 10A-3 under the Exchange Act. The audit committee will oversee our accounting and financial reporting processes and theaudits of the financial statements of our company. The audit committee will be responsible for, among other things:●appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by theindependent auditors;●reviewing with the independent auditors any audit problems or difficulties and management’s response;●discussing the annual audited financial statements with management and the independent auditors;●reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken tomonitor and control major financial risk exposures;●reviewing and approving all proposed related party transactions;●meeting separately and periodically with management and the independent auditors; and●monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of ourprocedures to ensure proper compliance.In 2021, our audit committee held meetings or passed unanimous written resolutions in lieu of meeting three times.Compensation Committee. Our compensation committee consists of Mr. Jian Sun and Mr. Hongchao Zhu, and is chaired by Mr. Jian Sun.We have determined that Messrs. Sun and Zhu each satisfy the “independence” requirements of Section 303A of the Corporate Governance Rulesof the NYSE. The compensation committee will assist the board in reviewing and approving the compensation structure, including all forms ofcompensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting duringwhich his compensation is deliberated upon. The compensation committee will be responsible for, among other things:●reviewing the total compensation package for our executive officers and making recommendations to the board with respect to it;●approving and overseeing the total compensation package for our executives other than the three most senior executives;●reviewing the compensation of our directors and making recommendations to the board with respect to it; and●periodically reviewing and approving any long-term incentive compensation or equity plans, programs or similar arrangements,annual bonuses, and employee pension and welfare benefit plans.In 2021, our compensation committee passed unanimous written resolutions in lieu of meeting once.Table of Contents111Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Mr. Min Fan andMr. Hongchao Zhu, and is chaired by Mr. Min Fan. We have determined that Messrs. Fan and Zhu each satisfy the “independence” requirements ofSection 303A of the Corporate Governance Rules of the NYSE. The nominating and corporate governance committee assists the board of directorsin selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating andcorporate governance committee is responsible for, among other things:●selecting and recommending to the board nominees for election by the shareholders or appointment by the board;●reviewing annually with the board the current composition of the board with regards to characteristics such as independence,knowledge, skills, experience and diversity;●making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of theboard;●advising the board periodically with regards to significant developments in the law and practice of corporate; and●governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all mattersof corporate governance and on any remedial action to be taken.In 2021, our nominating and corporate governance committee passed unanimous written resolutions in lieu of meeting once.Duties of DirectorsUnder Cayman Islands law, our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly and aduty to act in good faith and with a view to our best interests. Our directors must also exercise their powers only for a proper purpose. Our directorsalso owe to our company a duty to act with such care and diligence that a reasonably prudent person would exercise in comparable circumstancesand a duty to exercise the skill they actually possess. It was previously considered that a director need not exhibit in the performance of his duties agreater degree of skill than may reasonably be expected from a person of his knowledge and experience. However, English and commonwealthcourts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in theCayman Islands. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association, asamended and restated from time to time, and the class rights vested thereunder in the holders of the shares. Our company has the right to seekdamages if a duty owed by the directors is breached. A shareholder may in certain circumstances have rights to damages if a duty owed by thedirectors is breached.Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs. The functionsand powers of our board of directors include, among others:●convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings;●declaring dividends and distributions;●appointing officers and determining the term of office of the officers;●exercising the borrowing powers of our company and mortgaging the property of our company; and●approving the transfer of shares in our company, including the registration of such shares in our share register.Terms of Directors and OfficersOur officers are appointed by and serve at the discretion of the board of directors. Our directors are not subject to a term of office and holdoffice until such time as they are removed from office by ordinary resolution of the shareholders or by the board or their office is otherwisevacated. A director will cease to be a director if, among other things, the director (i) becomes bankrupt or hasTable of Contents112a receiving order made against him or suspends any payment or compounds with his creditors; (ii) dies or becomes of unsound mind; (iii) resignshis office by notice in writing to the company; (iv) without special leave of absence from our board of directors, is absent from meetings of ourboard of directors for six consecutive meetings and the board resolves that his office be vacated; (v) is prohibited by law from being a director; or(vi) is removed from office pursuant to any other provision of our memorandum and articles of association.D. EmployeesAs of December 31, 2019, 2020 and 2021, we had, 2,312, 2,251 and 2,434 employees, respectively. The table sets forth the number ofemployees by area of business as of December 31, 2021Number of Percentage of Employees EmployeesSales 540 22.2%Software Developers and Other Technology-related 313 12.9%Editorial 578 23.7%Customer Support 303 12.4%Corporate Offices 700 28.8%Total 2,434 100.0%We pay our sales staff a combination of salaries and sales commissions and pay salaries to all other employees. We believe that wemaintain a good working relationship with our employees, and we have not experienced any major labor disputes.We place special emphasis on the training of our employees, whom we consider to be our most valuable asset. All newly hired employeesmust undergo intensive training during their three-month probation period. We also invite outside experts, including experts from the E-HouseResearch and Training Institute, to provide ongoing classroom training to our employees. The human resources department is responsible forimplementing the training plans, including engaging trainers, preparing training materials, selecting training venues and collecting feedback.Because sales of online marketing services are highly competitive, we strongly emphasize training programs designed to improve the salesand marketing skills of our sales staff. In addition to training for new hires, our sales staff participate in weekly operating meetings that includeadditional training opportunities.We conduct quarterly performance evaluations for all employees and use both performance-based bonuses and job promotions asincentives to encourage strong performance. We strive to maintain a collaborative corporate culture and our mid-level and senior employees aregenerally eligible to participate in our share incentive plan.E. Share OwnershipThe following table sets forth information with respect to the beneficial ownership of our ordinary shares as of March 31, 2022 by:●each of our directors and executive officers; and●each person known to us to own beneficially more than 5.0% of our ordinary shares.As of March 31, 2022, we had 136,822,601 ordinary shares issued and outstanding, excluding the 3,580,151 ordinary shares issued to ourdepositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards granted under our share incentiveplan. Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficiallyowned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 daysfrom March 31, 2022, including through the exercise of any option, warrant orTable of Contents113other right or the conversion of any other security. These shares, however, are not included in the computation of the percentage ownership of anyother person.Shares Beneficially Owned Number %Directors and Executive Officers: Xin Zhou**Yinyu He(1) 1,967,531 1.4Charles Chao(2)**Canhao Huang**Minyi Zhang(3) — —Jian Sun(4)**Min Fan(5)**Winston Jin Li(6)**Hongchao Zhu(7)**Li-Lan Cheng**Qiong Zuo**All Directors and Executive Officers as a Group(†) 4,589,115 3.4Principal Shareholders: TM Home Limited(8) 76,401,247 55.8SINA Corporation(9) 16,642,623 12.2Tencent Holdings Limited(10) 21,231,220 15.5Notes:* Less than 1% of our total outstanding shares.(†) Except where otherwise disclosed in the footnotes below, the business address of each of our directors and executive officers is Level G,Building G, No.8 Dongfeng South Road, Chaoyang District, Beijing 100016, People’s Republic of China.(1)Include (i) 267,499 ordinary shares and 33 ordinary shares represented by 33 ADSs held by Mr. Yinyu He, (ii) 1,699,999 ordinary sharesissuable to Mr. He upon exercise of options or vesting of restricted shares within 60 days after March 31, 2022.(2)The business address of Mr. Charles Chao is SINA Plaza, No. 8 Courtyard 10, the West Xibeiwang E. Road, Haidian District, Beijing 100193,People’s Republic of China.(3)The business address of Mr. Minyi Zhang is Tengyun Building, No. 397 Tianlin Road, Xuhui District, Shanghai 200233, People’s Republic ofChina.(4)The business address of Mr. Jian Sun is No. 124 Caobao Road, Xuhui District, Shanghai 200235, People’s Republic of China.(5)The business address of Mr. Min Fan is Building 18, No. 968 Jin Zhong Road, Changning District, Shanghai 200335, People’s Republic ofChina.(6)The business address of Mr. Winston Jin Li is Unit 4, Tower C, Yingdu Building, Zhichun Road, Haidian District, Beijing 100086, People’sRepublic of China.(7)The business address of Mr. Hongchao Zhu is Suite 1702, Bund Center, 222 Yan An Road (East), Huangpu District, Shanghai 200002,People’s Republic of China.(8)Based on Schedule 13D/A filed with SEC on November 24, 2021 by the reporting persons, represents 76,401,247 ordinary shares held by TMHome Limited. TM Home Limited is a company incorporated in the Cayman Islands with limited liability and owned as to 70.23% and29.77% by E-House Enterprise and Alibaba Investment Limited, respectively. TM Home Limited purchasedTable of Contents11476,401,247 of ordinary shares from E-House Enterprise by issuing to the E-House Enterprise 6,854,839 of its ordinary shares. E-HouseEnterprise is a company registered in the Cayman Islands with limited liability and listed on the main board of the Hong Kong Stock Exchange(stock code: 2048), whose registered office is at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, GrandCayman KY1-1104, Cayman Islands and principal office in Hong Kong is at 18/F, Tesbury Centre, 28 Queen’s Road East, Wan Chai, HongKong.(9)Represents 16,642,623 ordinary shares held by SINA. SINA is an exempted company incorporated under the laws of the Cayman Islands.SINA is a leading online media company serving China and the global Chinese communities. The principal executive offices of SINA are No.8 SINA Plaza, Courtyard 10, West Xibeiwang East Road, Haidian District, Beijing, 100193.(10)Represents 21,231,220 held by THL O Limited, a British Virgin Islands company and an indirect wholly owned subsidiary of TencentHoldings Limited. or Tencent. See “Item 7. Related Party Transactions—Transactions and Agreements with Tencent” for more information.Tencent Holding Limited is incorporated in the Cayman Islands and its business address is 29/F., Three Pacific Place, No.1 Queen’s Road East,Wanchai, Hong Kong. Tencent is listed on the Hong Kong Stock Exchange.To our knowledge, as of March 31, 2022, 25,502,413 of our ordinary shares were held by four record holders in the United States,representing approximately 18.6% of our total outstanding shares (including the 3,580,151 ordinary shares issued to our depositary bank for bulkissuance of ADSs reserved for future issuances upon the exercise or vesting of awards granted under our share incentive plan). One of these holdersis JPMorgan Chase Bank, N.A., the depositary of our ADS program, which held 24,875,078 ordinary shares on record, representing approximately18.2% of our total outstanding shares on record as of March 31, 2022 (including the 3,580,151 ordinary shares issued to it for bulk issuance ofADSs reserved for future issuances upon the exercise or vesting of awards granted under our share incentive plan). The number of beneficialowners of our ADSs in the United States is likely to be much larger than the number of record holders of our ordinary shares in the United States.For the options granted to our directors, executive officers and employees, please refer to “—B. Compensation of Directors and ExecutiveOfficers”.ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONSA. Major ShareholdersPlease refer to “Item 6. Directors, Senior Management and Employees—E. Share Ownership”.B. Related Party TransactionsTransactions with E-House EnterpriseTransactions with E-House Enterprise. We have become a subsidiary of E-House Enterprise and our financial results have been consolidated into the accounts of E-House Enterprise since November 4, 2020. Mr. Xin Zhou, our executive chairman, is a director of E-House Enterprise. E-House Enterprise was controlled by E-House prior to 2018. For the years ended December 31, 2019, 2020 and 2021, we derived revenues in the amount of $1.4 million, $1.4 million, and $36,334 million from providing online advertising services to E-House Enterprise, respectively, and we recognized expenses for marketing channel services provided by E-House Enterprise of $7.4 million, $21.4 million, and $20.6 million, respectively. As of December 31, 2019, 2020 and 2021, we had a receivable balance of $0.9 million and a payable balance of $2.2 million and $4.0 million, respectively.Transactions and Agreements with E-HouseAgreements Related to Our Carve-out from E-HouseWe have entered into agreements with E-House with respect to various ongoing relationships between us. These include a mastertransaction agreement, an offshore transitional services agreement, an onshore transitional services agreement, a non-competition agreement and anonshore cooperation agreement. The following are summaries of these agreements.Table of Contents115Master Transaction AgreementThe master transaction agreement contains provisions relating to our carve-out from E-House. The master transaction agreement providesfor cross-indemnities that generally will place the financial responsibility on us for all liabilities associated with the current and historical real estateonline services business and operations that have been conducted by or transferred to us, and generally will place on E-House the financialresponsibility for liabilities associated with all of E-House’s other current and historical businesses and operations, in each case regardless of thetime those liabilities arise. The master transaction agreement also contains indemnification provisions under which we and E-House will indemnifyeach other with respect to breaches of the master transaction agreement or any related agreement.In addition, we have agreed to indemnify E-House against liabilities arising from misstatements or omissions in our SEC filings and frominformation we provide to E-House specifically for inclusion in E-House’s annual or quarterly reports following the completion of our initial publicoffering, but only to the extent that the information pertains to us or our business or to the extent E-House provides us prior written notice that theinformation will be included in its annual or quarterly reports and the liability does not result from the action or inaction of E-House. Similarly, E-House will indemnify us against liabilities with respect to information that E-House provided to us specifically for inclusion in our SEC filings.The master transaction agreement contains a general release, under which the parties will release each other from any liabilities arisingfrom events occurring on or before the initial filing date of the registration statement for our initial public offering, including in connection with theactivities to implement our initial public offering. The general release does not apply to liabilities allocated between the parties under the mastertransaction agreement or the other related agreements.Furthermore, under the master transaction agreement, we have agreed to use our reasonable best efforts to use the same independentcertified public accounting firm selected by E-House and to maintain the same fiscal year as E-House until the first E-House fiscal year-endoccurring after the earlier of (i) the first date when E-House no longer owns at least 20% of the voting power of our then outstanding securities and(ii) the first date when E-House ceases to be the largest beneficial owner of our then outstanding voting securities (without considering holdings bycertain institutional investors). We also have agreed to use our reasonable best efforts to complete our audit and provide E-House with all financialand other information on a timely basis.The master transaction agreement will automatically terminate five years after the first date upon which E-House ceases to own inaggregate at least 20% of the voting power of our then outstanding securities. This agreement can be terminated early by mutual written consent ofthe parties.Offshore Transitional Services Agreement (As Amended)Under the offshore transitional services agreement, E-House agrees that, during the service period, E-House will provide us with variouscorporate support services, including:●accounting support;●administrative support;●marketing support;●internal control support;●customer service support; and●legal support.E-House also may provide us with additional services that we and E-House may identify from time to time in the future. It may engagethird parties to provide services covered by the offshore transitional service agreement.Table of Contents116The offshore transitional service agreement provides that the performance of a service according to the agreement will not subject theprovider of such service to any liability whatsoever except as directly caused by the gross negligence or willful misconduct of the service provider.Liability for gross negligence or willful misconduct is limited to the lower of the price paid for the particular service or the cost of the service’srecipient performing the service itself or hiring a third party to perform the service. Under the offshore transitional services agreement, the serviceprovider of each service is indemnified by the recipient against all third-party claims relating to provision of services or the recipient’s materialbreach of a third-party agreement, except where the claim is directly caused by the service provider’s gross negligence or willful misconduct.The price to be paid for the services provided under the offshore transitional service agreement shall be the actual direct costs and indirectcosts of providing such services. Direct costs include compensation and travel expenses attributable to employees, temporary workers, andcontractors directly engaged in performing the services as well as materials and supplies consumed in performing the services. Indirect costsinclude occupancy, information technology supervision and other overhead costs of the department incurring the direct costs of providing theservice.The offshore transitional services agreement provides for a service period commencing on the date when the registration statement onForm F-1 for our initial public offering is first publicly filed with the SEC, and ending on the date when E-House ceases to own in aggregate atleast 20% of the voting power of our then outstanding securities or ceases to be the largest beneficial owner of our then outstanding votingsecurities, without considering holdings of institutional investors that have acquired our securities in the ordinary course of their business and notwith a purpose nor with the effect of changing or influencing our control.Either party may terminate the offshore transitional services agreement with respect to either all or part of the services by giving a 90-dayprior written notice to the other party. The agreement provides for an early termination fee in the case of early termination by E-House, but does notquantify the amount of or specify the calculation method, for such fee.The agreement will be for a term until December 31, 2025, and will terminate with respect to any services at the close of business on thelast day of the service period for such service, unless the parties have agreed in writing to an extension of the service period.Onshore Transitional Services Agreement (As Amended)The onshore transitional services agreement adopts terms and conditions similar to those of the offshore transitional services agreement.Under the onshore transitional services agreement, E-House (China) Enterprise Management Group Ltd. (formerly, Shanghai Real Estate Sales(Group) Co., Limited), an indirectly wholly owned subsidiary of E-House, or E-House Shanghai, agrees, during the applicable service period, toprovide Beijing Leju, Beijing Jiajujiu, Leju Hao Fang, Shanghai SINA Leju, Beijing Maiteng, Shanghai Yi Yue and City Rehouse, or the Leju PRCEntities, and/or their designated PRC affiliates, with various corporate support services, including accounting support, administrative support,internal control and internal audit support, marketing support, customer service support and legal support. E-House Shanghai also may provide theLeju PRC Entities with additional services that the Leju PRC Entities and E-House Shanghai may identify from time to time in the future. E-HouseShanghai may engage its PRC affiliates or other third parties to provide services covered by the onshore transitional services agreement.The price to be paid for the services provided under the onshore transitional services agreement shall be the actual direct costs and indirectcosts of providing such services. Direct costs include compensation and travel expenses attributable to employees, temporary workers, andcontractors directly engaged in performing the services as well as materials and supplies consumed in performing the services. Indirect costsinclude occupancy, information technology supervision and other overhead costs of the department incurring the direct costs of providing theservice.The onshore transitional services agreement provides for a service period commencing on the date when the registration statement onForm F-1 for our initial public offering is first publicly filed with the SEC, and ending on the earliest date of the following dates: (i) the date whenLeju PRC Entities terminate the services, (ii) the date when E-House Shanghai terminates the services, and (iii) December 31, 2025.Either E-House Shanghai or the Leju PRC Entities may terminate either all or part of the services by giving a 90-day prior written noticeto the other party. The agreement provides for an early termination fee in the case of early termination by the Leju PRC Entities, but does notquantify the amount of or specify the calculation method, for such fee.Table of Contents117E-House charged us a fee based on an estimate of the actual costs incurred to provide services under the offshore and onshore transitional services agreements, which amounted to $1.8 million, $1.9 million and $1.4 million for 2019, 2020 and 2021, respectively.Non-competition AgreementThe non-competition agreement provides for a non-competition period beginning on the date of the agreement and ending on the later of(i) three years after the first date when E-House ceases to own in aggregate at least 20% of the voting power of our then outstanding securities and(ii) five years after the date that the registration statement on Form F-1 for our initial public offering is first publicly filed with the SEC. Thisagreement can be terminated early by mutual written consent of the parties.E-House has agreed not to compete with us during the non-competition period in the business of providing real estate e-commerce, onlineadvertising and listing services, anywhere in the world. We have agreed not to compete with E-House during the non-competition period in anybusiness conducted by E-House as described in its periodic filings with the SEC, other than the businesses we are engaged in as described in theprospectus for our initial public offering.The non-competition agreement also provides for a mutual non-solicitation obligation that neither E-House nor we may, during the non-competition period, hire, or solicit for hire, any active employees of or individuals providing consulting services to the other party, or any formeremployees of or individuals providing consulting services to the other party within six months of the termination of their employment or consultingservices, without the other party’s consent, except for solicitation activities through generalized non-targeted advertisement not directed to suchemployees or individuals that do not result in a hiring within the non-competition period.Onshore Cooperation AgreementUnder this onshore cooperation agreement, E-House Shanghai, Beijing Leju, Beijing Jiajujiu and Leju Hao Fang agree that they willcooperate with each other in sharing information about potential demands for products and/or services and developing clients. If any party is awarethat its customers, suppliers or other business partners may have demands for the products and/or services of the primary business of any otherparty, it will share such information with such other party, to the extent not in violation of any applicable law and its confidentiality obligations orother terms under any contract binding on such party. Furthermore, the parties agree to cooperate with each other, to the extent commerciallyreasonable and in the manner deemed to be appropriate, in referring the principal products and/or services of any other party, joint pitching for andnegotiating with clients, and entering into agreements with clients. In the event that the parties jointly enter into an agreement with a client, theyshall determine their respective rights and obligations in writing through amicable negotiations, and based on the principle of fairness and the fairmarket values of the products and/or services offered by the parties. The parties agree not to charge any fees for their cooperation and assistanceprovided under the agreement unless they separately and explicitly agree otherwise.The onshore cooperation agreement provides for a term commencing on its date of execution and ending on the date when E-House ceasesto own in aggregate at least 20% of the voting power of our then outstanding securities or ceases to be the largest beneficial owner of our thenoutstanding voting securities, without considering holdings of institutional investors that have acquired our securities in the ordinary course of theirbusiness and not with a purpose nor with the effect of changing or influencing our control. The onshore cooperation agreement does not provideany early termination right.Other Transactions and Agreements with E-HouseFor the years ended December 31, 2019, 2020 and 2021, we derived revenues in the amount of $23,168, nil and $0.5 million fromproviding online advertising services to E-House. For the years ended December 31, 2019, 2020, and 2021, we recognized expenses for servicesprovided by E-House of $1.5 million, $0.8 million and $0.9 million, respectively.In March 2015, we declared a cash dividend of $0.20 per ordinary share, or $0.20 per ADS, and paid an aggregate of $18.7 million to E-House directly from our additional paid-in capital account in May 2015.As of December 31, 2019, 2020 and 2021, we had a receivable balance from E-House of $0.6 million, a payable balance to E-house of$0.1 million and $2.2 million, respectively.Table of Contents118Transactions and Agreements with SINAIn 2008, SINA reorganized its real estate and home furnishing websites and online real estate advertising business into a separate unit withits own legal entities, management team, advertising operations, systems