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(Mark One)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT
OF 1934
OR
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023.
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal period from to
OR
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Date of event requiring this shell company report
Commission file number: 001-36396
For the transition period from to
Leju 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)
S7-02, Building 1, Yard 22, Xidawang Road,
Chaoyang District, Beijing 100022
The People’s Republic of China
(Address of principal executive offices)
Li Yuan, Chief Financial Officer
Leju Holdings Limited
S7-02, Building 1, Yard 22, Xidawang Road,
Chaoyang District, Beijing 100022
People’s Republic of China
Telephone: +86 10 8515 0515
Email: ir@leju.com
(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:
None
Securities registered or to be registered pursuant to Section 12(g) of the Act:
American depositary shares, each representing ten ordinary shares
Ordinary shares, par value US$0.001 per share
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
(Title of Class)
None
(Title of Class)
Indicate 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.
137,839,249 ordinary shares (excluding the 3,180,170 ordinary shares issued to our depositary bank for bulk issuance of ADSs reserved for future issuances upon the
exercise or vesting of awards granted under our share incentive plan), par value $0.001 per share, as of December 31, 2023.
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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 of 1934.
☐ 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 this chapter) 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
“large accelerated 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
extended transition 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 April 5, 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
reporting under 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. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
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.
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).
Item 17 ☐ Item 18 ☐
☐ 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 to the distribution of securities under a plan confirmed by a court.
☐ Yes No ☐
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INTRODUCTION
FORWARD-LOOKING STATEMENTS
PART I
TABLE OF CONTENTS
ITEM 1.
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 5.
ITEM 6.
ITEM 7.
ITEM 8.
ITEM 9.
ITEM 10.
ITEM 11.
ITEM 12.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
OFFER STATISTICS AND EXPECTED TIMETABLE
KEY INFORMATION
INFORMATION ON THE COMPANY
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
FINANCIAL INFORMATION
TILE OFFER AND LISTING
ADDITIONAL INFORMATION
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
PART II
ITEM 13.
ITEM 14.
ITEM 15.
ITEM 16.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS
CONTROLS AND PROCEDURES
[RESERVED]
PART III
ITEM 17.
ITEM 18.
ITEM 19.
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
EXHIBITS
SIGNATURES
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Unless 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;
INTRODUCTION
● “variable interest entities” or “VIEs” are to Beijing Leju, Leju Hao Fang and Beijing Jiajujiu, and their respective
subsidiaries. The variable interest entities are PRC companies conducting operations in China, and their financial results
have been consolidated into our consolidated financial statements under U.S. GAAP for accounting purposes. Investors are
purchasing an interest in Leju Holdings Limited, a Cayman Islands holding company with no operations of its own. Leju
Holdings Limited does not have any equity ownership in the variable interest entities;
● “we,” “us,” “our company,” or “our” are to Leju Holdings Limited and its subsidiaries. We conduct operations in China
through (i) our PRC subsidiaries, and (ii) the variable interest entities, with which we have maintained contractual
arrangements, and their subsidiaries;
● “ADSs” are to our American depositary shares, each of which represents one ordinary share; Prior to May 20, 2022, each
of our ADSs represented one ordinary share. On May 20, 2022, we effected a change in the ratio of our ADSs to ordinary
shares from one ADS representing one ordinary share to one ADS representing ten ordinary shares, or the ADS Ratio
Change. Except as otherwise noted, the ADS Ratio Change has been retroactively reflected in this annual report on Form
20-F
● “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 limited liability 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 $0.001 per share;
● “RMB” and “Renminbi” are to the legal currency of China;
● “Shanghai SINA Leju” are to Shanghai SINA Leju Information Technology Co., Ltd.;
● “Leju Hao Fang” are to Shanghai Leju Hao Fang Information Service Co., Ltd. (formerly known as Shanghai Yi Xin E-
Commerce Co., Ltd.);
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● “Shanghai Yi Yue” are to Shanghai Yi Yue Information Technology Co., Ltd.;
● “SINA” are to SINA Corporation;
● “Tencent” are to Tencent Holdings Limited or certain of its affiliates which have entered into agreements with us as
described under “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions—Transactions
and Agreements with Tencent,” as applicable;
● “TM Home” are to TM Home Limited;
● “U.S. dollars”, “US$”, “$”, and “dollars” are to the legal currency of the United States; and
● “Weixin” are to Tencent’s social communication platform “wechat.”
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FORWARD-LOOKING STATEMENTS
This annual report on Form 20-F contains forward-looking statements that involve risks and uncertainties. All statements other
than statements of historical facts are forward-looking statements. These statements involve known and unknown risks, uncertainties and
other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied
by the forward-looking statements.
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 current expectations 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;
● our ability to attract clients and further enhance our brand recognition;
● trends and competition in the real estate services industry; and
● the government policies, regulations, measures aimed at China’s real estate industry.
You should read thoroughly this annual report and the documents that we refer to in this annual report with the understanding
that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking
statements by these cautionary statements. Other sections of this annual report include additional factors which could adversely impact
our business and financial performance. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge
from time to time and it is not possible for 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 which any 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 any forward-looking statements, whether as a result of new information, future events or otherwise.
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PART I
ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3.
KEY INFORMATION
Our Holding Company Structure and Contractual Arrangements with the Variable Interest Entities
Leju Holdings Limited is not a Chinese operating company but a Cayman Islands holding company with no equity ownership in
the variable interest entities. We conduct our operations primarily through our PRC subsidiaries and the variable interest entities
(including the variable interest entities and their subsidiaries) in China. PRC laws and regulations restrict and impose conditions on
foreign investment in the internet industry and there is uncertainty over administrative practice in advertising industries. Accordingly, we
operate part of our business through the variable interest entities, and rely on contractual arrangements among our PRC subsidiaries, the
variable interest entities and their shareholders to conduct the business operations of the variable interest entities. Revenues contributed
by the variable interest entities accounted for 99.9%, 100.0% and 100.0% of our total revenues for the years of 2021, 2022 and 2023,
respectively. As used in this annual report, “we,” “us,” “our company” and “our” refers to Leju Holdings Limited and its subsidiaries.