and physical facilities. Pursuant to the reorganization, SINA and E-Houseformed a joint venture, China Online Housing, which subsequently became our wholly owned subsidiary in December 2013 as part of a corporatereorganization by E-House. The terms of the joint venture provided China Online Housing with the rights, for an initial term of ten years, to use theE-House real estate information database and operate the SINA real estate and home furnishing websites, including licenses to use SINA’strademark, domain names, website technologies and certain software.In 2009, SINA and China Online Housing entered into an amended and restated advertising inventory agency agreement, a domain nameand content license agreement, a restated trademark license agreement and a software license and support services agreement. In March 2014, weand SINA entered into an advertising inventory agency agreement, an amended and restated domain name and content license agreement, anamended and restated trademark license agreement and an amended and restated software license and support services agreement. The principaleffect of the agreements entered into in March 2014 is to extend the term of our agreements with SINA through 2024.Advertising Inventory Agency AgreementUnder the advertising inventory agency agreement, we have the exclusive right to sell advertising to real estate, home furnishing andconstruction materials advertisers on all SINA non-real estate websites. We are required to pay SINA fees of approximately 15% of the revenuesgenerated from sales of advertising on SINA non-real estate websites, subject to certain limitations on the amount of advertising that we may selland fees payable by us to SINA based on the amount of advertising sold. In addition, we authorize SINA as our exclusive agent to sell non-realestate-related advertising on our directly operated websites. We are entitled to receive approximately 85% of the revenues generated from thesesales. The initial term of the amended and restated advertising inventory agency agreement is ten years, expiring in 2024.Domain Name and Content License AgreementUnder the amended and restated domain name and content license agreement, an affiliate of SINA, or licensor, granted to us an exclusivelicense to use its five domain names, namely, house.sina.com.cn, jiaju.sina.com.cn, construction.sina.com.cn, dichan.sina.com.cn, andesf.sina.com.cn in connection with our real estate internet operations in China. In addition, the licensor also granted to us an exclusive license touse all contents, whose copyrights are owned by the licensor or owned by a third-party provider but is sub-licensable by the licensor withoutrequiring payment of any additional fees and without violating the terms of any agreement with such third party provider, in connection withwebsites associated with the domain names licensed to us. For other operating contents, we may enter into an agreement with the ownerindependently and will be responsible for the costs associated with procuring the contents. The licenses are for an initial term of ten years expiringin 2024.Amended and Restated Trademark License AgreementUnder the amended and restated trademark license agreement, an affiliate of SINA granted to us a non-exclusive license to use three SINAtrademarks and an exclusive license to use four SINA related trademarks in connection with our real estate online operations in China throughwebsites located at leju.com and the websites located at house.sina.com.cn, jiaju.sina.com.cn, construction.sina.com.cn, dichan.sina.com.cn andesf.sina.com.cn. The licenses are for an initial term of ten years expiring in 2024.Amended and Restated Software License and Support Services AgreementUnder the amended and restated software license and support services agreement, a subsidiary of SINA, or licensor, granted to us a non-exclusive license to use (i) the proprietary software used for, among other things, internet content publishing, advertising publishing, salesmanagement, procurement reimbursement, financial management flow, statistics, monitoring and censoring; (ii) certain current software productsand interfaces necessary to facilitate our use of such current software products; (iii) the databases; (iv) certain improvements to the licensedsoftware; and (v) related documentation and hardware, in each case to the extent such items (other than licensor improvements) exist and have beendelivered to us under the software license and support service agreement executed in 2009. The licensor also provided to us infrastructurenecessary to operate our websites and facilitate our use of theTable of Contents119licensed software. In addition, the licensor also provided support services, including routine maintenance, technical support and hardware support.The licenses are for an initial term of ten years expiring in 2024 and free of any fees (subject to certain exceptions). However, to the extent thatthere are any reasonable, incremental costs for use of the licensed software or the infrastructure, or provision of the support services, due to achange in the business needs, we are required to reimburse the licensor for all such costs.Registration Rights AgreementIn connection with SINA becoming a principal shareholder of ours, on March 21, 2017, we entered into a registration rights agreementwith SINA, which grants SINA the same registration rights with respect to our ordinary shares as those granted to E-House and Tencent under theinvestor rights agreement dated March 31, 2014. For a detailed description of the registration rights, see “—Registration Rights Granted to E-House, Tencent and SINA”.Other Transactions with SINAAs of December 31, 2019, 2020 and 2021, we had a payable balance of $3.3 million, $3.2 million, and $1.5 million, respectively, to SINA, representing online advertising resources fee payable to SINA. The total cost recognized for the advertising resources purchased from SINA was $18.3 million, $29.3 million and $10.1 million for the years ended December 31, 2019, 2020 and 2021, respectively.Transactions and Agreements with TencentStrategic CooperationIn January 2019, we entered into a series of exclusive advertising agency agreements with Tencent. Pursuant to the exclusive advertisingagency agreements, we are the exclusive real property advertising agent of Tencent for selling advertising to real estate advertisers in certain areasof China, including, Tianjin and Sichuan, Anhui, Shanxi, Guangxi and Fujian provinces. In March 2019, we entered into an advertising agencyagreement with Tencent, pursuant to which we are the real property advertising agent of Tencent in certain other areas of China. In January 2020,we renewed and entered into advertising agency agreements with Tencent, pursuant to which we are the real property advertising agent of Tencentin many areas of China. Pursuant to the exclusive advertising agency agreements signed in April 2020, such areas of China were Heilongjiang,Shanxi, Tianjin, Fujian, Guangxi, Guizhou, Chongqing, Sichuan and some cities in Jiangsu Province. In early 2021, we renewed our advertisingagency agreements with Tencent, and the cooperative areas remain the same as those in 2020.Investor Rights AgreementOn March 31, 2014, being the closing date of the sale of shares to Tencent by E-House under the share purchase and subscriptionagreement, we entered into an investor rights agreement with E-House and Tencent, which granted E-House and Tencent, among other things,certain registration rights with respect to our ordinary shares owned by them. For a detailed description of the registration rights, see “—Registration Rights Granted to E-House, Tencent and SINA”.The investor rights agreement with E-House and Tencent also granted certain board representation rights to Tencent and placed certainrestrictions on the transfer of our ordinary shares by E-House or Tencent.Board representation. For so long as Tencent is the beneficial owner of at least 10% of our issued and outstanding ordinary shares,Tencent will have the right to designate one director to our board of directors.Other Transactions with TencentAs of December 31, 2019, 2020 and 2021, we had a receivable balance of $6.8 million, $9.1 million, and $3.6 million, respectively, from Tencent, representing online advertising resources fee prepaid to Tencent. The total cost recognized for the advertising resources purchased from Tencent was $21.4 million, $17.8 million, and $18.7 million for the years ended December 31, 2019, 2020 and 2021, respectively. In addition, fee paid to Tencent for advertising resources on behalf of customers as we acted as agent were $9.2 million, $43.1 million, and $2.5 million for the years ended December 31, 2019, 2020 and 2021, respectively.Table of Contents120Restrictions on transfer. For so long as Tencent is the beneficial owner of at least 10% of our issued and outstanding ordinary shares,Tencent’s prior written consent will be required for (i) a change of control of our company that results in certain specified entities, as agreed by usand Tencent, controlling us, (ii) the issuance, by way of a privately negotiated transaction, of equity securities representing more than 10% of ourissued and outstanding share capital to certain specified entities, or (iii) the transfer or other disposition, by way of a privately negotiatedtransaction, of equity securities representing more than 10% of our issued and outstanding share capital by E-House to certain specified entities, ineach case, subject to certain exceptions. Tencent will not, without our prior written consent, transfer or otherwise dispose, by way of a privatelynegotiated transaction, of our equity securities held by Tencent to certain specified entities, subject to certain exceptions.Registration Rights Granted to E-House, Tencent and SINAOn March 31, 2014, we entered into an investor rights agreement with E-House and Tencent, which granted E-House and Tencent, amongother things, certain registration rights with respect to our ordinary shares owned by them. On March 21, 2017, we entered into a registration rightsagreement with SINA, which grants SINA the same registration rights with respect to our ordinary shares as those granted to E-House and Tencentunder the investor rights agreement dated March 31, 2014.Demand registration rights. E-House, Tencent and SINA have the right to demand that we effect a registration covering the offer and saleof their ordinary shares. E-House, Tencent and SINA are each entitled to an aggregate of three such registrations. We, however, are not required toprepare and file (i) more than two demand registration statements in any 12-month period, or (ii) any demand registration statement within 120days following the date of effectiveness of any other registration statement. If the demand registration relates to an underwritten public offering andthe managing underwriter advises in its reasonable opinion that the number of securities requested to be included in the demand registrationexceeds the largest number which reasonably can be sold in such offering without having a material adverse effect on such offering, we willinclude in such demand registration, up to the maximum offering size, following the order of priority: (i) the registrable securities that therequesting parties propose to register; and (ii) any securities we propose to register and any securities with respect to which any other securityholder has requested registration. If the managing underwriter determines that less than all of the registrable securities proposed to be sold can beincluded in such offering, then the registrable securities that are included in such offering shall be allocated pro rata among the respectiverequesting parties on the basis of registrable securities sought to be registered by each requesting party.Shelf registration rights. Once we are eligible to file a shelf registration statement pursuant to Rule 415 promulgated under the SecuritiesAct, E-House, Tencent and SINA will have the right to demand that we file a shelf registration statement covering their ordinary shares. We,however, will not be required to prepare and file more than two shelf registration statements in any 12-month period.Piggyback registration rights. If we propose to file a registration statement for an offering of our ordinary shares, other than in atransaction of the type referred to in Rule 145 under the Securities Act or to our employees pursuant to any employee benefit plan, then we mustoffer E-House, Tencent and SINA an opportunity to include in the registration all or any part of their registrable securities. If the piggybackregistration relates to an underwritten public offering and the managing underwriter advises in its reasonable opinion that the number of securitiesrequested to be included in the piggyback registration together with the securities being registered by us or any other security holder exceeds thelargest number which reasonably can be sold in such offering without having a material adverse effect on such offering, then (i) if we initiate thepiggyback registration, we will include in such registration the securities we propose to register first, and allocate the remaining part of themaximum offering size to all other selling security holders on a pro rata basis; (ii) if any holder of our securities initiated the piggybackregistration, we will include, up to the maximum offering size, first the securities such initiating security holder proposes to register, then thesecurities of any other selling security holders on a pro rata basis, and lastly the securities we propose to register.Blackout periods. We are entitled to two blackout periods, aggregating to no more than 90 days in any consecutive 12-month period,during which we can delay the filing or effectiveness of a registration statement, if we would, in the good faith judgment of our board of directors,be required to disclose in the prospectus information not otherwise then required by law to be publicly disclosed, and there is a reasonablelikelihood that such disclosure, or any other action to be taken in connection with the prospectus, would materially and adversely affect or interferewith any significant financing, acquisition, merger, disposition of assets, corporate reorganization or other material transaction of negotiationsinvolving us.Table of Contents121Expenses of registration. We will pay all expenses relating to any demand or piggyback registration, except that E-House, Tencent andSINA shall bear and pay all (i) brokerage commissions, (ii) ADS issuance fees payable to any depositary institution, (iii) commissions, fees,spreads, discounts, transfer taxes, stamp duties, (iv) fees and expenses of its counsel or other advisers, subject to certain amounts that we will pay,and (v) their own out-of-pocket expenses, in each case, with respect to only such holder’s registrable securities.Transactions with Certain Related Customers and SuppliersTransactions with Yunnan Huixiangju Information & Consultant Ltd., or Huixiangju. Huixiangju is one of our investment affiliates and weown 51% equity interest in it. As of December 31, 2019, 2020 and 2021, we had a receivable balance of $1.4 million, nil and nil, respectively, fromHuixiangju, represents the platform service fee receivable from Huixiangju. The total revenue generated for the platform services to Huixiangjuwas $1.3 million, $2.4 million and $0.5 million for the years ended December 31, 2019, 2020 and 2021, respectively.Transactions with Suzhou Qianyisheng Information & Consultant Ltd., or Qianyisheng. Qianyisheng is one of our investment affiliates and we own 19% equity interest in it. As of December 31, 2019, 2020 and 2021, we had a receivable balance of $1,075, $692 and $708, respectively, which represents the expense paid on behalf of Qianyisheng.Transactions with Shanghai Yicang Enterprise Management Co., Ltd., or Yicang. Yicang was controlled by Mr. Xin Zhou, our executivechairman before it was sold by Mr. Xin Zhou on April, 2019. We rented office from Yicang of $17,767 in 2019. As of December 31, 2019, 2020and 2021, we had no receivable balance from or payable balance to Yicang.Transactions with Shanghai Tianji Network Services Ltd. (formerly known as Shanghai Yunchuang Information & Technology Ltd. ), or Tianji Network. Tianji Network is under control of Mr. Xin Zhou, our executive chairman, by May 2021 and became a subsidiary of E-houseEnterprise since then. We purchased technical services of $1.1 million, $0.5 million and $$69,762 million in 2019, 2020 and for the first fivemonths of 2021, respectively. As of December 31, 2019 and 2020, we had a payable balance of $1.1 million and $1.5 million, which represents thepayable for technical service fees. The transaction and balance with Tianji Network from June 2021 was included in the transactions with E-houseEnterprise.Transactions with Jupai Holdings Ltd., or Jupai. Mr. Xin Zhou, our executive chairman, is a director of Jupai. We purchased services of$0.1 million, $34,160, and nil from Jupai in 2019, 2020 and 2021, respectively. As of December 31, 2019, 2020 and 2021, we had no receivablebalance from or payable balance to Jupai.Transactions with Alibaba Investment Ltd., or Alibaba. Alibaba is a shareholder with significant influence on TM Home, our controllingshareholder, since November 4, 2021. We purchased services of $0.9 million in 2021. As of December 31, 2021, we had a receivable balance of$0.3 million, which represents prepaid fees for online advertising resources and technical service.Transactions with ManagementSee “Item 6. Directors, Senior Management and Employees Management—B. Compensation of Directors and Executive Officers”.Contractual Arrangements with Beijing Leju, Leju Hao Fang and Beijing Jiajujiu (the consolidated variable interest entities)See “Item 4. Information on the Company—C. Organizational Structure”.Share Options and Restricted SharesSee “Item 6. Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers—Share IncentivePlan”.C. Interests of Experts and CounselNot applicable.Table of Contents122ITEM 8. FINANCIAL INFORMATIONA. Consolidated Statements and Other Financial InformationWe have appended consolidated financial statements filed as part of this annual report.Legal ProceedingsWe are currently not involved in any material legal or arbitration proceedings. From time to time, we may be subject to claims and legalactions arising in the ordinary course of business, such as intellectual property infringement claims against us for use of others’ articles orphotographs and employment disputes and claims against us for use of our discount coupons. Such claims or legal actions, even if without merit,could result in the expenditure of significant financial and management resources and potentially result in civil liability for damages.Dividend PolicySubject to our memorandum and articles of association and the laws of the Cayman Islands, namely that our company may only paydividends out of profits or share premium, and provided always that in no circumstances may a dividend be paid if this would result in ourcompany being unable to pay its debts as they fall due in the ordinary course of business, our board of directors has complete discretion on whetherto distribute dividends. Our shareholders may by ordinary resolution declare a dividend, but not exceeding the amount recommended by our boardof directors. Our board of directors intends on paying dividends only to the extent cash is available in the offshore entities. Even if our board ofdirectors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements andsurplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant. If we pay anydividends, we will pay our ADS holders to the same extent as holders of our ordinary shares, subject to the terms of the deposit agreement,including the fees and expenses payable thereunder. Cash dividends on our ordinary shares, if any, will be paid in U.S. dollars.We rely principally on dividends from our PRC subsidiaries for our cash requirements, to the extent existing cash in our offshore entitiesis fully utilized, including any debt we may incur.As authorized by our board of directors, we paid a cash dividend of $0.20 on or about May 15, 2015, for each of our ordinary sharesissued and outstanding as of April 10, 2015, or each of our ADSs outstanding as of April 10, 2015. Our board of directors decides the timing,amount and form of any future dividends, if any, based on, among other things, our future results of operations and cash flow, our capitalrequirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictionsand other factors deemed relevant by our board of directors.Leju is a holding company incorporated in the Cayman Islands. It relies principally on dividends from its subsidiaries in China for its cashrequirements, including any payment of dividends to its shareholders. PRC regulations may restrict the ability of Leju’s PRC subsidiaries to paydividends to Leju. See “Item 4. Information on the Company—B. Business Overview—Regulation—Regulations relating to DividendDistributions”.B. Significant ChangesExcept as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our auditedconsolidated financial statements included in this annual report.ITEM 9. THE OFFER AND LISTINGA. Offering and Listing DetailsOur ADSs have been listed on the NYSE since April 17, 2014 under the symbol “LEJU”. Each ADS represents one of our ordinaryshares.Table of Contents123In 2021, the trading price of our ADSs on the NYSE ranged from $3.97 to $0.74 per ADS.B. Plan of DistributionNot applicable.C. MarketsOur ADSs, each representing one of our ordinary shares, have been traded on the NYSE since April 17, 2014 under the symbol “LEJU”.D. Selling ShareholdersNot applicable.E. DilutionNot applicable.F. Expenses of the IssueNot applicable.ITEM 10. ADDITIONAL INFORMATIONA. Share CapitalNot applicable.B. Memorandum and Articles of AssociationWe are a Cayman Islands exempted company with limited liability and our affairs are governed by our memorandum and articles ofassociation, as amended and restated from time to time, the Companies Act (As Revised) of the Cayman Islands, which is referred to as theCompanies Act below, and the common law of the Cayman Islands.The following are summaries of material provisions of our current amended and restated memorandum and articles of association that wasadopted by a special resolution passed on March 10, 2014 and became effective immediately upon the completion of our initial public offering ofordinary shares represented by ADSs in April 2014, insofar as they relate to the material terms of our ordinary shares.Registered Office and ObjectsOur registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited at PO Box 309, Ugland House,Grand Cayman, KY1-1104, Cayman Islands, or at such other place as our board of directors may from time to time decide. The objects for whichour company is established are unrestricted and we have full power and authority to carry out any object not prohibited by the Companies Act, asamended from time to time, or any other law of the Cayman Islands.Board of DirectorsSee “Item 6. Directors, Senior Management and Employees—C. Board Practices”.Table of Contents124Ordinary SharesGeneral. All of our issued and outstanding ordinary shares are fully paid and non-assessable. Our ordinary shares are issued in registeredform, and are issued when registered in our register of members. Our shareholders who are non-residents of the Cayman Islands may freely holdand vote their ordinary shares. Our company will not issue bearer or negotiable shares.Register of Members. Under Cayman Islands law, we must keep a register of members and there should be entered therein:●the names and addresses of the members, together with a statement of the shares held by each member, and such statement shallconfirm (i) the amount paid or agreed to be considered as paid, on the shares of each member, (ii) the number and category of sharesheld by each member, and (iii) whether each relevant category of shares held by a member carries voting rights under the articles ofassociation of the company, and if so, whether such voting rights are conditional;●the date on which the name of any person was entered on the register as a member; and●the date on which any person ceased to be a member.Under Cayman Islands law, the register of members of our company is prima facie evidence of the matters set out therein (i.e., the registerof members will raise a presumption of fact on the matters referred to above unless rebutted) and a member registered in the register of members isdeemed as a matter of Cayman Islands law to have legal title to the shares as set against its name in the register of members.If the name of any person is incorrectly entered in or omitted from our register of members, or if there is any default or unnecessary delayin entering on the register the fact of any person having ceased to be a member of our company, the person or member aggrieved (or any memberof our company or our company itself) may apply to the Grand Court of the Cayman Islands for an order that the register be rectified, and the Courtmay either refuse such application or it may, if satisfied of the justice of the case, make an order for the rectification of the register.Dividends. The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors. In addition, ourshareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors. UnderCayman Islands law, dividends may be declared and paid only out of funds legally available therefor, namely out of either profit or our sharepremium account, provided that a dividend may not be paid if this would result in our company being unable to pay its debts as they fall due in theordinary course of business.Voting Rights. Each shareholder is entitled to one vote on a show of hands or, on a poll, to one vote for each share registered in his nameon the register of members, on all matters upon which the ordinary shares are entitled to vote. Voting at any meeting of shareholders is by show ofhands unless a poll (before or on the declaration of the result of the show of hands) is demanded. A poll may be demanded by the chairman of suchmeeting or any one or more shareholders present in person or by proxy entitled to vote and who together hold not less than ten percent of the paidup voting share capital of our Company.An ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple majority of the votes cast by thoseshareholders entitled to vote who are present in person or by proxy at a general meeting, while a special resolution requires the affirmative vote ofno less than two-thirds of the votes cast by those shareholders entitled to vote who are present in person or by proxy at a general meeting. Bothordinary resolutions and special resolutions may also be passed by a unanimous written resolution signed by all the shareholders of our company,as permitted by the Companies Act and our memorandum and articles of association. A special resolution will be required for important matterssuch as a change of name or making changes to our memorandum and articles of association.Transfer of Ordinary Shares. Any of our shareholders may transfer, subject to the approval of our board of directors or the written consentof a director authorized by our board of directors in writing to approve share transfers, all or any of his or her ordinary shares by an instrument oftransfer in the usual or common form or any other form approved by our board of directors.Table of Contents125However, our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share which is not fullypaid up or on which our company has a lien. Our board of directors may also decline to register any transfer of any ordinary share unless:●the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such otherevidence as our board of directors may reasonably require to show the right of the transferor to make the transfer;●the instrument of transfer is in respect of only one class of shares;●the instrument of transfer is properly stamped, if required;●the ordinary shares transferred are free of any lien in favor of us;●any fee related to the transfer has been paid to us; or●in the case of a transfer to joint holders, the transfer is not to more than four joint holders.If our directors refuse to register a transfer they are required, within two months after the date on which the instrument of transfer waslodged, to send to each of the transferor and the transferee notice of such refusal.Liquidation. On a winding up of our company, the liquidator may, with the sanction of a special resolution, divide amongst theshareholders in specie or kind the whole or any part of the assets of our company (whether they shall consist of property of the same kind or not)and may for such purpose set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shallbe carried out as between the shareholders or different classes of shareholders. The liquidator may, with the like sanction, vest the whole or any partof such assets in trustees upon such trusts for the benefit of the contributories as the liquidator, with the like sanction shall think fit, but so that noshareholder shall be compelled to accept any shares or other securities whereon there is any liability. We are an exempted company with “limitedliability” incorporated under the Companies Act, and under the Companies Act, the liability of our members is limited to the amount, if any, unpaidon the shares respectively held by them. Our memorandum of association contains a declaration that the liability of our members is so limited.Calls on Ordinary Shares and Forfeiture of Ordinary Shares. Our board of directors may from time to time make calls upon shareholdersfor any amounts unpaid on their ordinary shares. The ordinary shares that have been called upon and remain unpaid are subject to forfeiture.Redemption, Repurchase and Surrender of Ordinary Shares. We may issue shares on terms that such shares are subject to redemption, atour option or at the option of the holders thereof, on such terms and in such manner as may be determined, before the issue of such shares, by ourboard of directors. Our company may also repurchase any of our shares (including any redeemable shares) provided that the manner and terms ofsuch purchase have been approved by ordinary resolution of our shareholders, or are otherwise authorized by our memorandum and articles ofassociation. Under the Companies Act, the redemption or repurchase of any share may be paid out of our company’s profits or out of the proceedsof a fresh issue of shares made for the purpose of such redemption or repurchase, or out of capital (including share premium account and capitalredemption reserve) if our company can, immediately following such payment, pay its debts as they fall due in the ordinary course of business. Inaddition, under the Companies Act no such share may be redeemed or repurchased (i) unless it is fully paid up; (ii) if such redemption orrepurchase would result in there being no shares issued and outstanding; or (iii) if the company has commenced liquidation. In addition, ourcompany may accept the surrender of any fully paid share for no consideration.Variation of Rights of Shares. If at any time, our share capital is divided into different classes or series of shares, all or any of the specialrights attached to any class or series of shares (unless otherwise provided by the terms of issue of the shares of that class or series) may be variedwith the consent in writing of the holders of a majority of the issued shares of that class or series or with the sanction of a special resolution passedat a general meeting of the holders of the shares of that class or series. The rights conferred upon the holders of the shares of any class or seriesissued with preferred or other rights will not, unless otherwise expressly providedTable of Contents126by the terms of issue of the shares of that class or series, be deemed to be varied by the creation or issue of further shares ranking pari passu withsuch existing class of shares.General Meetings of Shareholders and Shareholder Proposals. As a Cayman Islands exempted company, we are not obligated by theCompanies Act to call shareholders’ annual general meetings. Our memorandum and articles of association provide that we may (but are notobligated to) in each year hold a general meeting as our annual general meeting in which case we shall specify the meeting as such in the noticescalling it, and the annual general meeting shall be held at such time and place as may be determined by our directors.Shareholders’ annual general meetings and any other general meetings of our shareholders may be convened by a majority of our board ofdirectors. Advance notice of at least seven calendar days is required for the convening of our annual general meeting and any other general meetingof our shareholders. A quorum required for a general meeting of shareholders consists of shareholders present in person or by proxy, representingnot less than one-third of the votes attaching to the issued and outstanding shares in our company entitled to vote at general meetings.Cayman Islands law provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholderswith any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Ourmemorandum and articles of association allow our shareholders holding shares representing in aggregate not less than one-third of the share capitalof our company in issue entitled to vote at general meetings, to requisition an extraordinary general meeting of the shareholders, in which case ourdirectors are obligated to call such meeting and to put the resolutions so requisitioned to a vote at such meeting; however, our memorandum andarticles of association do not provide our shareholders with any right to put any proposals before annual general meetings or extraordinary generalmeetings not called by such shareholders.Election and Removal of Directors. Unless otherwise determined by our company in general meeting, our articles of association providethat our board will consist of not less than three directors. There are no provisions relating to retirement of directors upon reaching any age limit.The directors have the power to appoint any person as a director either to fill a casual vacancy on the board or as an addition to theexisting board. Our shareholders may also appoint any person to be a director by way of ordinary resolution.A director may be removed with or without cause by ordinary resolution.In addition, the office of any director shall be vacated if the director (i) becomes bankrupt or has a receiving order made against him orsuspends payment or compounds with his creditors, (ii) dies or becomes of unsound mind, (iii) resigns his office by notice in writing to theCompany; (iv) without special leave of absence from our board of directors, is absent from meetings of our board of directors for six consecutivemeetings and the board resolves that his office be vacated; (v) is prohibited by law from being a director or (vi) is removed from office pursuant toany other provision of our memorandum and articles of association.Proceedings of Board of Directors. Our memorandum and articles of association provide that our business is to be managed and conductedby our board of directors. The quorum necessary for board meetings may be fixed by the board and, unless so fixed at another number, will be amajority of the directors, including the chairman.Our memorandum and articles of association provide that the board may from time to time at its discretion exercise all powers of ourcompany to raise or borrow money, to mortgage or charge all or any part of the undertaking, property and assets (present and future) and uncalledcapital of our company and to issue debentures, bonds and other securities of our company, whether outright or as collateral security for any debt,liability or obligation of our company or of any third party.Inspection of Books and Records. Holders of our ordinary shares have no general right under Cayman Islands law to inspect or obtaincopies of our list of shareholders or our corporate records (other than our memorandum and articles of association, our register of mortgages andcharges and special resolutions ofo ur shareholders). However, we intend to provide our shareholders with annual audited financial statements. See“Where You Can Find Additional Information”.Table of Contents127Changes in Capital. Our shareholders may from time to time by ordinary resolution:●increase our share capital by such sum, to be divided into shares of such classes and amount, as the resolution shall prescribe;●consolidate and divide all or any of our share capital into shares of a larger amount than our existing shares;●sub-divide our existing shares, or any of them into shares of a smaller amount, provided that in the subdivision the proportionbetween the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in case of the share fromwhich the reduced share is derived; or●cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person anddiminish the amount of our share capital by the amount of the shares so cancelled.Our shareholders may by special resolution, subject to confirmation by the Grand Court of the Cayman Islands on an application by ourcompany for an order confirming such reduction, reduce our share capital or any capital redemption reserve in any manner permitted by law.Anti-Takeover Provisions. Some provisions of our current memorandum and articles of association may discourage, delay or prevent achange in control of our company or management that shareholders may consider favorable, including provisions that authorize our board ofdirectors to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preferredshares without any further vote or action by our shareholders.However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our memorandum andarticles of association, as amended and restated from time to time, for a proper purpose and for what they believe in good faith to be in the bestinterests of our company.Exempted Company. We are an exempted company with limited liability under the Companies Act. The Companies Act in the CaymanIslands distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands butconducts business mainly outside the Cayman Islands may apply to be registered as an exempted company. The requirements for an exemptedcompany are essentially the same as for an ordinary company except for the exemptions and privileges listed below:●an exempted company does not have to file an annual return of its shareholders with the Registrar of Companies;●an exempted company’s register of members is not required to be open to inspection;●an exempted company does not have to hold an annual general meeting;●an exempted company may issue no par value, negotiable or bearer shares;●an exempted company may obtain an undertaking against the imposition of any future taxation (such undertakings are usually givenfor 20 years in the first instance);●an exempted company may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;●an exempted company may register as a limited duration company; and●an exempted company may register as a segregated portfolio company.“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on that shareholder’sshares of the company (except in exceptional circumstances, such as involving fraud, the establishment of an agencyTable of Contents128relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).We are subject to reporting and other informational requirements of the Exchange Act, as applicable to foreign private issuers. Except asotherwise disclosed in this annual report, we currently intend to comply with the NYSE rules in lieu of home country practice.C. Material ContractsWe have not entered into any material contracts other than in the ordinary course of business and other than those described in “Item 4.Information on the Company”, “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions”, or elsewhere in thisannual report on Form 20-F.D. Exchange ControlsSee “Item 4. Information on the Company—B. Business Overview—Regulation—Foreign Exchange Registration of Offshore Investmentsby PRC Residents”.E. TaxationCayman Islands TaxationThe Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there isno taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of theCayman Islands except for stamp duties which may be applicable on instruments executed in, or brought within the jurisdiction of the CaymanIslands, or produced before a court of the Cayman Islands. The Cayman Islands is not party to any double tax treaties that are applicable to anypayments made to or by our company. There are no exchange control regulations or currency restrictions in the Cayman Islands.Payments of dividends and capital in respect of the shares will not be subject to taxation in the Cayman Islands and no withholding will berequired on the payment of a dividend or capital to any holder of the Shares, nor will gains derived from the disposal of the shares be subject toCayman Islands income or corporation tax.People’s Republic of China TaxationUnder the EIT Law, and its implementation rules, an enterprise established outside China with “de facto management body” within Chinais considered a resident enterprise. The implementation rules of the EIT Law define the term “de facto management body” as the body thatexercises full and substantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise. InApril 2009, the SAT issued the SAT Circular 82, which was most recently amended on December 29, 2017 and provides certain specific criteria fordetermining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. Althoughthis circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individualsor foreigners, the criteria set forth in the circular may reflect the SAT’s general position on how the “de facto management body” text should beapplied in determining the tax resident status of all offshore enterprises including Leju Holdings Limited. According to the SAT Circular 82, anoffshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue ofhaving its “de facto management body” in China only if all of the following conditions are met: (i) the primary location of the day-to-dayoperational management is in China; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject toapproval by organizations or personnel in China; (iii) the enterprise’s primary assets, accounting books and records, company seals, board andshareholder resolutions are located or maintained in China; and (iv) at least 50% of voting board members or senior executives habitually reside inChina.Although Leju Holdings Limited does not meet condition (iii) above as its primary assets in the form of shareholding in offshore entities,and its accounting books and records, company seals, and board and shareholder resolutions are located and maintained outside China, there areuncertainties as to the interpretation of relevant PRC regulations including the SAT Circular 82Table of Contents129and condition (iii) above as well as the applicability of the SAT Circular 82 to Leju Holdings Limited, and the tax resident status of an enterprise issubject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto managementbody”.If the PRC tax authorities determine that Leju Holdings Limited is a PRC resident enterprise for enterprise income tax purposes, we maybe required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises, including the holders ofour ADSs. In addition, non-resident enterprise shareholders (including our ADS holders) may be subject to a 10% PRC tax on gains realized on thesale or other disposition of ADSs or ordinary shares, if such income is treated as sourced from within China. It is unclear whether our non-PRCindividual shareholders (including our ADS holders) would be subject to any PRC tax on dividends or gains obtained by such non-PRC individualshareholders in the event we are determined to be a PRC resident enterprise. If any PRC tax were to apply to such dividends or gains, it wouldgenerally apply at a rate of 20% unless a reduced rate is available under an applicable tax treaty. However, it is also unclear whether non-PRCshareholders of Leju Holdings Limited would be able to claim the benefits of any tax treaties between their country of tax residence and China inthe event that Leju Holdings Limited is treated as a PRC resident enterprise.The SAT issued the SAT Circular 59 together with the Ministry of Finance in April 2009 and the SAT Circular 698 in December 2009. Bypromulgating and implementing these two circulars, the PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer ofequity interests in a PRC resident enterprise by a non-PRC resident enterprise. The SAT Bulletin 7 was promulgated in February 2015 and replacedprevious rules under the SAT Circular 698. Under the SAT Bulletin 7, an “indirect transfer” of assets of a PRC resident enterprise, including equityinterests in a PRC resident enterprise, by non-PRC resident enterprises may be re-characterized and treated as a direct transfer of PRC taxableproperties, if such transaction arrangement lacks a reasonable commercial purpose and was established for the purpose of avoiding payment ofPRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax. According to theSAT Bulletin 7, “PRC taxable assets” include assets attributed to an establishment in China, immovable properties located in China, and equityinterests in PRC resident enterprises. In respect of an indirect transfer of assets of a PRC establishment, the resulting gain is to be included with theenterprise income tax filing of the PRC establishment being transferred, and would consequently be subject to PRC enterprise income tax at a rateof 25%. If the underlying transfer relates to the immovable properties located in China or to equity interests in a PRC resident enterprise, which isnot related to a PRC establishment or place of business of a non-resident enterprise, a PRC enterprise income tax at 10% would apply, subject topreferential tax treatment under applicable tax treaties or similar arrangements, and the party who is obligated to make payments for the transferhas a withholding obligation. Although it appears that the SAT Bulletin 7 does not apply to share transfers of publicly traded companies, there isuncertainty as to the application of the SAT Bulletin 7 and we and our non-PRC resident investors may be at risk of being subject to tax filing orwithholding obligations under the SAT Bulletin 7 and we may be required to expend valuable resources to comply with the SAT Bulletin 7 or toestablish that we should not be taxed under the SAT Bulletin 7.U.S. Federal Income Tax ConsiderationsThe following discussion is a summary of U.S. federal income tax considerations relating to the ownership and disposition of our ADSs orordinary shares by a U.S. holder (as defined below) that holds our ADSs or ordinary shares as “capital assets” (generally, property held forinvestment) under the U.S. Internal Revenue Code of 1986, as amended. This discussion is based upon existing U.S. federal income tax law, whichis subject to differing interpretations or change, possibly with retroactive effect. There can be no assurance that the Internal Revenue Service the(“IRS”) or a court will not take a contrary position. This discussion does not discuss all aspects of U.S. federal income taxation that may beimportant to particular investors in light of their individual circumstances, including investors subject to special tax rules that differ significantlyfrom those summarized below (for example, certain financial institutions, insurance companies, broker-dealers, traders in securities that haveelected the mark-to-market method of accounting for their securities, partnerships and their partners, regulated investment companies, real estateinvestment trusts, and tax-exempt organizations (including private foundations), holders who are not U.S. holders, holders who own (directly,indirectly, or constructively) 10% or more of our stock (by vote or value), holders who acquire their ADSs or ordinary shares pursuant to anyemployee share option or otherwise as compensation, investors that will hold their ADSs or ordinary shares as part of a straddle, hedge, conversion,constructive sale, or other integrated transaction for U.S. federal income tax purposes, or investors that have a functional currency other than theU.S. dollar). In addition, this discussion does not address U.S. federal estate, gift, Medicare, and alternative minimum tax considerations, or anynon-U.S., state, and local tax considerations. Each U.S. holder is urged to consult its tax advisors regarding the U.S. federal, state, local, and non-U.S. tax considerations of an investment in our ADSs or ordinary shares.Table of Contents130GeneralFor purposes of this discussion, a “U.S. holder” is a beneficial owner of our ADSs or ordinary shares that is, for U.S. federal income taxpurposes, (i) an individual who is a citizen or resident of the United States; (ii) a corporation (or other entity treated as a corporation for U.S.federal income tax purposes) created in, or organized under the laws of, the United States or any state thereof or the District of Columbia; (iii) anestate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or (iv) a trust (A) theadministration of which is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority tocontrol all substantial decisions of the trust; or (B) that has otherwise validly elected to be treated as a U.S. person.If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of our ADSs orordinary shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of thepartnership. Partnerships holding our ADSs or ordinary shares and partners in such partnerships are urged to consult their tax advisors as to theparticular U.S. federal income tax consequences of an investment in our ADSs or ordinary shares.For U.S. federal income tax purposes, it is generally expected that a U.S. holder of ADSs will generally be treated as the beneficial ownerof the underlying shares represented by the ADSs. The remainder of this discussion assumes that a U.S. holder of our ADSs will be treated in thismanner. Accordingly, deposits or withdrawals of ordinary shares for ADSs will generally not be subject to U.S. federal income tax.Passive Foreign Investment Company ConsiderationsA non-U.S. corporation, such as our company, will be classified as a PFIC for U.S. federal income tax purposes, if, in the case of anyparticular taxable year, either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more ofthe value of its assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce or are heldfor the production of passive income (the “asset test”). For this purpose, cash and assets readily convertible into cash are categorized as a passiveasset and the company’s goodwill and other unbooked intangibles associated with active business activities may generally be classified as activeassets. Passive income generally includes, among other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets.We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation inwhich we own, directly or indirectly, 25% or more (by value) of the stock.Although the law in this regard is unclear, we treat our consolidated variable interest entities as being owned by us for U.S. federal incometax purposes, not only because we exercise effective control over the operation of such entities but also because we are entitled to substantially allof their economic benefits, and, as a result, we consolidate their operating results in our consolidated financial statements. Based upon thecomposition of our assets (in particular the retention of a substantial amount of cash), and the market price of our ADSs, we believe that we were aPFIC for United States federal income tax purposes for the taxable year ended December 31, 2021, and we will likely be a PFIC for our currenttaxable year unless the market price of our ADSs increases and/or we invest a substantial amount of the cash and other passive assets we hold inassets that produce or are held for the production of active income. If we were classified as a PFIC for any year during which a U.S. holder held ourADSs or ordinary shares, we generally would continue to be treated as a PFIC for all succeeding years during which such U.S. holder held ourADSs or ordinary shares.The U.S. federal income tax rules that apply if we are classified as a PFIC for any taxable year are generally discussed below under“Passive Foreign Investment Company Rules”.DividendsSubject to the discussion below under “Passive Foreign Investment Company Rules,” any cash distributions (including the amount of anytax withheld) paid on our ADSs or ordinary shares out of our current or accumulated earnings and profits, as determined under U.S. federal incometax principles, will generally be includible in the gross income of a U.S. holder as dividend income on the day actually or constructively receivedby the U.S. holder, in the case of ordinary shares, or by the depositary, in the case of ADSs. Because we do not intend to determine our earningsand profits on the basis of U.S. federal income tax principles, any distribution paid will generally be reported as a “dividend” for U.S. federalincome tax purposes. A non-corporate recipient of dividend income will generally be subject to tax on dividend income from a “qualified foreigncorporation” at a reduced U.S. federalTable of Contents131tax rate rather than the marginal tax rates generally applicable to ordinary income provided that certain holding period and other requirements aremet.A non-U.S. corporation (other than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or thepreceding taxable year) will generally be considered to be a qualified foreign corporation (i) if it is eligible for the benefits of a comprehensive taxtreaty with the United States which the Secretary of Treasury of the United States determines is satisfactory for purposes of this provision andwhich includes an exchange of information program; or (ii) with respect to any dividend it pays on stock (or ADSs in respect of such stock) whichis readily tradable on an established securities market in the United States. Our ADSs are listed on the NYSE, which is an established securitiesmarket in the United States, and will be considered readily tradable on the NYSE for as long as the ADSs continue to be listed on such exchange.Thus, we believe that dividends we pay on our ADSs will meet the conditions required for the reduced tax rate, but there can be no assurance thatour ADSs will continue to be considered readily tradable on an established securities market in later years. Since we do not expect that our ordinaryshares will be listed on established securities markets, it is unclear whether dividends that we pay on our ordinary shares that are not backed byADSs currently meet the conditions required for the reduced tax rate.In the event that we are deemed to be a PRC “resident enterprise” under the EIT Law (see “People’s Republic of China Taxation”), wemay be eligible for the benefits of the U.S.-PRC income tax treaty (which the Secretary of Treasury of the United States has determined issatisfactory for this purpose) and be treated as a qualified foreign corporation with respect to dividends paid to our ADSs or ordinary shares.Dividends received on the ADSs or ordinary shares will not be eligible for the dividends-received deduction allowed to corporations. Each U.S.holder is advised to consult its tax advisors regarding the availability of the reduced tax rate applicable to qualified dividend income for anydividends we pay with respect to our ADSs or ordinary shares.Dividends will generally be treated as income from foreign sources for U.S. foreign tax credit purposes and will generally constitutepassive category income. In the event that we are deemed to be a PRC resident enterprise under the EIT Law, a U.S. holder may be subject to PRCwithholding taxes on dividends paid on our ADSs or ordinary shares. A U.S. holder may be eligible, subject to a number of complex limitations, toclaim a foreign tax credit in respect of any foreign withholding taxes imposed on dividends received on ADSs or ordinary shares. A U.S. holderwho does not elect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction, for U.S. federal income tax purposes, inrespect of such withholdings, but only for a year in which such U.S. holder elects to do so for all creditable foreign income taxes. The rulesgoverning the foreign tax credit are complex. Each U.S. holder is advised to consult its tax advisors regarding the availability of the foreign taxcredit under their particular circumstances.As mentioned above, we believe that we were a PFIC for the taxable year ended December 31, 2021, and we will likely be classified as aPFIC for our current taxable year. U.S. holders are urged to consult their tax advisors regarding the availability of the reduced tax rate on dividendswith respect to the ADSs or ordinary shares in their particular circumstances.Sale or Other Disposition of ADSs or Ordinary SharesSubject to the discussion below under “Passive Foreign Investment Company Rules.” a U.S. holder will generally recognize capital gainor loss upon the sale or other disposition of ADSs or ordinary shares in an amount equal to the difference between the amount realized upon thedisposition and the U.S. holder’s adjusted tax basis in such ADSs or ordinary shares. Any capital gain or loss will be long-term gain or loss if theADSs or ordinary shares have been held for more than one year and will generally be U.S.