Holders of Leju’s ADSs hold equity interest in Leju Holdings Limited, our Cayman Islands holding company; by investing in Leju’s
ADSs, they do not, and may never, have direct or indirect interest in the variable interest entities in China. The variable interest entities
are PRC companies conducting operations in China, and their financial results have been consolidated into our consolidated financial
statements under U.S. GAAP for accounting purposes. Leju is a holding company with no operations of its own. We do not have any
equity ownership in the variable interest entities.
A series of contractual agreements, including exclusive call option agreements, loan agreements, equity pledge agreements,
powers of attorney, exclusive business cooperation agreements, have been entered into by and among our subsidiaries, the variable
interest entities and their respective shareholders. Terms contained in each set of contractual arrangements with the variable interest
entities and their respective shareholders are substantially similar. As a result of the contractual arrangements, we have effective control
over and are considered the primary beneficiary of these companies, and we have consolidated the financial results of these companies in
our consolidated financial statements under the U.S. GAAP for accounting purposes. Neither Leju nor its investors has an equity
ownership in, direct foreign investment in, or control through such ownership or investment of, the variable interest entities, and the
contractual arrangements are not equivalent to an equity ownership in the business of the variable interest entities. 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 the
variable interest entities, and we may incur substantial costs to enforce the terms of the arrangements. In addition, these agreements have
not been tested in PRC courts. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We rely on
contractual arrangements with Beijing Leju, Leju Hao Fang and Beijing Jiajujiu and their respective shareholders for a portion of our
operations, which may not be as effective as direct ownership in providing operational control” and “—The shareholders of the variable
interest entities may have potential conflicts of interest with us, and if any such conflicts of interest are not resolved in our favor, our
business may be materially and adversely affected.”
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There are also substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations
and rules regarding the status of the rights of Leju, a Cayman Islands holding company, with respect to its contractual arrangements with
the variable interest entities and their shareholders. It is uncertain whether any new PRC laws or regulations relating to variable interest
entity structures will be adopted or if adopted, what they would provide. If we or any of the variable interest entities is found to be in
violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the
PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. 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 for operating our advertising services business and real estate online business in China do not comply with PRC
governmental restrictions on foreign investment in the advertising industry or the internet information service industry, we could be
subject to severe penalties” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Substantial
uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and how it may impact the
viability of our current corporate structure, corporate governance and business operations.”
Our corporate structure is subject to risks associated with our contractual arrangements with the variable interest entities. If the
PRC government deems that our contractual arrangements with the variable interest entities do not comply with PRC regulatory
restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change or
are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.
Leju, its PRC subsidiaries and variable interest entities, and investors of Leju face uncertainty about potential future actions by the PRC
government that could affect the enforceability of the contractual arrangements with the variable interest entities and, consequently,
significantly affect the financial performance of the variable interest entities and our company as a whole. The PRC regulatory authorities
could disallow the VIE structure, which would likely result in a material change in our operations and cause the value of our securities to
significantly decline or become worthless. For a detailed description of the risks associated with our corporate structure, please refer to
all the risks disclosed under “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure.”
We face various risks and uncertainties related to doing business in China. Our business operations are primarily conducted in
China, and we are subject to complex and evolving PRC laws and regulations. For example, we face risks associated with regulatory
approvals on offshore offerings, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy, and regulation and
statements made by PRC government related to the use of variable interest entities, which may impact our ability to conduct certain
businesses, accept foreign investments, or list on a United States or other foreign exchange. These risks could result in a material adverse
change in our operations and the value of our ADSs, significantly limit or completely hinder our ability to offer or continue to offer
securities to investors, or cause the value of such securities to significantly decline or become worthless. For a detailed description of
risks related to doing business in China, please refer to risks disclosed 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 to investors. Implementation of industry-wide regulations, including data security or anti-monopoly related regulations,
in this nature may cause the value of such securities to significantly decline. For more details, see “Item 3. Key Information—D. Risk
Factors—Risks Related to Doing Business in China—The PRC government’s significant oversight over our business operation could
result in a material adverse change 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 and quickly evolving rules and regulations in China, could result in a material adverse change in our operations and the value of our
ADSs. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China —Uncertainties
with respect to the PRC legal system could adversely affect us” and “—Substantial uncertainties exist with respect to the interpretation
and implementation of the PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate
governance and business operations.”
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Permissions Required from the PRC Authorities for Our Operations
We conduct our business primarily through our subsidiaries and the variable interest entities in China. Our operations in China
are governed by PRC laws and regulations. As of the date of this annual report, Beijing Leju, Beijing Jiajujiu, Beijing Yisheng Leju
Finance Culture Media Co., Ltd. and Beijing Weike Union Information Technology Co., Ltd., both subsidiaries of Beijing Leju, Beijing
Yisheng Leju Internet Technology Co., Ltd., a subsidiary of Beijing Jiajujiu, and Leju Hao Fang, each holds a valid ICP license issued by
the local provincial branch of the MIIT for the operation of our value-added telecommunication business. Beijing Leju and Beijing
Yisheng Leju Finance Culture Media Co., Ltd. each holds a radio and television program production business license issued by the local
branch of the National Radio and Television Administration for the production and distribution of radio and television programs, and the
business scope of the business licenses of Beijing Leju and its subsidiaries which engage in the advertising business includes operating
advertising business. These licenses are essential to the operation of our online real estate business. In addition, Beijing Leju, Leju Hao
Fang and/or Beijing Jiajujiu and their respective subsidiaries do not have internet publication licenses and licenses for online
transmission of audio-visual programs, and are not applying for these licenses. For those video/audio programs and certain other forms of
content that we believe are subject to the requirements of these licenses, such programs and content are hosted by SINA through our
contractual arrangement with SINA. In the case that SINA does not possess the necessary licenses and permits, our video/audio programs
and other content hosted by SINA are 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 and those websites licensed to
us even if the underlying hosting of the relevant content 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 procure and maintain such additional licenses. As advised by our PRC counsel,
Fangda Partners, except for internet publication licenses and licenses for online transmission of audio-visual programs, we believe our
PRC subsidiaries and the variable interest entities have obtained all of the requisite licenses and permits from the PRC government
authorities that are necessary for the business operations.
Furthermore, the PRC government has indicated an intent to exert more oversight and control over offerings that are conducted
overseas and/or foreign investment in China-based issuers. In connection with our issuance of securities to foreign investors in the past,
under current PRC laws, regulations, and rules, as of the date of this annual report, we, our PRC subsidiaries, and the variable interest
entities (i) have not been required to obtain permissions from or complete filings with the China Securities Regulatory Commission, or
the CSRC, (ii) have not been required to go through cybersecurity review by the Cyberspace Administration of China, or the CAC, and
(iii) have not received or have not been denied such requisite permissions by the CSRC or the CAC. Our PRC counsel, Fangda Partners,
has consulted the government authorities, which acknowledged that, under the currently effective PRC laws and regulations, a company
already listed in a foreign stock exchange before promulgation of the latest Cybersecurity Review Measures is not required to go through
a cybersecurity review by the CAC to conduct a securities offering or maintain its listing status on the foreign stock exchange on which
its securities have been listed. Therefore, we believe that under the currently effective PRC laws and regulations, we are not required to
go through a cybersecurity review by the CAC for conducting a securities offering.
On February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by
Domestic Companies, or the Overseas Listing Trial Measures, and five supporting guidelines, which came into effect on March 31, 2023.
According to the Overseas Listing Trial Measures, an overseas listed company shall file with the CSRC within three business days after
the completion of its subsequent securities offering on the same market, and an overseas listed company shall file with the CSRC within
three business days after its application of offering and listing on a different market. If an overseas listed company purchases PRC
domestic assets through a single or multiple acquisitions, share swaps, shares transfers or other means, and such purchase constitutes
direct or indirect listing of PRC domestic assets, a filing with the CSRC is also required. In addition, an overseas listed company is
required to report to the CSRC the occurrence of any of the following material events within three business days after the occurrence and
announcement thereof: (i) a change of control of the listed company; (ii) the investigation, sanction or other measures undertaken by any
foreign securities regulatory agencies or the competent authorities in respect of the listed company; (iii) a change of listing status or
transfer of listing segment; and (iv) the voluntary or mandatory delisting of the listed company. If there is any material change of the
principal business of the listed company after the overseas offering and listing so that the listed company is no longer required to file
with the CSRC, it shall file a specific report and a legal opinion issued by a domestic law firm to the CSRC within three business days
after the occurrence hereof. On the same day, the CSRC also held a press conference for the release of the Overseas Listing Trial
Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which,
among others, clarifies that the domestic companies that have already been listed overseas on or before the effective date of the Overseas
Listing Trial Measures (i.e., March 31, 2023) shall be deemed as existing issuers. Existing issuers are not required to complete the filling
procedures, and they shall be required to file with the CSRC when subsequent matters such as refinancing are involved.
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Based on the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, we were
advised by our PRC Counsel, Fangda Partners, that under the currently effective PRC laws and regulations, we are not required to obtain
permissions from or complete filings with the CSRC. However, as the Overseas Listing Trial Measures is relatively new and there is no
clear guidance or explanation regarding the reporting obligation of an existing issuer under the Notice on Administration for the Filing of
Overseas Offering and Listing by Domestic Companies, we cannot assure you that whether we will need to go through the reporting
procedures with the CSRC for our recent delisting arrangements.
If (i) we do not receive or maintain any permissions or approvals or complete any reporting obligations, (ii) we inadvertently
concluded that certain permissions, approvals have been acquired or are not required, or certain reporting obligations have been
completed or are not required, or (iii) applicable laws, regulations or interpretations thereof change and we become subject to the
requirement of additional permissions, approvals or reporting obligations in the future, we cannot assure you that we will be able to
obtain such permissions or approvals or complete such reporting obligations in a timely manner, or at all, and such approvals may be
rescinded even if obtained. Any such circumstance could subject us to penalties, including fines, suspension of business and revocation
of required licenses, which could materially and adversely affect our business, financial condition and results of operations.
For more detailed information, see “Item 3. Key Information—D. Risk Factors— Risks Related to Our Business—If we fail to
obtain or keep licenses, permits or approvals applicable to the various online real estate services provided by us, we may incur significant
financial penalties and other government sanctions” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business
in China—The approval of and/or report and filing with the CSRC or other PRC government authorities may be required in connection
with our offshore offerings under 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 and reporting obligations.”
Holding Foreign Companies Accountable Act
Pursuant to the Holding Foreign Companies Accountable Act, or the HFCAA, if the SEC determines that we have filed audit
reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years,
the SEC will prohibit our shares or ADSs from being traded in the over-the-counter trading market in the United States. We have
appointed Yu Certified Public Account, P.C., or Yu CPA, for the audit of the consolidated financial statements since the fiscal year 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,
and was not included in the determinations made by the PCAOB on December 16, 2021. Our predecessor auditor’s work related to our
operations in China for the fiscal years 2012 to 2018 was not inspected by the PCAOB. There is no guarantee that our current auditor or
any future auditor engaged by us would remain subject to full PCAOB inspection during the entire term of our engagement, which may
impact our ability to remain traded in the United States. The related risks and uncertainties could cause the value of the ADSs to
significantly decline. Although we believe that the HFCAA and the related regulations do not currently affect us, we cannot assure you
that there will not be any further implementations and interpretations of the HFCAA or the related regulations, which might pose
regulatory risks to and impose restrictions on us in the future. 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 the PCAOB and
currently subject to periodic PCAOB inspection, if it is later determined that the PCAOB is unable to inspect or investigate our auditor
completely, investors would be deprived of the benefits of such inspection and our ADSs may be prohibited from trading.”