-source gain or loss for U.S. foreign tax credit purposes.The deductibility of a capital loss may be subject to limitations. In the event that we are treated as a PRC resident enterprise under the EIT Law andgain from the disposition of the ADSs or ordinary shares is subject to tax in China, such gain may be treated as PRC-source gain for foreign taxcredit purposes under the U.S.-PRC income tax treaty (the “Treaty”). Pursuant to recently issued Treasury Regulations, however, if a U.S. Holder isnot eligible for the benefits of the Treaty or does not elect to apply the Treaty, then such holder may not be able to claim a foreign tax credit arisingfrom any PRC tax imposed on the disposition of the ADSs or ordinary shares. U.S. holders are advised to consult their tax advisors regarding thetax consequences if a foreign tax is imposed on a disposition of our ADSs or ordinary shares, including the availability of the foreign tax credit ordeduction under their particular circumstances, their eligibility for benefits under the Treaty and the potential impact of the recently issued TreasuryRegulations.As mentioned above, we believe that we were a PFIC for the taxable year ended December 31, 2021, and we will likely be classified as aPFIC for our current taxable year. U.S. holders are urged to consult their tax advisors regarding the tax considerations of the sale or otherdisposition of the ADSs or ordinary shares in their particular circumstances.Table of Contents132Passive Foreign Investment Company RulesAs mentioned above, we believe that we were a PFIC for the taxable year ended December 31, 2021, and we will likely be classified as aPFIC for our current taxable year. If we are classified as a PFIC for any taxable year during which a U.S. holder holds our ADSs or ordinary shares,and unless the U.S. holder makes a mark-to-market election (as described below) with respect to the ADSs, the U.S. holder will generally besubject to special tax rules that have a penalizing effect, regardless of whether we remain a PFIC, on (i) any excess distribution that we make to theU.S. holder (which generally means any distribution paid during a taxable year to a U.S. holder that is greater than 125% of the average annualdistributions paid in the three preceding taxable years or, if shorter, the U.S. holder’s holding period for the ADSs or ordinary shares); and (ii) anygain realized on the sale or other disposition, including, under certain circumstances, a pledge, of ADSs or ordinary shares. Under the PFIC rules:●the excess distribution and/or gain will be allocated ratably over the U.S. holder’s holding period for the ADSs or ordinary shares;●the amount allocated to the current taxable year and any taxable years in the U.S. holder’s holding period prior to the first taxableyear in which we are classified as a PFIC (each, a pre-PFIC year) will be taxable as ordinary income;●the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effectapplicable to the U.S. holder for that year; and●an additional tax equal to the interest charge generally applicable to underpayments of tax will be imposed on the tax attributable toeach prior taxable year, other than a pre-PFIC year.If we are a PFIC for any taxable year during which a U.S. holder holds our ADSs or ordinary shares and any of our non-U.S. subsidiariesis also a PFIC, such U.S. holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes ofthe application of these rules. Each U.S. holder is advised to consult its tax advisors regarding the application of the PFIC rules to any of oursubsidiaries.As an alternative to the foregoing rules, a U.S. holder of “marketable stock” in a PFIC may make a mark-to-market election with respectto our ADSs. The mark-to-market election is available only for stock that is regularly traded on a national securities exchange that is registeredwith the SEC, or on a foreign exchange or represents a legitimate and sound fair market value. Our ADSs are traded on the NYSE, which is anestablished securities market in the U.S. Consequently, if our ADSs continue to be listed and are regularly traded on the NYSE, we expect that themark-to-market election would be available to a U.S. holder that holds our ADSs were we to become a PFIC. We anticipate that our ADSs shouldqualify as being regularly traded, but no assurances may be given in this regard. If a mark-to-market election is made, the U.S. holder will generally(i) include as ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of ADSs held at the end of thetaxable year over the adjusted tax basis of such ADSs; and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax basis of the ADSsover the fair market value of such ADSs held at the end of the taxable year, but only to the extent of the net amount previously included in incomeas a result of the mark-to-market election. The U.S. holder’s adjusted tax basis in the ADSs would be adjusted to reflect any income or lossresulting from the mark-to-market election. If a U.S. holder makes an effective mark-to-market election, in each year that we are a PFIC, any gainrecognized upon the sale or other disposition of the ADSs will be treated as ordinary income and loss will be treated as ordinary loss, but only tothe extent of the net amount previously included in income as a result of the mark-to-market election.If a U.S. holder makes a mark-to-market election in respect of a corporation classified as a PFIC and such corporation ceases to beclassified as a PFIC, the U.S. holder will not be required to take into account the mark-to-market gain or loss described above during any periodthat such corporation is not classified as a PFIC.Because a mark-to-market election cannot technically be made for any lower-tier PFICs that we may own, a U.S. holder who makes amark-to-market election with respect to our ADSs may continue to be subject to the general PFIC rules with respect to such U.S. holder’s indirectinterest in any of our non-U.S. subsidiaries that is classified as a PFIC.We do not intend to provide information necessary for U.S. holders to make qualified electing fund elections, which, if available, wouldresult in tax treatment different from the general tax treatment for PFICs described above.Table of Contents133In addition, if a U.S. holder owns our ADSs or ordinary shares during any taxable year that we are a PFIC, such holder is generallyrequired to file U.S. IRS Form 8621 and other information as the U.S. Treasury Department may require. Each U.S. holder is advised to consult itstax advisors regarding the potential tax consequences to such holder if we are or become classified as a PFIC, including the possibility of making amark-to-market election.F. Dividends and Paying AgentsNot applicable.G. Statement by ExpertsNot applicable.H. Documents on DisplayWe previously filed with the SEC our registration statement on Form F-1 (Registration No. 333-194505), as amended, including theprospectus contained therein, to register the issuance and sale of our ordinary shares represented by ADSs in relation to our initial public offering.We have also filed with the SEC our registration statement on Form F-6 (Registration No. 333-195067) to register our ADSs.We are subject to the periodic reporting and other informational requirements of the Exchange Act. Under the Exchange Act, we arerequired to file reports and other information with the SEC. Specifically, we are required to file annually a Form 20-F no later than four monthsafter the close of each fiscal year, which is December 31. All information filed with the SEC can be obtained over the Internet at the SEC’s websiteat www.sec.gov or inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549.You can request copies of documents, upon payment of a duplicating fee, by writing to the SEC.We will furnish JPMorgan Chase Bank, N.A., the depositary of our ADSs, with our annual reports, which will include a review ofoperations and annual audited consolidated financial statements prepared in conformity with U.S. GAAP, and all notices of shareholders’ meetingsand other reports and communications that are made generally available to our shareholders. The depositary will make such notices, reports andcommunications available to holders of ADSs and, upon our request, will mail to all record holders of ADSs the information contained in anynotice of a shareholders’ meeting received by the depositary from us.As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterlyreports and proxy statements, and officers, directors and principal shareholders are exempt from the reporting and short-swing profit recoveryprovisions contained in Section 16 of the Exchange Act.Our website is www.leju.com. We make our annual reports on Form 20-F and any amendments to such reports available free of charge onour website as soon as reasonably practicable following the electronic filing of each report with the SEC. In addition, we provide electronic orpaper copies of our annual reports free of charge to our shareholders and ADS holders upon request. The information contained on our website isnot part of this or any other report filed with or furnished to the SEC.I. Subsidiary InformationFor a listing of our subsidiaries, see “Item 4. Information on the Company—C. Organizational Structure”.ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKInterest Rate RiskOur exposure to interest rate risk primarily relates to the interest income generated by bank deposits with original maturities of threemonths or less and interest expenses incurred for our one year borrowing from bank. In September 2021, we entered into a one-year RMB 5.0million facility agreement with Shanghai Pudong Development Bank. The interest rate was priced at 65 basis points over Loan Prime Rate(“LPR”). The bank borrowing was unguaranteed and unsecured. We have not used any derivativeTable of Contents134financial instruments to manage our interest risk exposure. Interest-earning instruments carry a degree of interest rate risk. We have not beenexposed to material risks due to changes in interest rates. However, our future interest income may be lower than expected due to changes inmarket interest rates.Foreign Exchange RiskSubstantially all of our revenues and most of our expenses are denominated in Renminbi. We do not believe that we currently have anysignificant direct foreign exchange risk and we have not used any forward contracts, currency borrowings or derivative instruments to hedgeexposure to such risk. Although our exposure to foreign exchange risks should be limited in general, the value of your investment in our ADSs willbe affected by the exchange rate between U.S. dollar and Renminbi because the value of our business is effectively denominated in RMB, whileour ADSs will be traded in U.S. dollars.The conversion of Renminbi into foreign currencies, including U.S. dollars, is based on rates set by the People’s Bank of China. TheRenminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. It is difficult to predict how market forces or PRC or U.S.government policy may impact the exchange rate between Renminbi and the U.S. dollar in the future.To the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollarwould have an adverse effect on the RMB amount we receive from the conversion. Conversely, if we decide to convert Renminbi into U.S. dollarsfor the purpose of making payments for dividends on our ordinary shares or ADSs or for other business purposes, appreciation of the U.S. dollaragainst the Renminbi would have a negative effect on the U.S. dollar amounts available to us. As of December 31, 2021, we had Renminbi- orHong Kong dollar- denominated cash balances of $251.3 million and U.S. dollar-denominated cash balances of $1.1 million. Assuming we hadconverted the U.S. dollar-denominated cash balance of $1.1 million as of December 31, 2021 into Renminbi at the exchange rate of $1.00 forRMB6.3757 as of December 31, 2021, this cash balance would have been RMB7.1 million. Assuming a further 1% appreciation of the Renminbiagainst the U.S. dollar, this cash balance would have decreased to RMB7.0 million as of December 31, 2021. Assuming a 1% depreciation of theRenminbi against the U.S. dollar, this cash balance would have increased to RMB7.2 million as of December 31, 2021.ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIESA. Debt SecuritiesNot applicable.B. Warrants and RightsNot applicable.C. Other SecuritiesNot applicable.D. American Depositary SharesFees and Charges Our ADS Holders May Have to PayThe depositary may charge each person to whom ADSs are issued, including, without limitation, issuances against deposits of shares,issuances in respect of share distributions, rights and other distributions, issuances pursuant to a stock dividend or stock split declared by us orissuances pursuant to a merger, exchange of securities or any other transaction or event affecting the ADSs or deposited securities, and each personsurrendering ADSs for withdrawal of deposited securities or whose ADRs are cancelled or reduced for any other reason, $5.00 for each 100 ADSs(or any portion thereof) issued, delivered, reduced, cancelled or surrendered, as the case may be. The depositary may sell (by public or private sale)sufficient securities and property received in respect of a share distribution, rights and/or other distribution prior to such deposit to pay such charge.Table of Contents135The following additional charges shall be incurred by the ADR holders, by any party depositing or withdrawing shares or by any partysurrendering ADSs or to whom ADSs are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by usor an exchange of stock regarding the ADSs or the deposited securities or a distribution of ADSs), whichever is applicable:●a fee of $1.50 per ADR or ADRs for transfers of certificated or direct registration ADRs;●a fee of up to $0.05 per ADS for any cash distribution made pursuant to the deposit agreement;●a fee of up to $0.05 per ADS per calendar year (or portion thereof) for services performed by the depositary in administering theADRs (which fee may be charged on a periodic basis during each calendar year and shall be assessed against holders of ADRs as ofthe record date or record dates set by the depositary during each calendar year and shall be payable in the manner described in thenext succeeding provision);●a fee for the reimbursement of such fees, charges and expenses as are incurred by the depositary and/or any of its agents (including,without limitation, the custodian and expenses incurred on behalf of holders in connection with compliance with foreign exchangecontrol regulations or any law or regulation relating to foreign investment) in connection with the servicing of the shares or otherdeposited securities, the sale of securities (including, without limitation, deposited securities), the delivery of deposited securities orotherwise in connection with the depositary’s or its custodian’s compliance with applicable law, rule or regulation (which fees andcharges shall be assessed on a proportionate basis against holders as of the record date or dates set by the depositary and shall bepayable at the sole discretion of the depositary by billing such holders or by deducting such charge from one or more cash dividendsor other cash distributions);●a fee for the distribution of securities (or the sale of securities in connection with a distribution), such fee being in an amount equal tothe $0.05 per ADS issuance fee for the execution and delivery of ADSs which would have been charged as a result of the deposit ofsuch securities (treating all such securities as if they were shares) but which securities or the net cash proceeds from the sale thereofare instead distributed by the depositary to those holders entitled thereto;●stock transfer or other taxes and other governmental charges;●cable, telex and facsimile transmission and delivery charges incurred at your request in connection with the deposit or delivery ofshares;●transfer or registration fees for the registration of transfer of deposited securities on any applicable register in connection with thedeposit or withdrawal of deposited securities;●in connection with the conversion of foreign currency into U.S. dollars, JPMorgan Chase Bank, N.A. shall deduct out of such foreigncurrency the fees, expenses and other charges charged by it and/or its agent (which may be a division, branch or affiliate) soappointed in connection with such conversion; and●fees of any division, branch or affiliate of the depositary utilized by the depositary to direct, manage and/or execute any public and/orprivate sale of securities under the deposit agreement.JPMorgan Chase Bank, N.A. and/or its agent may act as principal for such conversion of foreign currency.We will pay all other charges and expenses of the depositary and any agent of the depositary (except the custodian) pursuant to agreementsfrom time to time between us and the depositary. The charges described above may be amended from time to time by agreement between us and thedepositary.Table of Contents136Fees and Other Payments Made by the Depositary to UsOur depositary has agreed to reimburse us for certain expenses we incur that are related to establishment and maintenance of the ADRprogram upon such terms and conditions as we and the depositary may agree from time to time. The depositary may make available to us a setamount or a portion of the depositary fees charged in respect of the ADR program or otherwise upon such terms and conditions as we and thedepositary may agree from time to time. The depositary collects its fees for issuance and cancellation of ADSs directly from investors depositingshares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for makingdistributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. Thedepositary may collect its annual fee for depositary services by deduction from cash distributions, or by directly billing investors, or by chargingthe book-entry system accounts of participants acting for them. The depositary will generally set off the amounts owing from distributions made toholders of ADSs. If, however, no distribution exists and payment owing is not timely received by the depositary, the depositary may refuse toprovide any further services to holders that have not paid those fees and expenses owing until such fees and expenses have been paid. At thediscretion of the depositary, all fees and charges owing under the deposit agreement are due in advance and/or when declared owing by thedepositary.For the year ended December 31, 2021, we received $0.3 million of reimbursement from the depositary for our expenses incurred inconnection with the establishment and maintenance of the ADS program.PART IIITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIESNone.ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDSNone.ITEM 15. CONTROLS AND PROCEDURESDisclosure Controls and ProceduresAs of the end of the period covered by this annual report, our management, with the participation of our chief executive officer and chieffinancial officer, has performed an evaluation of the effectiveness of our disclosure controls and procedures within the meaning of Rules 13a-15 (e)and 15d-15(e) of the Exchange Act. Based upon this evaluation, our management has concluded that, as of the end of the period covered by thisannual report, our existing disclosure controls and procedures were effective to provide reasonable assurance that the information required to bedisclosed by us in the reports that we file and furnish under the Exchange Act was recorded, processed, summarized and reported, within the timeperiods specified in the SEC’s rules and forms, and that the information required to be disclosed by us in the reports that we file or submit under theExchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allowtimely decisions regarding required disclosure.Management’s Report on Internal Control over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules13a-15(f) under the Exchange Act). Our internal control system was designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation and fair presentation of its published consolidated financial statements. All internal control systems, no matter howwell designed, have inherent limitations. Therefore, even those systems determined to be effective may not prevent or detect misstatements and canprovide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate.Table of Contents137As required by Section 404 of the Sarbanes-Oxley Act of 2002 and related rules promulgated by the Securities and ExchangeCommission, our management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31,2021. In making this assessment, it used the criteria established within the Internal Control—Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission (COSO).Based on this assessment, our management has concluded that, as of December 31, 2021, our internal control over financial reporting waseffective. This annual report does not include an attestation report on internal control over financial reporting from our company’s registered publicaccounting firm, because we, as a “non-accelerated filer” as defined under Rule 12b-2 of the Exchange Act, are not required to have an attestationreport on internal control over financial reporting from our external auditors.We had been an “emerging growth company”, as defined in the JOBS Act, and ceased to be one as of the end of the fiscal year endedDecember 31, 2019. For so long as we were an “emerging growth company”, we took advantage of certain exemptions from requirementsapplicable to other public companies that are not emerging growth companies including, most significantly, not being required to comply with theauditor attestation requirements of Section 404. Although we ceased to be an “emerging growth company”, as a “non-accelerated filer” as definedunder Rule 12b-2 of the Exchange Act, we are still not required to have an attestation report on internal control over financial reporting from ourexternal auditors.Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. It is possiblethat, had our independent registered public accounting firm conducted an audit of our internal control over financial reporting, such accountantmight have identified material weaknesses and deficiencies or might issue a qualified report if it is not satisfied with our internal controls or thelevel at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us.Changes in Internal Control over Financial ReportingOther than described above, there were no changes in our internal control over financial reporting during 2021 that have materiallyaffected, or are reasonably likely to materially affect, our internal control over financial reporting.ITEM 16. [RESERVED]ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERTOur board of directors has determined that Winston Li and Min Fan, members of our audit committee, are audit committee financialexperts. Each of Winston Li and Min Fan is an independent director (under the standards set forth in Section 303A of the Corporate GovernanceRules of the NYSE and Section 10A-3 of the Exchange Act).ITEM 16B. CODE OF ETHICSOur board of directors has adopted a code of business conduct and ethics that applies to our directors, officers and employees. We havefiled our code of business conduct and ethics as an exhibit to our registration statement on Form F-1 (No. 333-194505) and the code is alsoavailable on our official website under the investor relations section at ir.leju.com.ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICESIn May 2020, we appointed Yu Certified Public Accountant, P.C., or Yu CPA, as our independent registered public accounting firm for thefiscal year ended December 31, 2019. At the same time, we and Deloitte Touche Tohmatsu Certified Public Accountants LLP (“Deloitte”) mutuallyagreed to terminate Deloitte’s appointment as our independent registered public accounting firm. Since then Yu CPA has been our principalexternal auditors.Table of Contents138The following table sets forth the aggregate fees by categories specified below in connection with certain professional services renderedby Deloitte and Yu CPA, as applicable, our principal external auditors, for the periods indicated. We did not pay any other fees to our auditorsduring the periods indicated below.For the Years Ended December 31, 2020 2021Audit fees(1)- Deloitte 137,449 85,692Audit fees(1)-Yu CPA 618,000 620,000Notes:(1)“Audit fees” means the aggregate fees billed for professional services rendered by our principal auditors for the audit of our annual financialstatements and the review of our comparative interim financial statements.The policy of our audit committee is to pre-approve all audit and non-audit services provided by external auditor, including audit services,audit-related services, tax services and other services as described above, other than those for de minimis services which are approved by the auditcommittee prior to the completion of the audit.ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEESNone.ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERSNone.ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANTIn May 2020, we dismissed Deloitte Touche Tohmatsu Certified Public Accountants LLP as our independent auditor, the details of whichwere previously reported in the annual report on Form 20-F (File No. 001-36396), initially filed with the Securities and Exchange Commission onJuly 15, 2020.ITEM 16G. CORPORATE GOVERNANCEBecause more than 50% of the voting power of our company has been held by E-House Enterprise or TM Home since November 2020,we are a “controlled company” under Section 303A of the Corporate Governance Rules of the NYSE. A controlled company need not comply withthe applicable NYSE corporate governance rules requiring its board of directors to have a majority of independent directors. We availed ourselvesof the controlled company exemption. As a result, we do not have a majority of independent directors on our board.The Corporate Governance Rules of the NYSE permit a foreign private issuer like us to follow the corporate governance practices of itshome country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the NYSEcorporate governance listing standards. Currently, we do not rely on home country exemption for corporate governance matters. However, if wechoose to follow home country practice in the future, our shareholders may be afforded less protection than they otherwise would under theCorporate Governance Rules of the NYSE applicable to U.S. domestic issuers.ITEM 16H. MINE SAFETY DISCLOSURENot applicable.ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.Table of Contents139PART IIIITEM 17. FINANCIAL STATEMENTSWe have elected to provide financial statements pursuant to Item 18.ITEM 18. FINANCIAL STATEMENTSThe consolidated financial statements of Leju Holdings Limited and its subsidiaries are included at the end of this annual report.ITEM 19. EXHIBITSExhibit Number Description of Document1.1Amended and Restated Memorandum and Articles of Association (incorporated herein by reference to Exhibit 3.2 to theregistration statement on Form F-1 (File No. 333-194505), as amended, initially filed with the Securities and ExchangeCommission on March 12, 2014)2.1Registrant’s Specimen American Depositary Receipt (included in Exhibit 2.3)2.2Registrant’s Specimen Certificate for Ordinary Shares (incorporated herein by reference to Exhibit 4.2 to the registrationstatement on Form F-1 (File No. 333-194505), as amended, initially filed with the Securities and Exchange Commission onMarch 12, 2014)2.3Deposit Agreement, among the Registrant, the depositary and holder of the American Depositary Receipts (incorporatedherein by reference to Exhibit 4.3 to the registration statement on Form S-8 (File No. 333197609), as amended, initiallyfiled with the Securities and Exchange Commission on June 27, 2014)2.4Description of Securities (incorporated herein by reference to Exhibit 2.4 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities and Exchange Commission on July 15, 2020)4.12013 Share Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the registration statement on Form F-1 (FileNo. 