Cash and Asset Flows through Our Organization
Leju Holdings Limited is a holding company with no operations of its own. We conduct our operations in China primarily
through our subsidiaries and the variable interest entities in China. As a result, although other means are available for us to obtain
financing at the holding company level, Leju Holdings Limited’s ability to pay dividends to the shareholders and to service any debt it
may incur may depend upon dividends paid by our PRC subsidiaries and license and service fees paid by our PRC consolidated variable
interest entities. If any of our subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt may restrict its
ability to pay dividends to Leju Holdings Limited. In addition, our PRC subsidiaries are permitted to pay dividends to Leju Holdings
Limited only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Further,
our PRC subsidiaries and consolidated variable interest entities are required to make appropriations to certain statutory reserve funds or
may make appropriations to certain discretionary funds, which are not distributable as cash dividends except in the event of a solvent
liquidation of the companies. For more details, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital
Resources—Holding Company Structure.”
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Under PRC laws and regulations, our PRC subsidiaries and the variable interest entities are subject to certain restrictions with
respect to paying dividends or otherwise transferring any of their net assets to us. Remittance of dividends by a wholly foreign-owned
enterprise out of China is also subject to examination by the banks designated by the State Administration of Foreign Exchange, or
SAFE. The amounts restricted include the paid-up capital and the statutory reserve funds of our PRC subsidiaries and the net assets of the
variable interest entities in which we have no legal ownership, totaling $42.1 million, $41.7 million and $41.7 million as of December
31, 2021, 2022 and 2023, respectively. Furthermore, cash transfers from our PRC subsidiaries and the variable interest entities to entities
outside of China are subject to PRC governmental control on currency conversion. As a result, the funds in our PRC subsidiaries or the
variable interest entities in China may not be available to fund operations or for other use outside of China, such as the payments of
dividends to U.S. investors, due to interventions in, or the imposition of restrictions and limitations on, the ability of our holding
company, our subsidiaries, or the variable interest entities by the PRC government on such currency conversion. For risks related to the
fund flows of our operations in China, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Our
PRC subsidiaries and consolidated variable interest entities are subject to restrictions on paying dividends or making other payments to
us, which may restrict our ability to satisfy our liquidity requirements” and “Item 3.D. Key Information—Risk Factors—Risks Related to
Doing Business in China—Governmental control of currency conversion may affect the value of your investment.”
Under PRC law, Leju Holdings Limited may provide funding to our PRC subsidiaries only through capital contributions or
loans, and to the variable interest entities only through loans, subject to satisfaction of applicable government registration and approval
requirements. In the years ended December 31, 2021, 2022 and 2023, Leju Holdings Limited extended loans with outstanding principal
amount of RMB40.0 million, RMB40.0 million and RMB40.0 million, respectively, to our intermediate holding companies and
subsidiaries, and the variable interest entities received RMB40.0 million, RMB40.0 million and RMB40.0 million as capital or
investment, respectively. Furthermore, cash transfers from Leju to our PRC subsidiaries and the variable interest entities are subject to
PRC governmental control on currency conversion. As a result, the funds held by Leju may not be available to fund the operations of our
PRC subsidiaries or the variable interest entities in China. See “Item 3. Key Information—Risk Factors—Risks Related to Doing
Business in China—Governmental control of currency conversion may affect the value of your investment.”
Leju Holdings Limited declared and paid cash dividends of USD26.9 million in 2015. It does not have any present plan to pay
any cash dividends on our ordinary shares in the foreseeable future. We currently intend to retain most, if not all, of our available funds
and any future earnings 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. Additional Information—E. Taxation.”
Selected Consolidated Financial Data
The following selected consolidated statements of operations data for the years ended December 31, 2021, 2022 and 2023 and
selected consolidated balance sheet data as of December 31, 2022 and 2023 have been derived from our audited consolidated financial
statements included elsewhere in this annual report. The selected consolidated financial data should be read in conjunction with our
audited consolidated financial statements and related notes and “Item 5. Operating and Financial Review and Prospects” in this annual
report. Our consolidated financial statements are prepared and presented in accordance with U.S. GAAP.
Our selected consolidated statement of operations data for the fiscal years ended December 31, 2019 and 2020 and our
consolidated balance sheet data as of December 31, 2019, 2020 and 2021 have been derived from our audited consolidated financial
statements not included in this annual report.
Our selected consolidated financial data also includes certain non-GAAP measures, which are not required by, or presented in
accordance with U.S. GAAP, but are included because we believe they are indicative of our operating performance and are used by
investors and analysts to evaluate companies in our industry.
8
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Our historical results do not necessarily indicate results expected for any future periods.
Selected Consolidated Statement of Operations Data
2019
Year Ended December 31,
2021
(in thousands of $, except share and per share data)
2020
2022
Revenues
E-commerce
Online advertising
Listing
Total net revenues
Cost of revenues
Selling, general and administrative expenses
Other operating income, net
Income (loss) from operations
Income (loss) before income taxes and income (loss) from
equity in affiliates
Net income (loss)
Net income (loss) attributable to Leju Holdings Limited
shareholders(1)
Income (loss) per ADS(1):
Basic
Diluted
Weighted average numbers of ADS used in computation:
Basic
Diluted
Note:
547,184
143,779
1,642
692,605
(68,298)
(607,165)
598
17,740
547,895
170,783
848
719,526
(73,762)
(622,026)
381
24,119
411,097
122,522
498
534,117
(55,801)
(645,623)
560
(166,747)
278,464
64,707
11
343,182
(30,604)
(418,501)
298
(105,625)
2023
266,134
50,720
—
316,854
(23,095)
(349,560)
(2,940)
(58,741)
19,871
10,872
31,687
20,998
(163,408)
(149,924)
(101,794)
(89,691)
(57,554)
(55,773)
11,522
19,302
(150,934)
(89,668)
(55,934)
0.85
0.85
1.42
1.40
(11.05)
(11.05)
(6.54)
(6.54)
(4.07)
(4.07)
13,577,079
13,581,175
13,607,079
13,756,457
13,665,216
13,665,216
13,704,238
13,704,238
13,754,135
13,754,135
(1) On May 10, 2022, we announced that it would change its ADS to ordinary share ratio from one (1) ADS representing one (1) ordinary share to one (1) ADS
representing ten (10) ordinary shares. The change in the ADS ratio was effective on May 20, 2022. For our ADS holders, the change in the ADS ratio had the same
effect as a one-for-ten reverse ADS split. The ADS ratio change has no impact on our underlying ordinary share. ADS and income (loss) per ADS for 2019, 2020 and
2021 had been retrospectively adjusted accordingly.
Selected Consolidated Balance Sheet Data
2019
2020
Cash and cash equivalents
Accounts receivable and contract assets, net of allowance
Total current assets
Intangible assets, net
Total assets
Amounts due to related parties
Total current liabilities
Total liabilities
Total Leju Holdings Limited shareholders’ equity
159,012
148,467
383,201
45,581
524,480
4,407
237,513
272,121
255,401
9
As of December 31,
2021
(in thousands of $)
250,314
37,486
320,875
23,298
437,248
7,632
260,708
286,189
151,255
284,489
204,586
522,707
34,213
641,961
7,106
316,890
347,176
295,927
2022
2023
123,378
3,408
143,504
12,458
216,111
4,805
144,194
163,151
53,235
48,204
1,717
79,423
1,790
102,191
1,496
94,683
103,487
(1,173)
Table of Contents
Non-GAAP financial Measures
The following table sets forth, for the periods specified, our adjusted income (loss) from operations, our adjusted net income
(loss), and our adjusted net income (loss) attributable to Leju Holdings Limited shareholders. We present these non-GAAP financial
measures because they are 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. We also believe they are indicative of our operating performance and are used by
investors and analysts to evaluate companies in our industry. These non-GAAP measures of our performance are not required by, or
presented in accordance with, U.S. GAAP. Such measures are not a measurement of financial performance or liquidity under U.S. GAAP
and should not be considered as an alternative to income from operations, net income or any other performance measures derived in
accordance with U.S. GAAP or an alternative to cash flows from operating activities as a measure of liquidity. Our presentation of such
measures may not be comparable to similarly titled measures presented by other companies. You should not compare such measures as
presented by us with the presentation of such measures by other companies because not all companies use the same definition.
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
assets resulting from business combinations, goodwill impairment, and income tax impact on the share-based compensation expense,
amortization of intangible 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-based
compensation 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
Leju Holdings 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 to realize 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% tax rate 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 that impact our income (loss) from operations, net income (loss), and net income (loss) attributable to Leju Holdings Limited
shareholders for the period. We compensate for these limitations by providing the relevant disclosure of our share-based compensation
expense, amortization of intangible 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.
10
Table of Contents
The 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 and presented in accordance with U.S. GAAP:
Income (loss) from operations
Share-based compensation expense(1)
Amortization of intangible assets resulting from business acquisitions
Adjusted income (loss) from operations
Net income (loss)
Share-based compensation expense(1)
Amortization of intangible assets resulting from business acquisitions
Income tax benefits:
Current
Deferred(2)
Adjusted net income (loss)
Net income (loss)
Share-based compensation expense(1)
Amortization of intangible assets resulting from business acquisitions
Income tax benefits:
Current
Deferred(2)
Adjusted net income (loss) attributable to Leju Holdings Limited
shareholders
Notes:
2019
17,740
3,597
12,611
33,948
10,872
3,597
12,611
—
(3,153)
23,927
11,522
3,597
12,611
2022
2020
Year Ended December 31,
2021
(in thousands of $)
(166,747)
1,657
10,558
(154,532)
(149,924)
1,657
10,558
(105,625)
1,824
10,558
(93,243)
(89,691)
1,824
10,558
24,119
2,978
11,180
38,277
20,998
2,978
11,180
—
(2,795)
32,361
19,302
2,978
11,180
—
(2,640)
(140,349)
(150,934)
1,657
10,558
—
(2,640)
(79,949)
(89,668)
1,824
10,558
2023
(58,741)
1,766
10,558
(46,417)
(55,773)
1,766
10,558
—
(2,640)
(46,089)
(55,934)
1,766
10,558
—
(3,153)
—
(2,795)
—
(2,640)
—
(2,640)
—
(2,640)
24,577
30,665
(141,359)
(79,926)
(46,250)
(1) Share-based compensation expense includes share-based compensation expenses recorded by us for our own plans and options granted to our employees 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 assets recognized from acquisitions
and their reported amounts in the financial statements. The income tax impact on the share-based compensation expense and goodwill impairment are nil.
11
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Financial Information Related to the Variable Interest Entities
The following table presents the condensed consolidating schedule of financial position for the variable interest entities and
other entities as of the dates presented.