333-194505), as amended, initially filed with the Securities and Exchange Commission on March 12, 2014)4.2Form of Indemnification Agreement between the Registrant and its directors and executive officers (incorporated herein byreference to Exhibit 10.2 to the registration statement on Form F-1 (File No. 333194505), as amended, initially filed withthe Securities and Exchange Commission on March 12, 2014)4.3Form of Employment Agreement between the Registrant and its executive officers (incorporated herein by reference toExhibit 10.3 to the registration statement on Form F-1 (File No. 333-194505), as amended, initially filed with the Securitiesand Exchange Commission on March 12, 2014)4.4English translation of Exclusive Call Option Agreement, dated November 4, 2020, between Shanghai SINA LejuInformation Technology Co., Ltd., Beijing Yisheng Leju Information Services Co., Ltd. and Yinyu He (incorporated hereinby reference to Exhibit 4.4 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities and ExchangeCommission on April 15, 2021)4.5English translation of Exclusive Call Option Agreement, dated November 4, 2020, between Shanghai SINA LejuInformation Technology Co., Ltd., Beijing Yisheng Leju Information Services Co., Ltd. and Xudong Zhu (incorporatedherein by reference to Exhibit 4.5 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities andExchange Commission on April 15, 2021)4.6English translation of Loan Agreement, dated November 4, 2020, between Shanghai SINA Leju Information TechnologyCo., Ltd. and Yinyu He (incorporated herein by reference to Exhibit 4.6 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities and Exchange Commission on April 15, 2021)Table of Contents140Exhibit Number Description of Document4.7English translation of Loan Agreement, dated November 4, 2020, between Shanghai SINA Leju Information TechnologyCo., Ltd. and Xudong Zhu (incorporated herein by reference to Exhibit 4.7 to our annual report on Form 20-F (File No.001-36396) filed with the Securities and Exchange Commission on April 15, 2021)4.8English translation of Powers of Attorney, dated November 4, 2020, issued by Yinyu He to Shanghai SINA LejuInformation Technology Co., Ltd. (incorporated herein by reference to Exhibit 4.8 to our annual report on Form 20-F (FileNo. 001-36396) filed with the Securities and Exchange Commission on April 15, 2021)4.9English translation of Powers of Attorney, dated November 4, 2020, issued by Xudong Zhu to Shanghai SINA LejuInformation Technology Co., Ltd. (incorporated herein by reference to Exhibit 4.9 to our annual report on Form 20-F (FileNo. 001-36396) filed with the Securities and Exchange Commission on April 15, 2021)4.10English translation of Equity Pledge Agreement, dated November 4, 2020, between Shanghai SINA Leju InformationTechnology Co., Ltd., Beijing Yisheng Leju Information Services Co., Ltd. and Yinyu He (incorporated herein by referenceto Exhibit 4.10 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities and ExchangeCommission on April 15, 2021)4.11English translation of Equity Pledge Agreement, dated November 4, 2020, between Shanghai SINA Leju InformationTechnology Co., Ltd., Beijing Yisheng Leju Information Services Co., Ltd. and Xudong Zhu (incorporated herein byreference to Exhibit 4.11 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities and ExchangeCommission on April 15, 2021)4.12English translation of Exclusive Business Cooperation Agreement dated November 4, 2020 between Shanghai SINA LejuInformation Technology Co., Ltd. and Beijing Yisheng Leju Information Services Co., Ltd. (incorporated herein byreference to Exhibit 4.12 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities and ExchangeCommission on April 15, 2021)4.13English translation of Exclusive Call Option Agreement, dated November 4, 2020, between Shanghai Yi Yue InformationTechnology Co. Ltd., Leju Hao Fang E-Commerce Co., Ltd. and Yinyu He (incorporated herein by reference to Exhibit4.13 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities and Exchange Commission on April15, 2021)4.14English translation of Exclusive Call Option Agreement, dated November 4, 2020, between Shanghai Yi Yue InformationTechnology Co. Ltd., Leju Hao Fang E-Commerce Co., Ltd. and Weijie Ma (incorporated herein by reference to Exhibit4.14 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities and Exchange Commission on April15, 2021)4.15English translation of Loan Agreement, dated November 4, 2020, between Shanghai Yi Yue Information Technology Co.Ltd. and Yinyu He (incorporated herein by reference to Exhibit 4.15 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities and Exchange Commission on April 15, 2021)4.16English translation of Loan Agreement, dated November 4, 2020, between Shanghai Yi Yue Information Technology Co.Ltd. and Weijie Ma (incorporated herein by reference to Exhibit 4.16 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities and Exchange Commission on April 15, 2021)4.17English translation of Powers of Attorney, dated November 4, 2020, issued by Yinyu He to Shanghai Yi Yue InformationTechnology Co. Ltd. (incorporated herein by reference to Exhibit 4.17 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities and Exchange Commission on April 15, 2021)4.18English translation of Powers of Attorney, dated November 4, 2020, issued by Weijie Ma to Shanghai Yi Yue InformationTechnology Co. Ltd. (incorporated herein by reference to Exhibit 4.18 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities and Exchange Commission on April 15, 2021)4.19English translation of Equity Pledge Agreement, dated November 4, 2020, between Shanghai Yi Yue InformationTechnology Co. Ltd., Leju Hao Fang E-Commerce Co., Ltd. and Yinyu He (incorporated herein by reference to Exhibit4.19 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities and Exchange Commission on April15, 2021)Table of Contents141Exhibit Number Description of Document4.20English translation of Equity Pledge Agreement, dated November 4, 2020, between Shanghai Yi Yue InformationTechnology Co. Ltd., Leju Hao Fang E-Commerce Co., Ltd. and Weijie Ma (incorporated herein by reference to Exhibit4.20 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities and Exchange Commission on April15, 2021)4.21English translation of Exclusive Business Cooperation Agreement, dated November 4, 2020, between Shanghai Yi YueInformation Technology Co. Ltd. and Leju Hao Fang E-Commerce Co., Ltd. (incorporated herein by reference to Exhibit4.21 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities and Exchange Commission on April15, 2021)4.22English translation of Exclusive Call Option Agreement, dated November 4, 2020, between Beijing Maiteng FengshunScience and Technology Co. Ltd., Beijing Jiajujiu E-Commerce Co. Ltd. and Yinyu He (incorporated herein by reference toExhibit 4.22 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities and Exchange Commissionon April 15, 2021)4.23English translation of Exclusive Call Option Agreement, dated November 4, 2020, between Beijing Maiteng FengshunScience and Technology Co. Ltd., Beijing Jiajujiu E-Commerce Co. Ltd. and Weijie Ma (incorporated herein by referenceto Exhibit 4.23 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities and ExchangeCommission on April 15, 2021)4.24English translation of Loan Agreement, dated November 4, 2020, between Beijing Maiteng Fengshun Science andTechnology Co., Ltd. and Yinyu He (incorporated herein by reference to Exhibit 4.24 to our annual report on Form 20-F(File No. 001-36396) filed with the Securities and Exchange Commission on April 15, 2021)4.25English translation of Loan Agreement, dated November 4, 2020, between Beijing Maiteng Fengshun Science andTechnology Co., Ltd. and Weijie Ma (incorporated herein by reference to Exhibit 4.25 to our annual report on Form 20-F(File No. 001-36396) filed with the Securities and Exchange Commission on April 15, 2021)4.26English translation of Powers of Attorney, dated November 4, 2020, issued by Yinyu He to Beijing Maiteng FengshunScience and Technology Co., Ltd. (incorporated herein by reference to Exhibit 4.26 to our annual report on Form 20-F (FileNo. 001-36396) filed with the Securities and Exchange Commission on April 15, 2021)4.27English translation of Powers of Attorney, dated November 4, 2020, issued by Weijie Ma to Beijing Maiteng FengshunScience and Technology Co., Ltd. (incorporated herein by reference to Exhibit 4.27 to our annual report on Form 20-F (FileNo. 001-36396) filed with the Securities and Exchange Commission on April 15, 2021)4.28English translation of Equity Pledge Agreement, dated November 4, 2020, between Beijing Maiteng Fengshun Science andTechnology Co., Ltd., Beijing Jiajujiu E-Commerce Co., Ltd. and Yinyu He (incorporated herein by reference to Exhibit4.28 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities and Exchange Commission on April15, 2021)4.29English translation of Equity Pledge Agreement, dated November 4, 2020, between Beijing Maiteng Fengshun Science andTechnology Co., Ltd., Beijing Jiajujiu E-Commerce Co., Ltd. and Weijie Ma (incorporated herein by reference to Exhibit4.29 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities and Exchange Commission on April15, 2021)4.30English translation of Exclusive Business Cooperation Agreement, dated November 4, 2020, between Beijing MaitengFengshun Science and Technology Co., Ltd. and Beijing Jiajujiu E-Commerce Co., Ltd. (incorporated herein by referenceto Exhibit 4.30 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities and ExchangeCommission on April 15, 2021)4.31English translation of Advertising Inventory Sale Agency Agreement, dated March 7, 2014, between SINA Corporationand Leju Holdings Limited. (incorporated herein by reference to Exhibit 10.25 to the registration statement on Form F-1(File No. 333-194505), as amended, initially filed with the Securities and Exchange Commission on March 12, 2014)Table of Contents142Exhibit Number Description of Document4.32Amended and Restated Domain Name and Content License Agreement, dated March 7, 2014, between Beijing SINAInternet Information Service Co., Ltd. and Beijing Yisheng Leju Information Services Co., Ltd. (incorporated herein byreference to Exhibit 10.26 to the registration statement on Form F-1 (File No. 333194505). as amended, initially filed withthe Securities and Exchange Commission on March 12, 2014)4.33Amended and Restated Trademark License Agreement, dated March 7, 2014, between Beijing SINA Internet InformationService Co., Ltd. and Beijing Yisheng Leju Information Services Co., Ltd. (incorporated herein by reference toExhibit 10.27 to the registration statement on Form F-1 (File No. 333-194505), as amended, initially filed with theSecurities and Exchange Commission on March 12, 2014)4.34Amended and Restated Software License and Support Services Agreement, dated March 7, 2014, between SINA.comTechnology (China) Co. Ltd. and Shanghai SINA Leju Information Technology Co., Ltd. (incorporated herein by referenceto Exhibit 10.28 to the registration statement on Form F-1 (File No. 333194505), as amended, initially filed with theSecurities and Exchange Commission on March 12, 2014)4.35Master Transaction Agreement, dated March 2014, between the Registrant and E-House (China) Holdings Limited.(incorporated herein by reference to Exhibit 10.29 to the registration statement on Form F-1 (File No. 333-194505), asamended, initially filed with the Securities and Exchange Commission on March 12, 2014)4.36Offshore Transitional Services Agreement, dated March 2014, between the Registrant and E-House (China) HoldingsLimited. (incorporated herein by reference to Exhibit 10.30 to the registration statement on Form F-1 (File No. 333-194505). as amended initially filed with the Securities and Exchange Commission on March 12, 2014)4.37Amendment to Offshore Transitional Services Agreement, dated November 4, 2020 between the Registrant and E-House(China) Holdings Limited. (incorporated herein by reference to Exhibit 4.37 to our annual report on Form 20-F (File No.001-36396) filed with the Securities and Exchange Commission on April 15, 2021)4.38Non-Competition Agreement, dated March 2014, between the Registrant and E-House (China) Holdings Limited.(incorporated herein by reference to Exhibit 10.31 to the registration statement on Form F-1 (File No. 333-194505), asamended, initially filed with the Securities and Exchange Commission on March 12, 2014)4.39English translation of Onshore Transitional Services Agreement, dated March 2014, between Shanghai Real Estate Sales(Group) Co., Ltd. and certain subsidiaries of the Registrant (incorporated herein by reference to Exhibit 10.32 to theregistration statement on Form F-1 (File No. 333-194505), as amended, initially filed with the Securities and ExchangeCommission on March 12, 2014)4.40English translation of Supplement to Transitional Services Agreement, dated November 4 2020, between E-House (China)Enterprise Management Group Ltd. (formerly, Shanghai Real Estate Sales (Group) Co., Limited) and certain subsidiaries ofthe Registrant (incorporated herein by reference to Exhibit 4.40 to our annual report on Form 20-F (File No. 001-36396)filed with the Securities and Exchange Commission on April 15, 2021)4.41English translation of Onshore Cooperation Agreement, dated March 2014, by and among Shanghai Real Estate Sales(Group) Co., Ltd., Beijing Yisheng Leju Information Services Co., Ltd., Leju Hao Fang E-Commerce Co., Ltd. and BeijingJiajujiu E-Commerce Co., Ltd. (incorporated herein by reference to Exhibit 10.33 to the registration statement on Form F-1(File No. 333194505). as amended, initially filed with the Securities and Exchange Commission on March 12, 2014)4.42Strategic Cooperation Agreement. dated March 10, 2014. between Shanghai Yi Yue Information Technology Co., Ltd. andShenzhen Tencent Computer Systems Company Limited (incorporated herein by reference to Exhibit 10.37 to theregistration statement on Form F-1 (File No. 333-194505), as amended, initially filed with the Securities and ExchangeCommission on March 24, 2014)4.43Investor Rights Agreement dated March 31, 2014 between E-House (China) Holdings Limited, THL O Limited and theRegistrant (incorporated herein by reference to Exhibit 4.4 to the registration statement on Form F-1 (File No. 333-194505), as amended, initially filed with the Securities and Exchange Commission on April 4, 2014)Table of Contents143Exhibit Number Description of Document4.44Registration Rights Agreement, dated March 21, 2017, between the Registrant and SINA Corporation (incorporated hereinby reference to Exhibit 4.42 to our annual report on Form 20-F, filed with the Securities and Exchange Commission onApril 21, 2017)8.1*Principal Subsidiaries and Consolidated Variable Interest Entities of the Registrant11.1Code of Business Conduct and Ethics of the Registrant (incorporated herein by reference to Exhibit 99.1 to the registrationstatement on Form F-1 (File No. 333-194505), as amended, initially filed with the Securities and Exchange Commission onMarch 12, 2014)12.1*CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 200212.2*CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 200213.1**CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 200213.2**CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 200215.1*Consent of Yu Certified Public Accountant P.C.15.2*Consent of Fangda Partners16.1Letter from Deloitte Touche Tohmatsu Certified Public Accountants LLP to the Securities and Exchange Commission(incorporated herein by reference to Exhibit 16.1 to our annual report on Form 20-F, filed with the Securities and ExchangeCommission on July 15, 2020)101.INS*Inline XBRL Instance Document101.SCH*Inline XBRL Taxonomy Extension Scheme Document101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document104*Cover Page Interactive Data File (embedded within the Inline XBRL document)*Filed herewith**Furnished herewithTable of Contents144SIGNATURESThe registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized theundersigned to sign this annual report on its behalf.LEJU HOLDINGS LIMITEDBy:/s/ Yinyu HeName:Yinyu HeTitle:Chief Executive OfficerDate: April 13, 2022Table of ContentsF-1LEJU HOLDINGS LIMITEDINDEX TO CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31, 2019, 2020 AND 2021 PageReport of Independent Registered Public Accounting Firm (PCAOB ID: 5910)F-2Consolidated Balance Sheets as of December 31, 2020 and 2021F-4Consolidated Statements of Operations for the Years Ended December 31, 2019, 2020 and 2021F-5Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2019, 2020 and 2021F-6Consolidated Statements of Changes in Equity for the Years Ended December 31, 2019, 2020 and 2021F-7Consolidated Statements of Cash Flows for the Years Ended December 31, 2019, 2020 and 2021F-8Notes to Consolidated Financial Statements for the Years Ended December 31, 2019, 2020 and 2021F-9Table of ContentsF-2REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Shareholders and the Board of Directors ofLeju Holdings LimitedOpinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Leju Holdings Limited (the “Company”), its subsidiaries and its variable interestentities (collectively the “Group”) as of December 31, 2021, and 2020, the related consolidated statements of operations, comprehensive income(loss), changes in equity, and cash flows, for each of the three years ended December 31, 2021, and the related notes (collectively referred to as the“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financialpositions of the Group as of December 31, 2021, and 2020, and the results of its operations and its cash flows for each of the three years endedDecember 31, 2021, in conformity with generally accepted accounting principles in the United States of America.Basis for OpinionThese consolidated financial statements are the responsibility of the Group's management. Our responsibility is to express an opinion on theGroup’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company AccountingOversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Group in accordance with the U.S. federalsecurities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtainreasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. TheGroup is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we arerequired to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectivenessof the Group's internal control over financial reporting. Accordingly, we express no such opinion.Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due toerror or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding theamounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significantestimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our auditsprovide a reasonable basis for our opinion.Critical Audit MattersThe critical audit matter communicated below is the matter, arising from the current audit of the consolidated financial statements, which wascommunicated or required to be communicated to the audit committee, and that (i) related to accounts or disclosures which are material to theconsolidated financial statements, and (ii) involved our especially challenging, subjective, or complex judgments. The communication of criticalaudit matters does not alter, in any way, our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicatingthe critical audit matter below, providing separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.Allowance for current expected credit losses (“CECL”) on accounts receivables and contract assets, deposits, other receivables and amounts duefrom related parties.As described in Notes 2 (x) in the consolidated financial statements, the Group adopted Accounting Standard Update (ASU) 2016-13, FinancialInstruments-Credit Losses (codified as Accounting Standard Codification Topic 326), since January 1st, 2020, which requires measurement andrecognition of current expected credit losses for financial instruments held at amortized cost. The management of the Group have estimated anallowance for CECL of $125,785,771 for the year ended December 31, 2021 on accounts receivables, contract assets, deposits, other receivables,and amounts due from related parties based on the credit risk of the respective receivables. These receivables are assessed on an individual basis forcustomers with pledged credit risk (pledged type customers), with high credit risk (high risk type customers) and the remaining (normal risk typecustomers) is collectively assessed by using provision matrix. The allowance amount has been measured as the difference of the asset’s carryingamount and the estimates of present value of future cash flows based on historical settlement pattern, past default experience of the debtor, overalleconomic environment in which the debtors operate, and also the assessment of both current and future development of environment as of the datewhen this report issued. These procedures also included the involvement of professionals with specialized skills engaged by the Group.Table of ContentsF-3We have identified allowance for CECL on accounts receivables, contract assets, deposits, other receivables, and amounts due from related parties,as a critical audit matter due to the significance to the Group’s consolidated financial position and the involvement of subjective judgment andmanagement estimates in evaluating the CECL of these receivables.Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on theconsolidated financial statements. Our audit procedures to respond the risk of error in the allowance for CECL included (i) obtaining anunderstanding and assessing management’s method for developing the allowance for doubtful accounts (credit losses); (ii) evaluating theappropriateness of the model; (iii) testing the accuracy of management’s basic input in calculating CECL including aging report, historical write-offs and recoveries, on a sample basis.; (iv) evaluating the reasonableness of significant assumptions and judgments made by management toestimate the allowance for credit loss, including the Group’s provision matrix by grouping individually assessed customers (pledged typecustomers, high risk type customers) and the normal risk type customers into different categories, and the basis of estimated loss rates applied ineach category in the provision matrix (with reference to historical default rates) and forward-looking information; (v) evaluating the competence,capabilities and objectivity of the professionals engaged by the Group./s/ Yu Certified Public Accountant, P.C. We have served as the Group’s auditor since 2020. New York, New York April 13, 2022 Table of ContentsF-4LEJU HOLDINGS LIMITEDCONSOLIDATED BALANCE SHEETS(In U.S. dollar except for share data)December 31, 2020 2021ASSETSCurrent assets:Cash and cash equivalents284,489,282250,313,799Restricted cash1,217,4142,082,103Accounts receivable, net of allowance of $12,563,981 and $115,290,953 as of December 31, 2020 and 2021, respectively202,701,98736,071,056Contract assets, net of allowance of $119,798 and $83,678 as of December 31, 2020 and 2021, respectively1,884,1931,415,241Marketable securities4,303,9051,185,513Customer deposits, net of allowance of $3,480 and $10,259,195 as of December 31, 2020 and 2021, respectively11,550,586783,995Prepaid expenses and other current assets, net7,483,50425,110,040Amounts due from related parties, net9,076,3583,913,385Total current assets522,707,229320,875,132Property and equipment, net17,002,11316,667,281Intangible assets, net34,213,34223,297,758Right-of-use assets25,665,51923,409,149Investment in affiliates31,33117,942Deferred tax assets, net40,904,87751,605,404Other non-current assets1,436,3011,375,104TOTAL ASSETS641,960,712437,247,770LIABILITIES AND EQUITYCurrent liabilities:Short‑term borrowings (including short-term borrowings of the consolidated VIEs without recourse to Leju of nil and nil as of December 31, 2020 and2021, respectively)—784,230Accounts payable (including accounts payable of the consolidated VIEs without recourse to Leju of $2,714,357 and $1,631,401 as of December 31, 2020and 2021, respectively)2,833,9921,631,401Accrued payroll and welfare expenses (including accrued payroll and welfare expenses of the consolidated VIEs without recourse to Leju of $27,228,398and $19,962,938 as of December 31, 2020 and 2021, respectively)29,221,95621,516,888Income tax payable (including income tax payable of the consolidated VIEs without recourse to Leju of $27,877,546 and $31,400,562 as of December31, 2020 and 2021, respectively)63,040,92960,951,790Other tax payable (including other tax payable of the consolidated VIEs without recourse to Leju of $19,184,369 and $16,992,077 as of December 31,2020 and 2021, respectively)21,203,79518,046,289Amounts due to related parties (including amounts due to related parties of the consolidated VIEs without recourse to Leju of $4,737,776 and $2,693,624as of December 31, 2020 and 2021, respectively)7,105,8857,631,923Advances from customers (including advance from customers of the consolidated VIEs without recourse to Leju of $95,059,745 and $82,626,840 as ofDecember 31, 2020 and 2021, respectively)95,340,29582,787,409Lease liabilities, current (including lease liabilities, current of the consolidated VIEs without recourse to Leju of $5,375,547 and $5,556,351 as ofDecember 31, 2020 and 2021, respectively)5,461,2345,581,648Accrued marketing and advertising expenses (including accrued marketing and advertising expenses of the consolidated VIEs without recourse to Leju of$63,973,194 and $42,180,152 as of December 31, 2020 and 2021, respectively)70,086,28843,272,270Other current liabilities (including other current liabilities of the consolidated VIEs without recourse to Leju of $19,030,481 and $16,383,879 as ofDecember 31, 2020 and 2021, respectively)22,595,61218,504,471Total current liabilities316,889,986260,708,319Deferred tax liabilities (including deferred tax liabilities of the consolidated VIEs without recourse to Leju of $91,205 and $314,763 as of December 31,2020 and 2021, respectively)8,558,6496,042,540Lease liabilities, non-current (including lease liabilities, non-current of the consolidated VIEs without recourse to Leju of $21,680,018 and $19,437,887 asof December 31, 2020 and 2021, respectively)21,727,11719,437,887Total liabilities347,175,752286,188,746Commitments and contingencies (Note 14)Shareholders' Equity:Ordinary shares ($0.001 par value): 1,000,000,000 shares authorized, 136,326,020 and 136,822,601 shares issued and outstanding, as of December 31,2020 and 2021, respectively136,326136,823Additional paid-in capital799,536,607801,476,746Accumulated deficit(498,000,567)(648,934,102)Subscription receivables(50,286)—Accumulated other comprehensive loss(5,695,204)(1,424,302)Total Leju Holdings Limited Shareholders’ Equity295,926,876151,255,165Non-controlling interests(1,141,916)(196,141)Total equity294,784,960151,059,024TOTAL LIABILITIES AND EQUITY641,960,712437,247,770The accompanying notes are an integral part of these consolidated financial statements.Table of ContentsF-5LEJU HOLDINGS LIMITEDCONSOLIDATED STATEMENTS OF OPERATIONS(In U.S. dollar except for share data)Year Ended December 31, 2019 2020 2021RevenuesE-commerce 547,184,192547,895,262411,097,123Online advertising 143,778,573170,782,688122,522,232Listing 1,642,190848,033497,615Total net revenues 692,604,955719,525,983534,116,970Cost of revenues (68,297,832)(73,762,283)(55,800,726)Selling, general and administrative expenses (607,164,835)(622,026,035)(645,623,660)Other operating income, net 597,853380,849560,394Income (loss) from operations 17,740,14124,118,514(166,747,022)Interest income,net 151,9317,268,5303,130,211Other income, net 1,978,511300,056208,875Income (loss) before taxes and loss from equity in affiliates 19,870,58331,687,100(163,407,936)Income tax benefits (expenses) (8,989,662)(10,665,022)13,497,784Income (loss) before loss from equity in affiliates 10,880,92121,022,078(149,910,152)Loss from equity in affiliates, net of tax of nil (9,070)(23,859)(13,871)Net income (loss) 10,871,85120,998,219(149,924,023)Less: Net income (loss) attributable to non-controlling interests (650,145)1,695,9811,009,512Net income (loss) attributable to Leju Holdings Limited shareholders 11,521,99619,302,238(150,933,535)Income (loss) per share:Basic0.080.14(1.10)Diluted0.080.14(1.10)Shares used in computation of income (loss) per shareBasic135,770,793136,070,785136,652,162Diluted135,811,751137,564,567136,652,162The accompanying notes are an integral part of these consolidated financial statements.Table of ContentsF-6LEJU HOLDINGS LIMITEDCONSOLIDATEDSTATEMENTS OF COMPREHENSIVE INCOME (LOSS)(In U.S. dollar)Year Ended December 31, 2019 2020 2021Net income (loss) 10,871,85120,998,219(149,924,023)Other comprehensive income (loss), net of tax of nil:Foreign currency translation adjustments (3,744,695)17,938,0074,282,498Comprehensive income (loss) 7,127,15638,936,226(145,641,525)Less: Comprehensive income (loss) attributable to non-controlling interests (618,640)1,703,4421,021,108Comprehensive income (loss) attributable to Leju Holdings Limited shareholders 7,745,79637,232,784(146,662,633)The accompanying notes are an integral part of these consolidated financial statements.Table of ContentsF-7LEJU HOLDINGS LIMITEDCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(In U.S. dollar)Total LejuAccumulatedHoldingsAdditionalOtherLimitedPaid-inAccumulatedComprehensiveSubscriptionShareholders’Non-controlling Ordinary Shares Capital Deficit Income (loss) Receivable Equity Interests Total Equity Number $ $ $ $ $ $ $ $Balance at January 1, 2019135,763,962 135,764 792,626,535 (528,824,801) (19,848,006) — 244,089,492 (2,523,424) 241,566,068Net income (loss)—— — 11,521,996 — — 11,521,996 (650,145) 10,871,851Share-based compensation——3,596,679———3,596,679—3,596,679Exercise of share options48,7574969,165———69,214—69,214Disposal of non-controlling interest— — (100,583) — ——(100,583)100,583—Foreign currency translation adjustments————(3,776,200) — (3,776,200) 31,505 (3,744,695)Balance at December 31, 2019135,812,719 135,813 796,191,796 (517,302,805) (23,624,206)—255,400,598(3,041,481)252,359,117Net income———19,302,238— — 19,302,238 1,695,981 20,998,219Share-based compensation—— 2,978,026 — — — 2,978,026 — 2,978,026Vesting of restricted shares83,33383(83)——————Exercise of share options429,968430611,304——(50,286)561,448—561,448Acquisition of non-controlling interest—— (244,436) — (1,544) — (245,980) 196,123 (49,857)Foreign currency translation adjustments————17,930,546—17,930,5467,46117,938,007Balance at December 31, 2020136,326,020136,326799,536,607(498,000,567)(5,695,204)(50,286)295,926,876(1,141,916)294,784,960Net income (loss)———(150,933,535)——(150,933,535)1,009,512(149,924,023)Share-based compensation——1,657,278———1,657,278—1,657,278Vesting of restricted shares349,999350(350)——————Exercise of share options146,582147207,878——50,286258,311—258,311Disposal of non-controlling interest——75,333———75,333(75,333)—Foreign currency translation adjustments————4,270,902—4,270,90211,5964,282,498Balance at December 31, 2021136,822,601136,823801,476,746(648,934,102)(1,424,302)—151,255,165(196,141)151,059,024The accompanying notes are an integral part of these consolidated financial statements.Table of ContentsF-8LEJU HOLDINGS LIMITEDCONSOLIDATED STATEMENTS OF CASH FLOWS(In U.S. dollar)Year Ended December 31, 201920202021 Operating activities:Net income (loss) 10,871,85120,998,219(149,924,023)Adjustments to reconcile net income (loss) to net cash provided by/(used in) operating activities:Depreciation and amortization 15,158,24014,338,52913,369,416Loss from equity in affiliates 9,07023,85913,871Allowance for credit losses 5,530,8434,877,117111,267,396Share-based compensation 3,596,6792,978,0261,657,278Unrealized loss (gain) on marketable securities(951,545)(850,402)1,722,700Non-cash lease expenses7,565,7954,471,3244,860,980Interest expenses1,007,354——Others 279,277688,70778,027Changes in operating assets and liabilities:Accounts receivable(52,118,453)(65,126,276)61,918,496Contract assets 1,306,017(1,074,573)458,775Customer deposits(46,550,954)44,750,151469,505Amounts due from related parties (2,978,490)593,5235,165,007Marketable securities——1,369,581Right-of-use assets2,611,584(3,360,748)(2,604,610)Prepaid expenses and other current assets 2,523,380211,913(17,241,261)Other non-current assets 812,15330,39864,497Accounts payable 719,0561,285,916(1,228,688)Accrued payroll and welfare expenses 2,156,113(3,632,710)(7,872,273)Income tax payable (1,340,282)6,228,894(2,134,475)Other tax payable 7,167,8671,035,107(3,271,899)Amounts due to related parties 929,5842,699,108526,038Lease liabilities, current(1,219,464)271,983120,414Other current liabilities and accrued expenses 60,209,74570,262,381(44,291,642)Deferred tax assets 12,171,77411,132,101(9,569,781)Deferred tax liabilities(3,029,113)(3,198,793)(2,522,902)Lease liabilities, non-current(6,742,065)(1,139,046)(2,289,230)Net cash provided by/(used in) operating activities 19,696,016108,494,708(39,888,803)Investing activities:Deposits for and purchases of property and equipment and intangible assets (7,968,925)(1,553,067)(1,115,482)Proceeds from disposal of property and equipment 2,407,7341,654,838797,174Net cash provided by/(used in) investing activities (5,561,191)101,771(318,308)Financing activities:Proceeds from exercise of options69,214561,448258,311Proceeds from short-term borrowings——775,083Prepayment and payment for acquisition of non-controlling interest of subsidiary(28,669)(21,188)—Net cash provided by financing activities 40,545540,2601,033,394Effect of exchange rate changes on cash, cash equivalents and restricted cash (2,426,744)17,557,8655,862,923Net increase/(decrease) in cash, cash equivalents and restricted cash 11,748,626126,694,604(33,310,794)Cash, cash equivalents and restricted cash at the beginning of the year 147,263,466159,012,092285,706,696Cash, cash equivalents and restricted cash at the end of the year 159,012,092285,706,696252,395,902Supplemental disclosure of cash flow information:Income taxes paid/(refund) 386,563(52,961)1,358,100Interest expenses paid——9,147Non-cash information on lease liabilities arising from obtaining right-of-use assets 4,052,1291,967,2692,064,279Non-cash investing and financing activities:Additional paid in capital increased/(decreased) in connection with business disposal(100,583)—75,333Non-controlling interest recognized in connection with business disposal100,583—(75,333)Reconciliation to amounts on consolidated balance sheets:Cash and cash equivalents159,012,092284,489,282250,313,799Restricted cash—1,217,4142,082,103Total cash, cash equivalents, and restricted cash shown in the statement of cash flows159,012,092285,706,696252,395,902The accompanying notes are an integral part of these consolidated financial statements.Table of ContentsF-9LEJU HOLDINGS LIMITEDNOTES TO CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER 31,2019, 2020 AND 2021(In U.S. dollar)1. Organization and Principal ActivitiesLeju Holdings Limited (the “Company” or “Leju”) was incorporated on November 20, 2013 in the Cayman Islands as an exempted company withlimited liability under the Companies Law of the Cayman Islands. The Company, through its subsidiaries and consolidated variable interest entities(“VIEs”), is principally engaged in providing online advertising, e-commerce services and listing services for the real estate and home furnishingindustries in the People’s Republic of China (“PRC”). The Company, its subsidiaries and consolidated VIEs are collectively referred to as the“Group”.E-House (China) Holdings Limited (“E-House Holdings”) was the Company’s parent company from its incorporation to December 30, 2016. E-House Holdings, its subsidiaries and VIEs, excluding the Group, are collectively referred to as “E-House”. On December 30, 2016, E-HouseHoldings repurchased all its ordinary shares held by SINA Corporation (“SINA”) for a total consideration consisting of 40,651,187 ordinary sharesof Leju and of $129,038,150 in cash. As a result of this transaction, E-House Holdings ceased to be Leju’s controlling shareholder but remains asthe largest shareholder and SINA became a principal shareholder of Leju from December 30, 2016. E-House Holdings was ultimately controlled byMr. Xin Zhou.On November 4, 2020, E-House (China) Enterprise Holdings Limited (“E-House Enterprise”) purchased (i) 51,925,996 ordinary shares of Lejufrom Mr. Xin Zhou and certain of his affiliated entities (the “Zhou Parties”) and (ii) 24,475,251 ordinary shares of Leju from the SINA. Uponcompletion of these transactions, E-House Enterprise acquired the beneficial ownership of 76,401,247 ordinary shares of Leju, and Leju became asubsidiary of E-House Enterprise. SINA remains to be a principal shareholder of Leju.On November 24, 2021, TM Home Limited (“TM Home”), a company incorporated in the Cayman Islands with limited liability and owned as to70.23% and 29.77% by E-House Enterprise and Alibaba Investment Limited, respectively, completed the acquisition of the 76,401,247 ordinaryshares of Leju from E-House Enterprise. Upon completion of these transactions, Leju became a subsidiary of TM Home, which was also controlledby E-house Enterprise. SINA remained to be a principal shareholder of Leju.The following table lists major subsidiaries and the consolidated VIEs of the Company as of December 31, 2021: Date of Place of Percentage of Incorporation Incorporation Ownership Shanghai SINA Leju Information Technology Co., Ltd (“Shanghai SINA Leju”)08-May-08 PRC 100%E-House City Re-House Real Estate Agency (Shanghai) Co., Ltd (“City Re-House”)04-Mar-10 PRC 100%Shanghai Yi Yue Information Technology Co., Ltd (“Shanghai Yi Yue”)16-Sep-11 PRC 100%Beijing Maiteng Fengshun Science and Technology Co., Ltd (“Beijing Maiteng”)04-Jan-12 PRC 84%Beijing Yisheng Leju Information Services Co., Ltd. (“Beijing Leju”)13-Feb-08 PRC VIEShanghai Leju Hao Fang Information Service Co., Ltd. (“Leju Hao Fang”) (formerly known asShanghai Yi Xin E-Commerce Co., Ltd.)05-Dec-11 PRC VIEBeijing Jiajujiu E-Commerce Co., Ltd. (“Beijing Jiajujiu”)22-Mar-12 PRC VIE2. Summary of Principal Accounting Policies(a) Basis of presentationThe consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United Statesof America (“US GAAP”).(b) Impact of COVID-19Starting from early 2020, in response to intensifying efforts to contain the spread of COVID-19, the Chinese government took a number of actions,which included extending the Chinese New Year holiday, quarantining individuals infected with or suspected ofTable of ContentsF-10having COVID-19, restricting residents from travel, encouraging employees of enterprises to work remotely from home and cancelling publicactivities, among others. The pandemic resulted in a significant reduction in real estate transaction volumes as many of our developer clients had toclose their project sales centers and show rooms for an extended period, adversely affecting our e-commerce services.The Group has assessed various accounting estimates and other matters, including credit losses for financial assets, valuation allowances fordeferred tax assets and revenue recognition. Based on current assessment of these estimates, although the COVID-19 outbreak adversely affectedthe Group’s business for the year ended December 31, 2021, the Group concluded that there would be no material impact on the Group’s long-termforecast, and the Group did not identify any impairments related to its long-lived assets as of December 31, 2021 as a result of COVID-19. Whilethe adverse impact from COVID-19 is currently expected to be temporary, there is uncertainty around the duration of these disruptions and thepossibility of other adverse effects on the Group’s business, and the Group will continue to monitor for potential credit risk as the impact of theCOVID-19 pandemic evolves.(c) Basis of consolidationThe consolidated financial statements include the financial statements of Leju, its majority owned subsidiaries and its VIEs, Beijing Leju, Leju HaoFang and Beijing Jiajujiu. All inter-company transactions and balances have been eliminated in consolidation.The Group evaluates each of its interests in private companies to determine whether or not the investee is a VIE and, if so, whether the Group is theprimary beneficiary of such VIE. In determining whether the Group is the primary beneficiary, the Group considers if the Group (1) has power todirect the activities that most significantly affects the economic performance of the VIE, and (2) receives the economic benefits of the VIE thatcould be significant to the VIE. If deemed the primary beneficiary, the Group consolidates the VIE.VIE arrangementsPRC regulations currently prohibit or restrict foreign ownership of companies that provide internet content and advertising services. To complywith these regulations, the Group provides such activities through its VIEs and their subsidiaries. To provide the Group effective control over andthe ability to receive substantially all of the economic benefits of its VIEs and their subsidiaries, certain of the Company’s subsidiaries, ShanghaiSINA Leju, Shanghai Yi Yue and Beijing Maiteng (collectively, the “Foreign Owned Subsidiaries”) entered into a series of contractualarrangements with Beijing Leju, Leju Hao Fang and Beijing Jiajujiu (collectively the “VIEs”) and their respective shareholders, respectively, assummarized below:Foreign OwnedName of ForeignSubsidiaries’OwnedEconomic Ownership Subsidiaries of VIES Name of VIEs Activities of VIEsShanghai SINA Leju 100%Beijing Leju Operate the online advertising and listing businessShanghai Yi Yue 100%Leju Hao Fang Operate the e-commerce businessBeijing Maiteng 100%Beijing Jiajujiu Operate the online home furnishing businessThe VIEs hold the requisite licenses and permits necessary to conduct internet content and advertising services activities from which foreignownership of companies are prohibited or restricted. In addition, the VIEs hold leases and other assets necessary to operate such business andgenerate a majority of the Group’s revenues.Table of ContentsF-11Agreements that Transfer Economic Benefits of the VIEs to the GroupExclusive Consulting and Technical Support Agreement. Pursuant to an exclusive consulting and technical support agreement between theForeign Owned Subsidiaries and the respective VIEs, the Foreign Owned Subsidiaries provide the respective VIEs with a series of consulting andtechnical support services and are entitled to receive related fees. The term of this exclusive technical support agreement will expire upondissolution of the VIEs. Unless expressly provided by this agreement, without prior written consent of the Foreign Owned Subsidiaries, the VIEsmay not engage any third party to provide the services offered by the Foreign Owned Subsidiaries under this agreement.Agreements that Provide Effective Control over VIEsExclusive Call Option Agreement. Each of the shareholders of the VIEs has entered into an exclusive call option agreement with the respectiveForeign Owned Subsidiaries. Pursuant to these agreements, each of the shareholders of the VIEs has granted an irrevocable and unconditionaloption to the respective Foreign Owned Subsidiaries or their designees to acquire all or part of such shareholder’s equity interests in VIEs at its solediscretion, to the extent as permitted by PRC laws and regulations then in effect. The consideration for such acquisition of all equity interests in theVIEs will be equal to the registered capital of the VIEs, and if PRC law requires the consideration to be greater than the registered capital, theconsideration will be the minimum amount as permitted by PRC law. In addition, the VIEs irrevocably and unconditionally granted the respectiveForeign Owned Subsidiaries an exclusive option to purchase, to the extent permitted under the PRC law, all or part of the assets of the VIEs. Theexercise price for purchasing the assets of the VIEs will be equal to their respective book values, and if PRC law requires the price to be greaterthan the book value, the price will be the minimum amount as permitted by PRC law. The call option may be exercised by the respective ForeignOwned Subsidiaries or their designees.Loan Agreement. Under the loan agreement among shareholders of the VIEs and the respective Foreign Owned Subsidiaries, each of therespective Foreign Owned Subsidiaries has granted an interest-free loan to the shareholders of the VIEs, solely for their purchase of the equityinterest of the VIEs, investing or operating activities conducted in the VIEs. Each loan agreement will be due upon the earlier of twenty years fromthe date of execution or the expiration of the term of business of VIEs.Shareholder Voting Right Proxy Agreement. Each of the shareholders of the VIEs has irrevocably granted any person designated by therespective Foreign Owned Subsidiaries the power to exercise all voting rights to which he will be entitled to as shareholder of the VIEs at that time,including the right to declare dividends, appoint and elect board members and senior management members and other voting rights.Each shareholder voting right proxy agreement has a term of twenty years, unless it is early terminated by all parties in writing or pursuant toprovision of this agreement. The term of the agreement will be automatically extended for one year upon the expiration, if the Foreign OwnedSubsidiary gives the other parties written notice requiring the extension at least 30 days prior to expiration and the same mechanism will applysubsequently upon the expiration of each extended term.Equity Pledge Agreement. Each of the shareholders of the VIEs has also entered into an equity pledge agreement with the respective ForeignOwned Subsidiaries. Pursuant to which these shareholders pledged their respective equity interest in the VIEs to guarantee the performance of theobligations of the VIEs. The Foreign Owned Subsidiaries, as pledgee, will be entitled to certain rights, including the right to sell the pledged equityinterests. Pursuant to the equity pledge agreement, each shareholder of the VIEs cannot transfer, sell, pledge, dispose of or otherwise create anynew encumbrance on their respective equity interest in the VIEs without the prior written consent of the respective Foreign Owned Subsidiaries.The equity pledge right enjoyed by the Foreign Owned Subsidiaries will expire when shareholders of the VIEs have fully performed theirrespective obligations under the above agreements. The equity pledges of the VIEs have been registered with the relevant local branch of the StateAdministration for Industry and Commerce, or SAIC.Table of ContentsF-12Risks in relation to the VIE structureThe Company believes that the Foreign Owned Subsidiaries’ contractual arrangements with the VIEs are in compliance with PRC law and arelegally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce these contractual arrangementsand the interests of the shareholders of the VIEs may diverge from that of the Company and that may potentially increase the risk that they wouldseek to act contrary to the contractual terms, for example by influencing the VIEs not to pay the service fees when required to do so.The Company’s ability to control the VIEs also depends on the power of attorney, the Foreign Owned Subsidiaries have to vote on all mattersrequiring shareholder approval in the VIEs. As noted above, the Company believes this power of attorney is legally enforceable but may not be aseffective as direct equity ownership.In addition, if the legal structure and contractual arrangements were found to be in violation of any existing PRC laws and regulations, theCompany may be subject to fines or other actions. The Company does not believe such actions would result in the liquidation or dissolution of theCompany, the Foreign Owned Subsidiaries or the VIEs.The Company, through its subsidiaries and through the contractual arrangements, has (1) the power to direct the activities of the VIEs that mostsignificantly affect the entity’s economic performance and (2) the right to receive benefits from the VIEs. Accordingly, the Company is the primarybeneficiary of the VIEs and has consolidated the financial results of the VIEs.The following financial statement amounts and balances of the Group’s VIEs were included in the accompanying consolidated financial statements,after elimination of inter-company balances and transactions:As of December 31, 2020 2021$$Cash and cash equivalents236,976,406199,808,985Restricted cash957,2421,953,803Accounts receivable, net199,050,91734,485,667Contract assets, net1,884,1931,415,241Customer deposits, net1,235,041783,995Amounts due from related parties, net15,721,8213,834,986Other current assets, net4,143,64323,934,283Total current assets459,969,263266,216,960Total non-current assets67,284,28963,522,807Total assets527,253,552329,739,767Accounts payable2,714,3571,631,401Accrued payroll and welfare expenses27,228,39819,962,938Income tax payable27,877,54631,400,562Other tax payable19,184,36916,992,077Amounts due to related parties4,737,7762,693,624Advances from customers95,059,74582,626,840Lease liabilities, current5,375,5475,556,351Accrued marketing and advertising expenses63,973,19442,180,152Other current liabilities19,030,48116,383,879Total current liabilities265,181,413219,427,824Deferred tax liabilities91,205314,763Lease liabilities, non-current21,680,01819,437,887Total liabilities286,952,636239,180,474Table of ContentsF-13Year Ended December 31, 2019 2020 2021$$$Total revenues691,566,168718,861,490533,619,355Cost of revenues(59,822,537)(65,612,576)(47,730,331)Net income (loss)(2,843,984)14,278,316(81,530,172)Net cash provided by/ (used in) operating activities44,671,170100,460,964(41,427,975)Net cash provided by/ (used in) investing activities(5,813,685)(1,068,664)431,057Net cash provided by/ (used in) financing activities———There are no consolidated VIEs’ assets that are collateral for the VIEs’ obligations or are restricted solely to settle the VIEs’ obligations. TheCompany has not provided any financial support that it was not previously contractually required to provide to the VIEs.(d) Use of estimatesThe preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect reportedamounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts ofrevenues and expenses during the reporting period. Actual results could differ from such estimates. Significant accounting estimates reflected in theGroup’s financial statements include (i) revenue recognition, (ii) provision for credit losses of accounts receivable and contract assets, customerdeposits, other receivables recorded in prepayments and other current assets and amounts due from related parties, (iii) assessment for impairmentof long-lived assets, intangible assets and goodwill, (iv) fair value of financial instruments, (v) valuation and recognition of share-basedcompensation expenses, (vi) useful lives of property and equipment and intangible assets, (vii) and provision for income tax and valuationallowance for deferred tax assets.(e) Fair value of financial instrumentsThe Group records its financial assets and liabilities at fair value on a recurring basis. Fair value reflects the price that would be received fromselling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining thefair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or mostadvantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability.The Group applies a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservableinputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input thatis significant to the fair value measurement. There are three levels of inputs that may be used to measure fair value:Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset orliability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets withinsufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or canbe derived principally from, or corroborated by, observable market data.Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurementof the fair value of the assets or liabilities.Assets measured at fair value on a recurring basis are comprised of marketable securities. The Group uses quoted price in active markets (Level 1)to determine the fair value of marketable securities.There are no assets or liabilities measured at fair value on a nonrecurring basis in 2019, 2020 and 2021.Table of ContentsF-14For cash and cash equivalents, accounts receivable, contract assets, customer deposits, other receivables, accounts payable, other payables, andamounts due from/to related parties, the carrying value approximates its fair value due to its short-term nature.(f) Business combinationsBusiness combinations are recorded using the purchase method of accounting and, accordingly, the acquired assets and liabilities are recorded attheir fair market value at the date of acquisition. Any excess of acquisition cost over the fair value of the acquired assets and liabilities, includingidentifiable intangible assets, is recorded as goodwill.(g) Cash and cash equivalentsCash and cash equivalents consist of cash on hand and demand deposits, which are unrestricted as to withdrawal and use, and which have originalmaturities of three months or less.(h) Restricted cashAny cash that is legally restricted from use is classified as restricted cash. As of December 31, 2020 and 2021, the restricted cash balancesrepresent (i) $944,215 and $1,708,478, which related to collection and payment as a service for real estate developers. The withdrawal of the cashin bank is required to be pre-approved by real estate developers. (ii) $273,199 and $373,625, which was the full dispute amount and maximumdamages of certain law suits, was frozen by the courts for law suits related and accounted for as restricted bank balances(i) Marketable securitiesMarketable securities include securities that are classified as trading securities. Trading securities represent equity securities that are bought andheld principally for the purpose of selling them in the near term, and they are reported at fair value, with both unrealized and realized gains andlosses reported as other income (loss). The fair value of marketable securities is based upon the quoted price in an active market for identicalinstruments (Level 1).(j) Customer depositsThe Group provides online real estate e-commerce services for its developer customers. Some real estate developers require the Group to pay anupfront and refundable deposit to obtain the exclusive right to provide e-commerce services for a real estate development project. These depositsare refunded to the Group subject to certain pre-determined criteria specified in the deposit agreement. Customer deposits are recorded as eithercurrent or non-current assets based on the Group’s estimate of the date of refund. As of December 31, 2021, the Group recognized $10,259,195 forexpected credit loss against customer deposits which is mainly attributable to an overdue customer deposit of $10,258,960. As of December 31,2020, the Group recognized $3,480 for expected credit loss against customer deposits.(k) Investment in affiliatesAffiliated companies are entities over which the Group has significant influence, but which it does not control. The Group generally considers anownership interest of 20% in common stock or higher to represent a presumption that they are able to exert significant influence.Investments in affiliates are accounted for by the equity method of accounting. Under this method, the Group’s share of the post-acquisition profitsor losses of affiliated companies is recognized in the income statement and its share of post-acquisition movements in other comprehensive incomeis recognized in other comprehensive income. Unrealized gains on transactions between the Group and its affiliated companies are eliminated tothe extent of the Group’s interest in the affiliated companies; unrealized losses are also eliminated unless the transaction provides evidence of animpairment of the asset transferred. When the Group’s share of losses in an affiliated company equals or exceeds its interest in the affiliatedcompany, the Group does not recognize further losses, unless the Group has incurred obligations or made payments on behalf of the affiliatedcompany.Table of ContentsF-15The Group is required to perform an impairment assessment of its investments whenever events or changes in business circumstances indicate thatthe carrying value of the investment may not be fully recoverable. An impairment loss is recorded when there has been a loss in value of theinvestment that is other than temporary. As of December 31, 2020 and 2021, the Group determined that no such events were presented. The Groupdid not record any impairment losses in any of the periods reported.(l) LeasesOn January 1, 2019, the Group adopted ASU No. 2016-02, Leases (Topic 842), as amended, which supersedes the lease accounting guidance underTopic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balancesheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements.The Group elected to apply practical expedients permitted under the transition method that allow the Group to use the beginning of the period ofadoption as the date of initial application, to not recognize lease assets and lease liabilities for leases with a term of twelve months or less, to notseparate non-lease components from lease components, and to not reassess lease classification, treatment of initial direct costs, or whether anexisting or expired contract contains a lease. The Group used modified retrospective method and did not adjust the prior comparative periods.Under the new lease standard, the Group determines if an arrangement is or contains a lease at inception. Right-of-use assets and liabilities arerecognized at lease commencement date based on the present value of remaining lease payments over the lease terms. The Group considers onlypayments that are fixed and determinable at the time of lease commencement.ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readilydetermined, its incremental borrowing rate. As most of the Group’s leases do not provide an implicit rate, the Group uses its incremental borrowingrate as the discount rate for the lease. The Group’s incremental borrowing rate is estimated to approximate the interest rate on a collateralized basiswith similar terms and payments. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liabilityadjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentivesreceived. The Group’s lease terms may include options to extend or terminate the lease. Renewal options are considered within the right-of-useassets and lease liability when it is reasonably certain that the Group will exercise that option.Lease expense for lease payments is recognized on a straight-line basis over the lease term.(m) Property and equipment, netProperty and equipment is recorded at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the followingestimated useful lives:Leasehold improvements Over the shorter of the lease term or their estimated useful livesBuildings 30 yearsFurniture, fixtures and equipment 3-5 yearsMotor vehicles 5 yearsGains and losses from the disposal of property and equipment are included in income (loss) from operations.(n) Intangible assets, netAcquired intangible assets mainly consist of the advertising agency agreement and license agreements with SINA, customer relationships, anddatabase license are recorded at fair value on the acquisition date. All intangible assets, with the exception of customer relationships, are amortizedratably over the contract period. Intangible assets resulting out of acquired customer relationships are amortized based on the timing of the revenueexpected to be derived from the respective customer.Table of ContentsF-16(o) Impairment of long-lived assets other than goodwillThe Group evaluates its long-lived assets, such as fixed assets and purchased or acquired intangible assets with finite lives, for impairmentwhenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with ASCsubtopic 360-10, Property, Plant and Equipment: Overall (“ASC 360-10”). When these events occur, the Group assesses the recoverability of thelong-lived assets by comparing the carrying amount of the assets to future undiscounted net cash flow expected to result from the use of the assetsand their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Group willrecognize an impairment loss equal to the excess of the carrying amount over the fair value of the assets. Impairment on long-lived assets were nilas of December 31, 2020 and 2021 respectively.(p) Impairment of goodwillThe Group evaluates the recoverability of goodwill annually or more frequently if an event occurs or circumstances change in the interim thatwould more likely than not reduce the fair value of the asset below its carrying amount. Goodwill is considered to be impaired when the carryingvalue of a reporting unit or asset exceeds its fair value. The Group currently has only one reporting unit: Leju online segment.In the evaluation of goodwill for impairment, the Group first assesses qualitative factors to determine whether it is more likely than not that the fairvalue of a reporting unit is less than its carrying value. If the Group determines that it is not more likely than not for a reporting unit’s fair value tobe less than its carrying value, a calculation of the fair value is not performed. If the Group determines that it is more likely than not for a reportingunit’s fair value to be less than its carrying value, a calculation of the reporting unit’s fair value is performed and compared to the carrying value ofthat unit. An impairment loss is recorded equal to the excess of the reporting unit’s carrying value over its fair value.Generally, the Group measures fair value of reporting units based on a present value of future discounted cash flows and an income valuationapproach. The discounted cash flow models indicate the fair value of the reporting units based on the present value of the cash flow that thereporting units are expected to generate in the future. Significant estimates in the discounted cash flow models include: the weighted average costof capital; long-term rate of growth and profitability of the Group’s business; and working capital effects. Key assumptions used in the incomeapproach, which requires significant management judgment, include forecasted cash flows which consider the historical financial trends, businessgrowth rate and market share, as well as terminal value and discount rate. Significant increases in discount rate or decrease in terminal value inisolation would result in a significantly lower fair value measurement.(q) Income taxesDeferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities, and their reported amounts in thefinancial statements, net operating loss carry-forwards and credits by applying enacted statutory tax rates applicable to future years when thereported amounts of the asset or liability are expected to be recovered or settled, respectively. Deferred tax assets are reduced by a valuationallowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not berealized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.The Group only recognizes tax benefits related to uncertain tax positions when such positions are more likely than not of being sustained uponexamination. For such positions, the amount of tax benefit that the Group recognizes is the largest amount of tax benefit that is more than fiftypercent likely of being sustained upon the ultimate settlement of such uncertain position. The Group records interest and penalties as a componentof income tax expense.(r) Share-based compensationShare-based compensation expense is measured on the grant date of the share award, based on the fair value of the award, and recognized as anexpense over the requisite service period. Management has made an estimate of expected forfeitures and recognizes compensation cost only forthose equity awards expected to vest.Table of ContentsF-17(s) Revenue recognitionThe Group generates real estate online revenues principally from e-commerce, online advertising, and listing services and enters into separatecontracts with its customers under each revenue stream. Revenues are recorded, after considering reductions by estimates for refund allowancesand sales related taxes.The Group has adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and all subsequent ASUs that modified ASC 606 onJanuary 1, 2018 and has elected to apply it retrospectively for the year ended December 31, 2018.The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in anamount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that coreprinciple, the Group applies the following steps:●Step 1: Identify the contract(s) with a customer●Step 2: Identify the performance obligations in the contract●Step 3: Determine the transaction price●Step 4: Allocate the transaction price to the performance obligations in the contract●Step 5: Recognize revenue when (or as) the entity satisfies a performance obligationE-commerceThe Group offers individual property buyers discount coupons that enable them to purchase specified properties from real estate developers atdiscounts greater than the face value of the fees charged by the Group. Discount coupons are collected initially upfront from the property buyersand are refundable at any time before they are used to purchase the specified properties. As such, these fees are recorded as advance fromcustomers in the Group’s consolidated balance sheets. In this context, the Group determines its customers to be individual property buyers and hasidentified one single performance obligation to be the sale of discount coupons. The Group determines the sale of discount coupons to be satisfiedat a point in time only when confirmation letters are obtained from its customers or developers that prove the use of the coupons. The transactionprice is the discount coupon fees charged by the Group which is fixed in the contract with individual property buyers.Online advertisingIn respect of the online advertising services, the Group mainly provides comprehensive advertisement placement services to the advertisers (i.e.,property developers) through a packaged online cross-media and cross-platform product portfolio, including those owned by the Group and otherindependent outlets.Management considers the Group acts as principal in this arrangement when the Group is a contracting party to its advertisers and is primarilyresponsible for delivering the specified service to the advertisers. The Group controls the specified service before that service is transferred to anadvertiser, because (i) the Group has the discretion to decide which media outlets to use and what type of the advertisements to be placed; (ii) theGroup is subject to certain risk of loss to the extent that the cost paid to the media outlets, which is charged to the Group based on a number ofmethodology, including viewership (CPM) or click (CPC) or others, cannot be compensated by the total consideration obtained from theadvertisers; and (iii) the Group has the discretion to determine the fee charged to the advertisers, which affects the Group’s margin as the costsincurred might vary. Therefore the Group reports revenue earned from the advertisers and costs paid to media outlets related to these transactionson a gross basis.In addition, management considers the Group acts as an agent for those arrangements that the Group only earns agreed rebates from certain mediaoutlets and recognizes such rebates as revenue on a net basis. Media outlets grant the Group rebates in the form of prepayments for the mediaoutlets’ services or cash, mainly based on the gross spending of the advertisers. In some circumstances, the Group will share with its advertiserscertain amount of the rebates earned from the media outlets, which is accounted for as a reduction of the rebates, and the Group recognizes such netamount of rebates as revenue.Table of ContentsF-18ListingListing services entitle real estate brokers to post and make changes to information for properties in a particular area on the website for a specifiedperiod of time, in exchange for a fixed fee.In this context, the Group determines its customers to be real estate brokers and has identified a single performance obligation that is recognizedover time on a straight-line basis over the contract period of display and when collection is probable. The transaction price is the fixed fee outlinedin the contract. No rebates are given to the real estate brokers.Contract balancesThe Group does not have unconditional right to the consideration for advertising or listing services until all promises have been fulfilled andtherefore initially records a contract asset when recognizing revenue. Upon fulfillment of all advertising or listing services, contract assets will bereclassified as a receivable. Contract assets, net, recognized were $1,884,193 and $1,415,241 as of December 31, 2020 and 2021 respectively.Disaggregation of revenueIn accordance with ASC 606-10-50, the Group believes the disaggregation of revenue from contracts with customers by e-commerce, onlineadvertising and listing to sufficiently achieve the disclosure objective of depicting how the nature, amount, timing, and uncertainty of revenue andcash flows are affected by economic factors.Practical Expedients and ExemptionsFor the Group’s contracts that have an original duration of one year or less, the Group uses the practical expedient applicable to such contracts andhas not disclosed the transaction prices for the remaining performance obligations as of the end of the reporting period or when the Group expectsto recognize this revenue.Financing ComponentIn determining the transaction price, the Group adjusts the promised amount of consideration to determine the cash selling price of the service to bedelivered and reflect the time value of money if the contract has a significant financing component. As a result of the adjustment to the transactionprice, the Group recognized interest income amounting to $301,368, $4,454,077 and nil for the years ended December 31, 2019, 2020 and 2021,respectively.(t) Cost of revenueCost of revenue consists of costs associated with the production of websites, which includes fees paid to third parties for internet connection,content and services, editorial personnel related costs, amortization of intangible assets, depreciation associated with website production equipmentand fees paid to media outlets for advertising resources.(u) Marketing and advertising expensesMarketing and advertising expenses consist primarily of targeted online and offline marketing costs for promoting the Group’s e-commerceprojects and the Group’s own brand building, such as Leju property visit, sponsored marketing campaigns, online or print advertising, publicrelations and sponsored events. The Group expenses all marketing advertising costs as incurred and record these costs within “Selling, general andadministrative expenses” on the consolidated statements of operations when incurred. The nature of the Group’s direct marketing activities is suchthat they are intended to attract subscribers for the online advertising and potential property buyers to purchase the discount coupons. The Groupincurred marketing and advertising expenses amounting to $487,111,773, $523,315,406 and $442,975,679 for the years ended December 31, 2019,2020 and 2021, respectively.Table of ContentsF-19(v) Foreign currency translation and transactionThe functional currency of the Company is the United States dollar (“U.S. dollar”) and is used as the reporting currency of the Group. Monetaryassets and liabilities denominated in currencies other than the U.S. dollar are translated into U.S. dollar at the rates of exchange ruling at thebalance sheet date. Equity accounts are translated at historical exchange rates and revenues, expenses, gains and losses are translated using theaverage rate for the year. Translation adjustments are reported as foreign currency translation adjustment and are shown as a separate component ofother comprehensive income (loss) in the consolidated statements of changes in equity and comprehensive income (loss).The financial records of certain of the Company’s subsidiaries are maintained in local currencies other than the U.S. dollar, such as Renminbi(“RMB”) and Hong Kong dollar (“HKD”), which are their functional currencies. Transactions in other currencies are recorded at the rates ofexchange prevailing when the transactions occur. Transaction gains and losses are recognized in the consolidated statements of operations.The Group recorded an exchange gain $412,236, exchange loss $815,656 and $431,686 for the years ended December 31, 2019, 2020 and 2021,respectively, as a component of other income (loss), net, in the consolidated statements of operations.(w) Government subsidiesGovernment subsidies include cash subsidies received by the Company’s subsidiaries and VIEs in the PRC from local governments. Thesesubsidies are generally provided as incentives for conducting business in certain local districts and are typically granted based on the amount ofvalue-added tax, and income tax generated by the Group in certain local districts. Such subsidies allow the Group full discretion in utilizing thefunds and are used by the Group for general corporate purposes. The local governments have final discretion as to the amount of cash subsidies.Cash subsidies of $597,853, $380,849 and $560,394 were included in other operating income for the years ended December 31, 2019, 2020 and2021, respectively. Subsidies are recognized when cash is received and when all the conditions for their receipt have been satisfied.(x) Concentration of credit riskFinancial instruments that potentially expose the Group to concentrations of credit risk consist primarily of cash and cash equivalents, accountsreceivable and customer deposits. The Group deposits its cash and cash equivalents in the reputable financial institutions.Prior to January 1, 2020, the Group regularly reviews the creditworthiness of its customers, and requires collateral or other security from itscustomers in certain circumstances when accounts receivables’ aging is over one year. The Group establishes an allowance for credit lossesprimarily based upon factors surrounding the credit risk of specific customers, including creditworthiness of the clients, aging of the receivablesand other specific circumstances related to the accounts. Accounts receivable balances are written off after all collection efforts have beenexhausted.The Group adopted Accounting Standard Update (ASU) 2016-13, Financial Instruments-Credit Losses (codified as Accounting StandardCodification Topic 326), since January 1, 2020, which requires measurement and recognition of current expected credit losses for financialinstruments held at amortized cost.The Group’s accounts receivable and contract assets, customer deposits, other receivables recorded in prepayments and other current assets andamounts due from related parties are within the scope of ASC Topic 326.To estimate expected credit losses, the Group has identified the relevant risk characteristics of its customers and these receivables are assessed onan individual basis for customers with good credit rating (strategic type customers), with pledged credit risk (pledged type customers), with highcredit risk (high risk type customers) and the remaining (normal risk type customers). For each customer, the Group considers historical settlementpattern, past default experience of the debtor, overall economic environment in which the debtors operate, and also the assessment of both currentand future development of environment as of the date when this report issued. This is assessed at each quarter based on the Group’s specific factsand circumstances.Table of ContentsF-20Balances of the allowance for credit losses for accounts receivable and contract assets by each risk category are as follows:Year Ended December 31, 2020 2021$$Balances of customers with good credit rating 45,476 —Balances of customers with pledged credit risk 1,935,563 1,126,119Balances of customers with high credit risk 6,164,942 112,183,037Balances of customers with normal risk 4,537,798 2,065,475 12,683,779 115,374,631Movement of the allowance for credit losses for accounts receivable and contract assets is as follows:Year Ended December 31, 2019 2020 2021$$$Balance as of January 1 18,195,38216,108,52012,683,779Provisions 5,530,8434,535,063101,172,959Write-offs (7,343,322)(8,809,126)(600,847)Changes due to foreign exchange (274,383)849,3222,118,740Balance as of December 31 16,108,52012,683,779115,374,631Movement of the allowance for other receivables in prepaid expenses and other current assets, is as follows:Year Ended December 31, 2020 2021$$Balance as of January 1 — 335,386Provisions/(reversal) 335,386 (190,200)Write-offs — —Changes due to foreign exchange — 5,584Balance as of December 31 335,386 150,770Movement of the allowance for customer deposits, is as follows:Year Ended December 31, 2020 2021$$Balance as of January 1— 3,480Provisions3,480 10,286,671Write-offs— —Changes due to foreign exchange— (30,956)Balance as of December 313,480 10,259,195Movement of the allowance for amount due from related parties, is as follows: Year Ended December 31, 2020 2021$$Balance as of January 1 — 3,188Provisions/(reversal) 3,188 (2,034)Write-offs — —Changes due to foreign exchange — 21Balance as of December 31 3,188 1,175Table of ContentsF-21Details of the accounts receivable and contract assets from customers accounting for 10% or more of total net accounts receivable and contract assets are as follows:As of December 31, 2020 2021Customer A$$Accounts receivable, gross146,284,59096,510,078Allowance for credit losses(43,885)(96,510,078)Accounts receivable, net146,240,705—(y) Income (Loss) per shareBasic income (loss) per share is computed by dividing income (loss) attributable to holders of ordinary shares by the weighted average number ofordinary shares outstanding during the period.Diluted income (loss) per ordinary share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares wereexercised or converted into ordinary shares.The following table sets forth the computation of basic and diluted income (loss) per share for the periods indicated:Year Ended December 31, 2019 2020 2021Net income (loss) attributable to Leju ordinary shareholders—basic and diluted$11,521,996$19,302,238$(150,933,535)Weighted average number of ordinary shares outstanding—basic135,770,793136,070,785136,652,162Stock options and restricted shares40,9581,493,782—Weighted average number of ordinary shares outstanding-diluted135,811,751137,564,567136,652,162Basic income (loss) per share$0.08$0.14$(1.10)Diluted income (loss) per share$0.08$0.14$(1.10)Diluted income (loss) per ordinary share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares wereexercised or converted into ordinary shares. Diluted income (loss) per share does not include the following instruments as their inclusion wouldhave been anti-dilutive:Year Ended December 31, 2019 2020 2021Share options and restricted shares 8,440,5457,207,04515,617,986(z) Non-controlling interestNon-controlling interest classified as a separate line item in the equity section and disclosures in the Company’s consolidated financial statementshave distinguished the interest of Leju from the interest of non-controlling interest holders.(aa) Comprehensive income (loss)Comprehensive income (loss) includes all changes in equity except those resulting from investments by owners and distributions to owners. For theyears presented, total comprehensive income (loss) includes net income (loss) and foreign currency translation adjustments.Table of ContentsF-22(ab) Impact of newly adopted accounting pronouncementIn January 2020, the FASB issued ASU 2020-01, “Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures(Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815,” which clarifiesthe interaction of the accounting for equity investments under Topic 321 and investments accounted for under the equity method of accounting inTopic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. The standard is effective forpublic companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The new guidance is effectivefor fiscal years, and interim periods within those fiscal years, beginning after December 31, 2020. The Company adopted this guidance on January1, 2021 with no material impact on its audited consolidated financial statements.(ac) Recent issued accounting pronouncements not yet adoptedIn October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805) – Accounting for Contract Assets and Contract Liabilitiesfrom Contracts with Customers”, which requires that an acquirer recognize and measure contract assets and contract liabilities acquired in abusiness combination in accordance with Topic 606, as if it had originated the contracts. Prior to this ASU, an acquirer generally recognizescontract assets acquired and contract liabilities assumed that arose from contracts with customers at fair value on the acquisition date. The ASU iseffective for fiscal years beginning after December 15, 2022, with early adoption permitted. The ASU is to be applied prospectively to businesscombinations occurring on or after the effective date of the amendment (or if adopted early as of an interim period, as of the beginning of the fiscalyear that includes the interim period of early application). The ASU is currently not expected to have a material impact on the Company’sconsolidated financial statements.3. LeasesThe Group leases office under non-cancelable operating lease agreements, which expire at various dates from 2021 to 2028. As of December 31,2020 and 2021, the Group’s operating leases had a weighted average remaining lease term of 6.6 and 5.8 years and a weighted average discountrate of 5.54% and 5.61%, respectively. Future lease payments under operating leases as of December 31, 2021 were as follows: As of December 31,2021$20225,669,30420235,023,85520244,388,88120254,360,96320264,287,103Then thereafter5,610,325Total future lease payments29,340,431Impact of discounting remaining lease payments(4,320,896)Total lease liabilities25,019,535Lease liabilities, current5,581,648Lease liabilities, non-current19,437,887Operating lease expenses for the years ended December 31, 2019, 2020 and 2021 were $9,439,187, $6,016,402 and $6,331,194, respectively, whichdid not include short-term lease cost. Short-term lease costs for the years ended December 31, 2019, 2020 and 2021 were $2,950,929, $2,306,983and $2,302,019, respectively.Cash paid for amounts included in the measurement of operating lease liabilities was $7,212,182, $5,794,716 and $6,287,094 for the years endedDecember 31, 2019, 2020 and 2021, respectively. Non-cash transaction amounts of lease liabilities arising from obtaining right-of-use assets were$4,052,129, $1,967,269 and $2,064,279 for the years ended December 31, 2019, 2020 and 2021, respectively.Table of ContentsF-234. Property and Equipment, NetProperty and equipment, net consists of the following:As of December 31, 2020 2021$$Furniture, fixtures and equipment 10,994,46111,119,445Leasehold improvements 5,010,3845,269,934Buildings 11,041,25912,085,843Motor vehicles 1,141,4911,120,551Total 28,187,59529,595,773Accumulated depreciation (11,185,482)(12,928,492)Property and equipment, net 17,002,11316,667,281Depreciation expenses were $2,287,325, $2,701,577 and $2,374,493 for the years ended December 31, 2019, 2020 and 2021, respectively.5. Intangible Assets, NetWeighted AverageRemainingAmortization As of December 31, Period in Years 2020 2021 $$Intangible assets subject to amortization are comprised of the following:Advertising agency agreement with SINA 106,790,000106,790,000 2.25License agreements with SINA 80,660,00080,660,000 2.25Computer software licenses 1,739,1662,432,242 1.73Total intangible assets, gross 189,189,166189,882,242 2.24Less: Accumulated amortizationAdvertising agency agreement with SINA 87,616,07593,670,998License agreements with SINA 66,398,86670,902,383Computer software licenses 960,8832,011,103Total accumulated amortization 154,975,824166,584,484Total intangible assets, net 34,213,34223,297,758The advertising agency agreement and license agreements with SINA (the “SINA Agreements”) were recognized in connection with the Group’sacquisition of China Online Housing Technology Corporation (“COHT”) in 2009, and provide the Group with exclusive rights to operate SINA’sreal estate and home furnishing related channels and the exclusive right to sell advertising relating to real estate, home furnishing and constructionmaterials on these channels as well as SINA’s other websites. If the Group sells advertising on SINA’s websites other than the above channels, itwill pay SINA fees of approximately 15% of the revenues generated from these sales. The SINA Agreements had an original expiration date in2019. In March 2014, the SINA Agreements were extended by five years to 2024 for no additional consideration. All other terms of the SINAAgreements remained the same. The acquisition cost was recognized as an intangible asset and amortized over the term of the agreement.Table of ContentsF-24Amortization expenses were $12,870,915, $11,636,952 and $10,994,923 for the years ended December 31, 2019, 2020 and 2021, respectively. TheGroup expects to record amortization expenses of $10,848,846, $10,631,568, $1,809,946 , $7,398 and nil for the years ending December 31, 2022,2023, 2024, 2025 and 2026, respectively.6. BorrowingsAs of December 31,20202021$$Short‑term borrowings —784,230In September 2021, the Group entered into a one-year RMB 5.0 million facility agreement with Shanghai Pudong Development Bank. The interestrate was set at 65 basis points over Loan Prime Rate (“LPR”). The bank borrowing was unguaranteed and unsecured. For the year ended December31, 2021, the Group recognized an interest expense of $9,147, which was recorded in interest income, net.7. Other Income (Loss), NetYear Ended December 31, 201920202021 $ $ $Realized gain on marketable securities——2,127,985Unrealized gain (loss) on marketable securities951,545850,402(1,722,700)Income (loss) from sales of properties held for sales363,01214,141(17,430)Foreign exchange gain (loss) 412,236(815,656)(431,686)Others251,718251,169252,706Total 1,978,511300,056208,8758. Income TaxThe following table summarizes income (loss) before income taxes incurred in the PRC and outside of the PRC:Year Ended December 31, 2019 2020 2021$$$Income (loss) before income taxes:PRC 24,990,44340,605,716(148,696,060)Outside of PRC (5,119,860)(8,918,616)(14,711,876)Total 19,870,58331,687,100(163,407,936)Table of ContentsF-25Expenses (benefits) for income taxes are comprised of:Year Ended December 31, 2019 2020 2021$$$Current TaxPRC (378,008)2,725,114(1,409,996)Outside of PRC 225,0096,6004,895 (152,999)2,731,714(1,405,101)Deferred TaxPRC 9,142,6617,933,308(12,092,683)Outside of PRC ——— 9,142,6617,933,308(12,092,683)Income tax expense (benefits) 8,989,66210,665,022(13,497,784)The Company is incorporated in the Cayman Islands, which is exempted from tax.Enterprise Income Tax Law in China applies a statutory 25% enterprise income tax rate to both foreign invested enterprises and domesticenterprises.Shanghai SINA Leju was granted a high and new technology