Selected Condensed Consolidated Statements of Income Information
For the Year Ended December 31, 2023
Company
Subsidiaries
Consolidated
Variable Interest
Entities
Eliminations Consolidated Total
—
(6,322)
(26,504)
(3,038)
(35,864)
(35,579)
(20,326)
USD
(In thousand)
334,563
(16,773)
(340,765)
98
(22,877)
(21,975)
(35,447)
(17,709)
—
17,709
—
—
—
—
316,854
(23,095)
(349,560)
(2,940)
(58,741)
(57,554)
(55,773)
For the Year Ended December 31, 2022
Company
Subsidiaries
Consolidated
Variable Interest
Entities
Eliminations Consolidated Total
11
(6,210)
(85,979)
24
(92,154)
(90,633)
(78,809)
USD
(In thousand)
376,282
(24,394)
(365,633)
274
(13,471)
(11,161)
(10,882)
(33,111)
—
33,111
—
—
—
—
343,182
(30,604)
(418,501)
298
(105,625)
(101,794)
(89,691)
For the Year Ended December 31, 2021
Company
Subsidiaries
Consolidated
Variable Interest
Entities
Eliminations Consolidated Total
498
(8,071)
(79,342)
116
(86,799)
(86,435)
(68,394)
USD
(In thousand)
582,290
(47,730)
(614,952)
444
(79,948)
(76,973)
(81,530)
(48,671)
—
48,671
—
—
—
—
534,117
(55,801)
(645,623)
560
(166,747)
(163,408)
(149,924)
Total net revenues
Cost of revenues
Selling, general and administrative expenses
Other operating (loss) income, net
Loss from operations
Loss before income taxes and income (loss) from equity in affiliates
Net loss
Total net revenues
Cost of revenues
Selling, general and administrative expenses
Other operating income, net
Loss from operations
Loss before income taxes and income (loss) from equity in affiliates
Net loss
Total net revenues
Cost of revenues
Selling, general and administrative expenses
Other operating income, net
Loss from operations
Loss before income taxes and income (loss) from equity in affiliates
Net loss
12
Table of Contents
Selected Condensed Consolidated Balance Sheets Information
Cash and cash equivalents
Accounts receivable and contract assets, net of allowance
Total current assets
Intangible assets, net
Total assets
Amounts due to related parties
Total current liabilities
Total liabilities
Total Leju Holdings Limited shareholders’ equity
Cash and cash equivalents
Accounts receivable and contract assets, net of allowance
Total current assets
Intangible assets, net
Total assets
Amounts due to related parties
Total current liabilities
Total liabilities
Total Leju Holdings Limited shareholders’ equity
Selected Condensed Consolidated Cash Flows Information
As of December 31, 2023
Company
Subsidiaries
Consolidated
Variable Interest
Entities
Eliminations Consolidated Total
25,365
708
170,215
1,775
174,980
—
4,383
4,825
170,159
USD
(In thousand)
22,839
1,009
51,549
15
69,552
138,189
226,993
235,355
(165,684)
—
—
(142,341)
—
(142,341)
(136,693)
(136,693)
(136,693)
(5,648)
As of December 31, 2022
48,204
1,717
79,423
1,790
102,191
1,496
94,683
103,487
(1,173)
Company
Subsidiaries
Consolidated
Variable Interest
Entities
Eliminations Consolidated Total
USD
(In thousand)
90,796
2,628
107,852
105
155,542
99,028
207,046
222,882
(67,069)
—
—
(104,103)
—
(104,103)
(98,360)
(98,360)
(98,360)
(5,743)
32,582
780
139,755
12,353
164,672
4,137
35,508
38,629
126,047
123,378
3,408
143,504
12,458
216,111
4,805
144,194
163,151
53,235
Net cash used in operating activities
Net cash provided by investing activities
Net cash used in financing activities
(7,853)
1,875
(740)
(65,797)
706
—
(73,650)
2,581
(740)
Company
Subsidiaries
For the Year Ended December 31, 2023
Consolidated
Variable Interest
Entities
USD
(In thousand)
Consolidated Total
Company
Subsidiaries
For the Year Ended December 31, 2022
Consolidated
Variable Interest
Entities
USD
(In thousand)
Consolidated Total
Net cash used in operating activities
Net cash provided by/(used in) investing activities
Net cash used in financing activities
(14,784)
80
(52)
(93,192)
(74)
—
(107,976)
6
(52)
13
Company
Subsidiaries
For the Year Ended December 31, 2021
Consolidated
Variable Interest
Entities
USD
(In thousand)
Consolidated Total
1,539
(749)
1,033
(41,428)
431
—
(39,889)
(318)
1,033
Table of Contents
Net cash provided by/(used in) operating activities
Net cash (used in)/provided by investing activities
Net cash provided by financing activities
A.
B.
[Reserved]
Capitalization and Indebtedness
Not applicable.
C.
Reasons for the Offer and Use of Proceeds
Not applicable.
D.
Risk Factors
Summary of Risk Factors
An investment in our ADSs or ordinary shares involves significant risks. Below is a summary of material risks we face,
organized under 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 of operations.
● 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 that support 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
our concentration in these major urban areas.
● We are required to comply with PRC and other applicable laws relating to privacy and cybersecurity. The improper use or
disclosure of data could have a material and adverse effect on our business and prospects.
14
Table of Contents
Risks Related to Our Corporate Structure
● Leju is a Cayman Islands holding company with no equity ownership in the variable interest entities. We conduct our
operations primarily through our PRC subsidiaries and consolidated variable interest entities in China. Holders of Leju’s
ADSs hold equity interest in Leju Holdings Limited, our Cayman Islands holding company, and do not have direct or
indirect interest in the variable interest entities in China. If the PRC government deems that our contractual arrangements
with the variable interest entities do not comply with PRC regulatory restrictions on foreign investment in the relevant
industries, or if these regulations or the interpretation of existing regulations change or are interpreted differently in the
future, we could be subject to severe penalties 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 the contractual arrangements with the variable interest
entities and, consequently, significantly affect the financial performance of the 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 portion of 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 Jiajujiu may 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
could adversely affect our business.
● The approval of and/or report and filing with the CSRC or other PRC government authorities may be required in
connection with our offshore offerings under 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 and reporting obligations.
● The PRC government has significant oversight and discretion over the conduct of our business, and may intervene or
influence our operations, which could result in a material adverse change in our operations and the value of our ADSs. The
PRC government’s significant authority in 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 to investors, and cause the value of such securities to significantly decline or be worthless. See the risk factor on
page 37 for details.
● Our PRC subsidiaries and consolidated variable interest entities are subject to restrictions on paying dividends or making
other payments to us, which may restrict our ability to satisfy our liquidity requirements. See the risk factor on page 43 for
details.
● Changes in international trade policies and rising political tensions, particularly between the U.S. and China, may adversely
impact our business and operating results.
● Although our independent registered public accounting firm is registered with the PCAOB and currently subject to periodic
PCAOB inspection, if it is later determined that the PCAOB is unable to inspect or investigate our auditor completely,
investors would be deprived of the benefits of such inspection and our ADSs may be prohibited from trading.
15
Table of Contents
Risks Related to Our ADSs
● The delisting of our ADSs from the New York Stock Exchange, or the NYSE, may continue to have a material adverse
effect on the trading and price of our ADSs, and we cannot assure you that our ADSs will be relisted, or that once relisted,
they will remain listed.
● The market price of our ADSs has been and may continue to be highly volatile.
Risks Related to Our Business
We had incurred net loss and negative cash flows from operating activities in the past, and we may not achieve or sustain
profitability.
You should not rely on our revenues or gross profit from any previous period as an indication of our future revenues. Our
revenues might decline, or the growth rate of our revenues may slow down for a number of reasons, including declined demand for our
products and services, increasing competition, emergence of alternative business models, changes in regulations and government
policies, changes in general economic conditions, as well as other risks described in this annual report.
In 2021, 2022 and 2023, we had a net loss of US$149.9 million, US$89.7 million and US$55.8 million, respectively. We had
negative cash flows from operations of US$39.9 million, US$108.0 million and US$73.6 million in 2021, 2022 and 2023, respectively.
Our ability to continue as a going concern is dependent on our ability to successfully execute our business plan including the
implementation of a balanced growth strategy and an effective financial management which can contribute to the optimization of the
operating cost and expense structure.
We cannot assure you that we will be able to generate net income or positive cash flows from operating activities in the future.
If we are unable to achieve profitability or raise sufficient capital to cover our capital needs, we may not continue as a going concern.
There can be no assurance that we can obtain additional financing. Our ability to obtain additional financing is subject to a number of
factors, which may be beyond our control. These factors include market demand for our services, effectiveness of our development
strategy, our ability to control cost and expenses and to manage our growth effectively, market competition, macroeconomic and
regulatory environment. For a detailed discussion, please see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and
Capital Resources.”
Our consolidated financial statements for the year ended December 31, 2023 included in this annual report beginning on page F-
1 have been prepared based on the assumption that we will continue on a going concern basis. The auditors of our consolidated financial
statements for the year ended December 31, 2023 have included in their audit reports an explanatory paragraph relating to substantial
doubt about our ability to continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business.
16
Table of Contents
Our business is susceptible to fluctuations in China’s real estate industry, which may materially and adversely affect our results
of operations.
We conduct our real estate services business primarily in China. Our business depends substantially on conditions in China’s
real estate industry and more particularly on the volume of new property transactions in China. Demand for private residential real estate
in China has grown rapidly in recent years but such growth is often coupled with volatility and fluctuations in real estate transaction
volume and prices. Fluctuations of supply and demand in China’s real estate industry are caused by economic, social, political and other
factors. Over the years, governments at both national and local levels have announced and implemented various policies and measures
aimed to regulate the real estate market, in some cases to stimulate further development and more purchase of residential real estate units
and in other cases to restrict these activities from growing too rapidly. These measures can affect real estate buyers’ eligibility to
purchase additional units, their down payment requirements and financing, as well as availability of land to developers and their ability
to obtain financing. These measures have affected and continue to affect the conditions of China’s real estate market and cause
fluctuations in real estate pricing and transaction volume. See “—Our business may be materially and adversely affected by government
measures aimed at China’s real estate industry.” Furthermore, there may be situations in which China’s real estate 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 spending on
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 estate market, and it is difficult to foresee the timing or direction of regulatory changes. Since 2016, the local
governments announced various restrictive measures to limit purchases of houses, including adjustment to the percentage of required
down payment especially in first-tier cities, more restrictive eligibility requirement imposed on purchasers, limit on the maximum
number of houses one may purchase and increased scrutiny when reviewing the upper price limit of new residential properties for sale. In
2018, central and local governments emphasized the general administrative policy that “housing is for living, not for speculation”, and
continually implemented restrictive policies to curb significant increase of housing price. In 2019, central government reiterated its
insistence on the general administrative policy that “housing is for living, not for speculation,” and clearly put forward that real estate
should not be used as a short-term tool for stimulating economy. On July 13, 2021, certain PRC authorities promulgated Notice on the
Continuous Rectification and Regulation of the Real Estate Market Order, which provides for intensified punishment by local authorities
for real estate agencies violating laws and regulations, including warning and interview, suspension of business for rectification,
revocation of business license and qualification certificate, exposure to the public, and reference to security and judicial authorities for
investigation and punishment in the case of criminal offence. On December 15, 2022, the National Development and Reform
Commission, or the NDRC, issued the Implementation Plan for Expanding Domestic Demand Strategy under the 14th Five-Year Plan,
which once again emphasized the principle of “house is for living in and not for speculation,” and called for strengthening the guidance
in the expectations of the real estate market development, exploring new development models, moving faster to build a housing system
featuring multiple suppliers and various support channels that encourages both rentals and purchases, and the steady implementation of
long-term mechanisms for the steady and healthy development of the real estate market, and supporting residents’ reasonable demand for
their own living purpose. On November 11, 2022, the People’s Bank of China and the China Banking and Insurance Regulatory
Commission issued the Notice on the Current Financial Support for the Stable and Healthy Development of the Real Estate Market,
which announced a series of measures to support the stable and healthy development of the real estate market. The applicable period of
these measures are further extended by the notice issued by the People’s Bank of China and the China Banking and Insurance Regulatory
Commission in July 2023.