enterprise (“HNTE”) status. Shanghai SINA Leju renewed its qualification of “highand new technology enterprise” in 2018 and 2021, and was entitled to a favorable statutory tax rate of 15% from 2018 through 2023.The Group’s subsidiaries in Hong Kong are subject to a profit tax at the rate of 16.5% on assessable profit determined under relevant Hong Kongtax regulations. The Company’s subsidiaries incorporated in the BVI are not subject to taxation.The Group does not have uncertain tax positions in accordance with ASC740-10, nor does it anticipate any significant increase to its liability forunrecognized tax benefit within next 12 months. The Group will classify interest and penalties related to income tax matters, if any, as income taxexpense.According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to taxauthority’s mistake or due to computational errors made by the taxpayer. The statute of limitations will be extended to five years under specialcircumstances, which are not clearly defined, but an underpayment of tax liability exceeding RMB100,000 ($15,685) is specifically listed as aspecial circumstance. In the case of a transfer pricing related adjustment, the statute of limitations is 10 years. There is no statute of limitations inthe case of tax evasion.Table of ContentsF-26The principal components of the deferred income tax assets/liabilities are as follows:As of December 31, 2020 2021$$Deferred tax assets:Accrued salary expenses 6,904,6174,987,961Bad debt provision 3,243,96228,843,655Net operating loss carry-forwards 35,417,60640,000,359Advertising expenses 433,3001,441,682Accrued expense—2,434,194Others 619,872629,598Gross deferred tax assets 46,619,35778,337,449Valuation allowance (5,714,480)(26,732,045)Total deferred tax assets 40,904,87751,605,404Deferred tax liabilities:Intangible assets from acquisition and other assets 8,558,6496,042,540Total deferred tax liabilities 8,558,6496,042,540The majority of deferred tax liabilities were recognized for temporary differences between the tax basis of intangible assets recognized fromacquisitions and their reported amounts in the financial statements.Movement of the valuation allowance is as follows:Year Ended December 31, 2019 2020 2021$$$Balance as of January 1(480,689)(5,634,684)(5,714,480)Reversal/(Additions)(5,220,332)291,962(20,905,451)Write-offs——393,251Changes due to exchange rate translation66,337(371,758)(505,365)Balance as of December 31(5,634,684)(5,714,480)(26,732,045)The Group recognized a valuation allowance against deferred tax assets on tax loss carry-forwards of $5,220,332 and $20,905,451 for the yearsended December 31, 2019 and 2021, respectively. The Group reversed a valuation allowance against deferred tax assets on tax loss carry forwardsof $291,962 for the year ended December 31, 2020.The Group assesses available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existingdeferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period endedDecember 31, 2021. Such objective evidence limits the Group’s ability to consider other subjective evidence such as its projections for futuregrowth.On the basis of this evaluation, as of December 31, 2021, a valuation allowance of $26,732,045, of which $24,127,520 was for bad debt provisionand $2,604,525 was for net operating loss carry-forwards, was recorded to reflect only the portion of the deferred tax assets that is not more likelythan not to be realized. The amount of the deferred tax assets considered realizable, however, could be adjusted if estimates of future taxableincome during the carry forwards period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longerpresent and additional weight may be given to subjective evidence such as the Group’s projections for growth.Table of ContentsF-27Reconciliation between the provision for income tax computed by applying the statutory tax rate to income before income taxes and the actualprovision for income taxes is as follows:Year Ended December 31, 2019 2020 2021 PRC income tax rate 25.00%25.00%25.00%Share based compensation expenses not deductible for tax purposes 4.53%2.35%(0.25)%Other expenses not deductible for tax purposes (1.13)%(0.12)%0.17%Effect of tax holiday (9.32)%(0.27)%(5.29)%Effect of different tax rate of subsidiary operation in other jurisdiction 2.27%3.20%(2.00)%Valuation allowance movement 26.29%(0.82)%(12.37)%Withholding tax(2.39)%4.32%3.01% 45.25%33.66%8.27%The aggregate amount and per share effect of the tax holiday are as follows:Year Ended December 31, 2019 2020 2021$$$The aggregate dollar effect 1,852,41985,461(8,646,324)Per share effect—basic 0.010.00(0.06)Per share effect—diluted 0.010.00(0.06)As of December 31, 2020 and 2021, the Group had tax operating loss carry-forwards of $159,850,210, and $205,754,412, respectively. The taxoperating losses of entities not qualified as HNTE are available for offset against future profits that may be carried forward until calendar years2025 and 2026, respectively and further to 2030 and 2031, respectively for qualified HNTE according to the public announcement made by theState Administration of Taxation in China in 2021.Undistributed earnings of the Company’s PRC subsidiaries of approximately $3,068,485 at December 31, 2021 are considered to be indefinitelyreinvested and, accordingly, no provision for PRC dividend withholding tax has been provided thereon. Upon distribution of those earningsgenerated after January 1, 2009, in the form of dividends or otherwise, the Group would be subject to the then applicable PRC tax laws andregulations. The amounts of unrecognized deferred tax liabilities for these earnings are in the range of $153,424 to $306,849, as the withholding taxrate of the profit distribution will be 5% or 10% depending on whether the immediate offshore companies can enjoy the preferential withholdingtax rate of 5%.9. Share-Based CompensationLeju PlanIn November 2013, the Company adopted a share incentive plan (“Leju Plan”), which allows the Company to offer a variety of share-basedincentive awards to employees, officers, directors and individual consultants who render services to the Group. Under the Leju Plan, the maximumnumber of shares that may be issued would be 8% of the total outstanding shares on an as-converted and fully diluted basis as of the effective dateof the plan, and would be increased automatically by 5% of the then total outstanding shares on an as-converted fully diluted basis on each of thethird, sixth and ninth anniversaries of the effective date of the Leju Plan. On December 1, 2016, the award pool under Leju plan was automaticallyincreased by 7,553,422 ordinary shares. On December 1, 2019, the award pool under Leju plan was automatically increased by 7,833,224 ordinaryshares. Options have a ten-year life.Share Options:During 2019 and 2020, there were no options granted under Leju Plan.During 2021, the Company granted 4,267,000 options to purchase its ordinary shares to certain of the Group’s employees at an exercise price from$0.10 to $1.00 per share, including 600,000 options granted to senior management team as part of 2020 bonus as described below. The optionsexpire ten years from the date of grant and vest ratably at each grant date anniversary over a period of three years.Table of ContentsF-28The Company has used the binomial model to estimate the fair value of the options granted under the Leju Plan. The fair value per option wasestimated at the date of grant using the following assumptions: 2021Risk-free rate of return1.56% Contractual life of option10 yearsEstimated volatility72.06% Dividend yield0.00% A summary of option activities under the Leju Plan during the year ended December 31, 2021 is presented below: Weighted AverageRemainingAggregateWeightedContractualIntrinsicNumber ofAverageTermValue of Options Exercise Price (in years) Options$$Outstanding, as of January 1, 2021 11,803,404 3.39 5.39 Granted4,267,000Exercised (146,582)1.42193,492Forfeited (305,836)3.35Outstanding, as of December 31, 202115,617,9862.725.71 Vested and expected to vest as of December 31, 202115,130,5492.785.59Exercisable as of December 31, 202111,368,9863.414.36The weighted average grant-date fair value of the options granted in 2021 was $1.74 per share. For the years ended December 31, 2019, 2020 and2021, the Company recorded compensation expenses of $2,268,554, $1,415,526 and $1,519,778 for the share options granted to the Group’semployees, respectively. During the years ended December 31, 2019, 2020 and 2021, 48,757, 429,968 and 146,582 options were exercised having atotal intrinsic value of $20,441, $471,610 and $193,492, respectively. The proceeds from exercise of options were $69,214, $611,734 and $208,025for the years ended December 31, 2019, 2020 and 2021, respectively.As of December 31, 2021, there was $4,140,587 of total unrecognized compensation expense related to unvested share options granted under theLeju Plan. That cost is expected to be recognized over a weighted-average period of 2.31 years.Restricted Shares:Restricted shares are restricted from voting or receiving dividends until the shares are vested based on the stipulated service periods as set out in theaward agreements.The Company granted 250,000 restricted shares to certain employees in 2019. Under the terms of each restricted shares, restricted shares vest over three years.On March 15, 2019, the board of directors approved that portion of bonus for the senior management team would be paid in the form of restrictedshares. For the year ended December 31, 2019, the Company recorded compensation expenses of $1,225,000 for 800,000 restricted shares thatwere granted to the senior management team in June, 2020.On May 28, 2020, the board of directors also approved that portion of bonus for the senior management team would be paid in the form ofrestricted shares. For the year ended December 31, 2020, the Company recorded compensation expenses of $1,425,000,and 600,000 options weregranted to the senior management team at an exercise price of $0.10 per share on April 23, 2021.There were no restricted shares granted under Leju Plan in 2021.Table of ContentsF-29A summary of restricted share activity under the Leju Plan during the year ended December 31, 2021 is presented below: WeightedNumber ofAverageRestrictedGrant-date Shares Fair Value$Outstanding, as of January 1, 2021 966,667 1.53GrantedVested (349,999)1.54Forfeited —Outstanding, as of December 31, 2021 616,668 1.52The total grant-date fair value of restricted shares vested in 2019, 2020 and 2021 was nil, $137,500 and $537,498, respectively.For the years ended December 31, 2019, 2020 and 2021, the Company recorded compensation expenses of $103,125, $137,500 and $137,500 forthe restricted shares granted to the Group’s employees which did not include the restricted shares granted as the bonus for the senior managementteam, respectively.As of December 31, 2021, there was $34,375 of total unrecognized compensation expense related to unvested restricted shares granted under theLeju Plan. That cost is expected to be recognized over a weighted-average period of 0.25 years.10. Employee Benefit PlansThe Group’s PRC subsidiaries and VIEs are required by law to contribute a certain percentage of applicable salaries for retirement benefits,medical insurance benefits, housing funds, unemployment and other statutory benefits. The PRC government is directly responsible for thepayments of such benefits. The Group contributed $14,444,210, $8,027,949, and $14,677,938 for the years ended December 31, 2019, 2020 and2021, respectively, for such benefits.11. Distribution of ProfitsRelevant PRC statutory laws and regulations permit payment of dividends by the Group’s PRC subsidiaries and VIEs only out of their retainedearnings, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC law, each of the Group’s PRCsubsidiaries and VIEs is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reservereaches 50% of its registered capital. Each of the Group’s subsidiaries with foreign investment is also required to further set aside a portion of itsafter-tax profits to fund the employee welfare fund at the discretion of the board. Although the statutory reserves can be used, among other ways, toincrease the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are notdistributable as cash dividends, loans or advances except in the event of liquidation of these subsidiaries.The amounts of the reserve fund for the Group as of December 31, 2020 and 2021 were $9,705,317 and $10,059,628, respectively.As a result of these PRC laws and regulations, the Group’s PRC subsidiaries and VIEs are restricted in their ability to transfer a portion of their netassets, including general reserve and registered capital, either in the form of dividends, loans or advances. Such restricted portion amounted to$35,493,857 and $35,848,168. The amount of $9,093,749 and $9,448,820 was attributed to general reserve and registered capital of the VIEs, as ofDecember 31, 2020 and 2021, respectively.12. Segment InformationThe Group operates and manages its business as a single segment. The Group uses the management approach to determine operating segments. Themanagement approach considers the internal organization and reporting used by the Group’s chief operating decision maker (“CODM”) for makingdecisions, allocating resources and assessing performance. The Group’s CODM has been identified as the chief executive officer, who reviews theconsolidated results of the Group as a whole when making decisions about allocating resources and assessing performance.Table of ContentsF-30The following table summarizes the revenue information of the Group:Year Ended December 31, 2019 2020 2021$$$E-commerce 547,184,192547,895,262411,097,123Online advertising 143,778,573170,782,688122,522,232Listing 1,642,190848,033497,615 692,604,955719,525,983534,116,970GeographicSubstantially all of the Group’s revenues from external customers are located in the PRC.Major customersThere were no customers from whom revenue accounted for 10% or more of total revenue for the years ended December 31, 2019, 2020 and 2021,respectively.13. Related Party Balances and TransactionsThe table below sets forth major related parties and their relationships with the Group:Company Name Relationship with the Group E-House EnterpriseMr. Xin Zhou, executive chairman of Leju, is E-House Enterprise’schairman. E-House Enterprise was a subsidiary of E-House before itbecame a listed company in Hong Kong in July, 2018. Leju became asubsidiary of E-House Enterprise as of November 4, 2020.E-House Under the common control of E-House Holdings until December 30,2016, and E-House Holdings was the largest shareholder fromDecember 31, 2016 to November 4, 2020. Mr. Xin Zhou, executivechairman of Leju, is E-House’s ultimate controller. (Note 1).SINA A shareholder with significant influenceTencent Holdings Ltd. or certain of its affiliates (“Tencent”)A shareholder with significant influenceAlibaba Investment Ltd. or certain of its affiliates (“Alibaba”)A shareholder with significant influence on TM Home, the Company’scontrolling shareholder, since November 4, 2021. (Note 1)Shanghai Yicang Enterprise Management Ltd. (“Yicang”) Mr. Xin Zhou, executive chairman of Leju, is Yicang’s chairman andultimate controller by April 2019. Yicang was disposed of in April,2019.Shanghai Tianji Network Services Ltd. (“Tianji Network”) (formerlyknown as Shanghai Yunchuang Information & Technology Ltd.)Mr. Xin Zhou, executive chairman of Leju, is Tianji Network’s ultimatecontroller by May 2021. Tianji Network became a subsidiary of E-House Enterprise since May 2021.Yunnan Huixiangju Information & Consultant Ltd. (“Huixiangju”)One of the Group’s investment affiliates and the Group owns 51%equity interest and has significant influenceSuzhou Qianyisheng Information & Consultant Ltd. (“Qianyisheng”)One of the Group’s investment affiliates and the Group owns 19%equity interest and has significant influenceShanghai Quanzhuyi Home Furnishing Accessories Ltd.(“QuanZhuYi”)One of the Group’s investment affiliates and the Group owns 13.5%equity interest and has significant influenceJupai Holdings Ltd. (“Jupai”)Mr. Xin Zhou, executive chairman of Leju, is Jupai’s director. E-HouseHoldings has significant influence on Jupai and LejuTable of ContentsF-31Subsequent to Leju’s IPO, E-House began charging the Group corporate service fees pursuant to agreements entered into in March 2014 inconnection with Leju’s IPO. Under these service arrangements, E-House provides various corporate support services to the Group, includinggeneral finance and accounting, human resource management, administrative, internal control and internal audit, operational management, legaland information technology. The termination provisions in the arrangements were amended on November 4, 2020 and E-House continues toprovide such services under the amended services arrangements. E-House charges the Group a fee based on an estimate of the actual cost incurredto provide such services, which amounted to $1,772,642, $1,910,204 and $1,352,382 for the years ended December 31, 2019, 2020 and 2021,respectively.During the years ended December 31, 2019, 2020 and 2021, significant related party transactions were as follows:Year Ended December 31, 2019 2020 2021$$$Corporate service provided by E-House under service agreements1,772,6421,910,2041,352,382Online advertising resources fee recognized as cost of revenues purchased from SINA 18,281,40629,322,24110,078,875Online advertising resources fee recognized as cost of revenues purchased from Tencent21,441,77917,790,50118,671,019Services purchased from/rental cost paid to E-House 1,478,163764,952886,866Services purchased from E-House Enterprise7,427,36421,429,92020,557,777Services purchased from Alibaba (Note A)**875,072Services purchased from Jupai132,58634,160—Services purchased from Tianji Network (Note B)1,090,583493,17669,762Services purchased from Yicang (Note C)17,767——Total services purchased from related parties51,642,29071,745,15452,491,753Online advertising services provided to E-House 23,168—484,185Services provided to E-House Enterprise1,391,4481,392,19036,334Services provided to Investing affiliates1,319,8052,393,204548,075Total online advertising services provided to related parties2,734,4213,785,3941,068,594Fee paid to Tencent for advertising resources on behalf of customers (Note D)9,247,00543,083,5482,502,309Note A: Alibaba became the Company’s related party since 2021.Note B: The amount represents services purchased from Tianji Network from January to May, 2021 while the amount for the services purchasedfor the remaining period was included in the amount of E-House Enterprise.Note C: Yicang was a related party before it was disposed of in April, 2019. The transactions with Yicang in 2019 represent the services purchasedfrom Yicang from January to April, 2019.Note D: The Group has determined that it acts as an agent for those arrangements as the Group only earns agreed rebates from certain media outletsand recognizes such rebates as revenue on a net basis. Media outlets grant the Group rebates in the form of prepayments for the media outlets’services or cash, mainly based on the gross spending of the advertisers. For performance obligations for which it acts as the agent, revenue isrecorded net of the costs for advertising placements from suppliers, equal to the amount retained for its fee or commission. Fees paid to Tencent foradvertising resources on behalf of customers represent costs paid to Tencent for such arrangements.The transactions are measured at the amount of consideration established and agreed to by the related parties.Table of ContentsF-32As of December 31, 2020 and 2021, amounts due from related parties were comprised of the following:As of December 31, 2020 2021$ $Investing affiliates (1)692708Tencent (2)9,078,8543,581,609Alibaba(3)*332,243Allowance for current expected credit losses(3,188)(1,175)Total9,076,3583,913,385As of December 31, 2020 and 2021, amounts due to related parties were comprised of the following:As of December 31, 2020 2021$$E-House (4)129,5662,201,127SINA (5) 3,238,3291,479,957Tianji Network (6)1,499,447*E-House Enterprise (7)2,238,5433,950,839Total 7,105,8857,631,923(1)The amounts due from affiliates as of December 31, 2020 and 2021 represent the expense paid on behalf of Qianyisheng.(2)The amounts due from Tencent as of December 31, 2020 and 2021 represent prepaid fees for online advertising resources.(3)The amounts due from Alibaba as of December 31 2021 represent prepaid fees for online advertising resources and technical service.(4)The amounts due to E-House as of December 31, 2020 and 2021 were primarily for the payable for corporate service fees charged by E-House.(5)The amounts due to SINA as of December 31, 2020 and 2021 represents payable for online advertising resources fee.(6)The amounts due to Tianji Network as of December 31, 2020 represent payable for technical service fees. The balance of Tianji Network wasincluded in the balance of E-house Enterprise as of December 31, 2021.(7)The amounts due to E-House Enterprise as of December 31, 2020 and 2021 represent net results for receivable for online advertising revenuefrom E-House Enterprise and payable for marketing service fees charged by E-House Enterprise.The roll forward of the payable to/ (receivable from) E-House for the years ended December 31, 2019, 2020 and 2021 is as follows:Year Ended December 31, 2019 2020 2021$$$Balance at January 1 (894,222)(555,652)129,566Corporate service provided by E-House under services agreements(A)1,772,6421,910,2041,352,382Service provided to E-House(A)(23,168)—(484,185)Service purchased from/rental cost paid to E-House(A)1,478,163764,952886,866Net received/(payment)(B)(2,889,067)(1,989,938)316,498Balance at December 31 (555,652)129,5662,201,127Table of ContentsF-33As of December 31, 2020 2021$ $Net results for service fee (B)129,5662,201,127Amounts due to E-House129,5662,201,127(A)Represents the services provided by or to E-House.(B)Represents net cash flow for activities between the Company and E-House.The roll forward of the payable to / (receivable from) E-House Enterprise for the years ended December 31, 2020 and 2021 are as follows:Year Ended December 31,20202021 $$Balance at January 1 (906,009)2,238,543Service provided to E-House Enterprise(C)(1,392,190)(36,334)Service purchased from E-House Enterprise(C)21,429,92020,557,777Net payment(D)(16,893,178)(18,809,147)Balance at December 31 2,238,5433,950,839(C)Represents services provided by or to E-House Enterprise.(D)Represents net cash flow for the activities between the Company and E-House Enterprise.14. Commitments and ContingenciesThe Group is subject to claims and legal proceedings that arise in the ordinary course of its business. Each of these matters is subject to variousuncertainties, and it is possible that some of these matters may be decided unfavorably to the Group. The Group does not believe that any of thesematters will have a material effect on its business, assets or operations.15. Subsequent EventsThere is no significant subsequent event occurred. Exhibit 8.1PRINCIPAL SUBSIDIARIES AND CONSOLIDATED VARIABLE INTEREST ENTITIESName of Entity Place of Incorporation SubsidiaryBranco Overseas LtdBritish Virgin IslandsE-House China (Tianjin) Holdings Ltd.British Virgin IslandsE-House Property Consultancy Ltd.British Virgin IslandsE-House International Property Consultancy Ltd.Hong KongE-House City Rehouse Real Estate Broker (Shanghai) Co., Ltd.PRCChina E-Real Estate Holdings Ltd.British Virgin IslandsChina E-Real Estate Group Ltd.Hong KongShanghai Yi Yue Information Technology Co., Ltd.PRCChina Online Housing Technology CorporationCayman IslandsChina Online Housing (Hong Kong) Co., LimitedHong KongShanghai SINA Leju Information Technology Co., Ltd.PRCShanghai Fangxin Information Technology Co., Ltd.PRCLeju (China) Internet Technology Co., Ltd.PRCOmnigold Holdings Ltd.British Virgin IslandsChina Commercial Real Estate Group Ltd.British Virgin IslandsChina Real Estate Business Group Ltd.Hong KongBeijing Maiteng Fengshun Science and Technology Co., Ltd.PRCConsolidated Variable Interest EntitiesShanghai Leju Hao Fang Information Service Co., LtdPRCBeijing Yisheng Leju Information Services Co., Ltd.PRCBeijing Jiajujiu E-Commerce Co., Ltd.PRC Exhibit 12.1Certification by the Principal Executive OfficerPursuant to Section 302 of the Sarbanes-Oxley Act of 2002I, Yinyu He, certify that:1.I have reviewed this annual report on Form 20-F of Leju Holdings Limited;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period coveredby this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;4.The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)and 15d-15(f)) for the company and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by otherswithin those entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions aboutthe effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period coveredby the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting;and5.The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’sinternal control over financial reporting.Date: April 13, 2022By:/s/ Yinyu HeName:Yinyu HeTitle:Chief Executive Officer Exhibit 12.2Certification by the Principal Financial OfficerPursuant to Section 302 of the Sarbanes-Oxley Act of 2002I, Li-Lan Cheng, certify that:1.I have reviewed this annual report on Form 20-F of Leju Holdings Limited;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period coveredby this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;4.The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)and 15d-15(f)) for the company and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by otherswithin those entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions aboutthe effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period coveredby the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting;and5.The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’sinternal control over financial reporting.Date: April 13, 2022By:/s/ Li-Lan ChengName:Li-Lan ChengTitle:Acting Chief Financial Officer Exhibit 13.1Certification by the Principal Executive OfficerPursuant to Section 906 of the Sarbanes-Oxley Act of 2002In connection with the Annual Report of Leju Holdings Limited (the “Company”) on Form 20-F for the year ended December 31, 2021 as filedwith the Securities and Exchange Commission on the date hereof (the “Report”), I, Yinyu He, Chief Executive Officer of the Company, certify,pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.Date: April 13, 2022By:/s/ Yinyu HeName:Yinyu HeTitle:Chief Executive Officer Exhibit 13.2Certification by the Principal Financial OfficerPursuant to Section 906 of the Sarbanes-Oxley Act of 2002In connection with the Annual Report of Leju Holdings Limited (the “Company”) on Form 20-F for the year ended December 31, 2021 as filedwith the Securities and Exchange Commission on the date hereof (the “Report”), I, Li-Lan Cheng, Chief Financial Officer of the Company, certify,pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.Date: April 13, 2022By:/s/ Li-Lan ChengName:Li-Lan ChengTitle:Acting Chief Financial Officer Exhibit 15.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in the Registration Statements on Form S-8 (File Nos. 333-197069, 333-217644 and 333-239943) ofour report dated April 13, 2021, relating to the consolidated financial statements of Leju Holdings Limited, its subsidiaries and its consolidatedvariable interest entities (the “Group”) as of December 31, 2021, and December 31, 2020 and for each of the three years ended December 31, 2021,in which our report expresses an unqualified opinion, appearing in this Annual Report on Form 20-F of the Group for the year ended December 31,2021./s/ Yu Certified Public Accountant P.C.New York, New YorkApril 13, 2022 Exhibit 15.2[Letterhead of Fangda Partners]April 13, 2022Leju Holdings LimitedLevel G, Building G, No. 8 Dongfeng South Road,Chaoyang District, Beijing 100016People’s Republic of ChinaDear Sirs,We consent to the reference to our firm under “Item 4. Information on the Company—C. Organizational Structure” in Leju HoldingsLimited’s Annual Report on Form 20-F for the year ended December 31, 2021, which will be filed with the Securities and Exchange Commission(the “SEC”) in April 2022, and further consent to the incorporation by reference in the Registration Statements on Form S-8 (File Nos. 333-197069, 333-217644 and 333-239943). We also consent to the filing with the SEC of this consent letter as an exhibit to the Annual Report on Form20-F for the year ended December 31, 2021.In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 ofthe Securities Act of 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated thereunder.Yours faithfully,/s/ Fangda PartnersFangda Partners

Continue reading text version or see original annual report in PDF format above