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In the third quarter of 2023, central government issued a series of policies aiming to stimulate the economy and stabilize the real
estate industry in the PRC. On July 10, 2023, the People’s Bank of China and the National Financial Regulatory Administration issued
the Notice of Extending the Policy Term of Financial Support for the Stable and Healthy Development of the Real Estate Market, which
further extended the applicable period of measures set out by the previous notice. On August 18, 2023, the Ministry of Housing and
Urban-Rural Development, the People’s Bank of China and the National Financial Regulatory Administration jointly issued the Notice
on Matters Related to the Interest Rate of the First Set of Housing Unit in Stock, which mentioned that if the household (including the
borrower, spouse and minor children) has no housing unit under their name in the local area, regardless of whether they have used the
loan to purchase housing unit or not, the banking financial institution shall implement the housing credit policy based on the first housing
unit. On August 31, 2023, the People’s Bank of China and the National Financial Regulatory Administration issued Notice on Matters
Concerning Reducing the Interest Rates of Existing Individual Housing Loans for the Purchase of First Housing Units, which mentioned
that the borrower of an existing commercial individual housing loan for the purchase of the first housing unit may apply to the financial
institution granting the loan for issuing a new loan to replace the existing loan, or changing the level of interest rates agreed in the
contract through negotiations. On the same day, the People’s Bank of China and the National Financial Regulatory Administration issued
the Notice on Adjustment of Differential Mortgage Loan Policies, which on the one hand lowered the minimum down payment
percentage of commercial individual housing loans for the purchase of the first and second housing unit to 20% and 30% respectively,
and on the other hand lowered the policy floor of interest rates on commercial individual housing loans for the purchase of the second
housing unit to not less than the loan prime rate of the corresponding term plus 20 basis points. Since then, more specific policies have
been announced by local governments of both first-tier and second-tier cities including the lowering of benchmark lending rates and
down payment requirements for home purchases, and removal or relaxation of purchase restrictions. These measures are expected to help
improve both the economy and the real estate market in the PRC.
On January 5, 2024, the Ministry of Housing and Urban-Rural Development and the National Financial Regulatory
Administration issued the Notice on the Establishment of a Municipal Real Estate Financing Coordination Mechanism, which mentioned
that cities at or above the prefecture level shall be guided in establishing a real estate financing coordination mechanism. The
coordination mechanism shall provide a list of real estate projects eligible for financing support and such list will be sent to local
financial institutions. The notice requires that financial institutions to evaluate the projects in accordance with the principles of
marketization and the rule of law and provide financial aid according to the construction and financial status of these projects. As of
February 28, 2024, 276 cities in 31 provinces have set up coordination mechanisms, with a total of approximately 6,000 real estate
projects proposed and loans in an aggregate amount of more than RMB200 billion provided by commercial banks.
However, it is uncertain for how long these measures will remain in effect, and whether the central or local governments will
further tighten their policies or adopt new measures that are less restrictive. Frequent changes in government policies may also create
uncertainty that could discourage investment in real estate. Our business may be materially and adversely affected as a result of
decreased transaction volumes or 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 more lines of business. For example, we compete with fang.com, formerly soufun.com, a leading real estate internet portal in
China and compete with anjuke.com, which is operated by 58.com, a major online real estate listing platform in China. In addition, we
also compete with mobile-based providers of news, such as toutiao.com, for our online advertising business. Our competitors may have
more established brand names, larger visitor numbers 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
establishing internet-based businesses are low, thereby allowing new entrants to emerge rapidly. The new competitive landscape has
placed additional demands on us to increase the amount of resources we provide to customers and increase the quality of our services in
order to retain customers. As the online real estate services industry in China is constantly evolving, our current or future competitors
may be able to better position themselves to attract funding and to compete as the industry matures.
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We also face competition from companies in other media that offer e-commerce, advertising, listing and similar services. Any of
these competitors 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 our brand. Increased competition in the online real estate services industry in China could make it difficult for
us to retain existing customers and attract 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 with larger, well-established and well-financed companies and obtain significantly greater financial, marketing and content
licensing and development resources than us. Furthermore, some of our competitors receive support from local governments, which may
place us at a disadvantage when competing with them in their local markets. We cannot assure you that we will be able to compete
successfully against our current or future competitors. Any failure to compete effectively in the real estate internet services market in
China would have a material adverse effect on 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 that support 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 and services. We rely in part on attracting customers to our platform by providing attractive and helpful content and tools on our
websites and mobile devices to assist customers seeking to purchase residential properties and home furnishings. In addition, our ability
to continue to generate and maintain online advertising service revenues depends on our ability to innovate. To remain competitive, we
must continue to develop and expand our content and service offerings. We must also continue to enhance and improve the user interface,
functionality and features of our websites and our mobile applications. These efforts may require us to develop internally, or to license,
increasingly complex technologies. In addition, many of our competitors are continually introducing new internet-related products,
services and technologies, which will require us to update or modify our own technology to keep pace. New internet-related products,
services and technologies developed by competitors could render our products and services obsolete if we are unable to update or modify
our own technology. Developing and integrating new products, services and technologies into our existing businesses could be expensive
and time-consuming. Furthermore, such new features, functions and services may not achieve market acceptance or serve to enhance our
brand loyalty. We may not succeed in incorporating new internet technologies, or, in order to do so, we may incur substantial expenses. If
we fail to develop and introduce or acquire new features, functions, services or technologies effectively and on a timely 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 new internet
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 other benefits in order to attract and retain quality sales, technical and other operational personnel in the future. We compete with
other companies engaged in online real estate services and internet-related businesses and with print media for qualified personnel. We
have, from time to time in the past, experienced, and we expect in the future to continue to experience, difficulty in hiring and retaining
highly skilled employees with appropriate qualifications. There may be a limited supply of qualified individuals in some of the cities in
China where we have operations and other cities into which we intend to expand. We must hire and train qualified managerial and other
employees on a timely basis to keep pace with our rapid growth while maintaining consistent quality of services across our operations in
various geographic locations. We must also provide continued training to our managerial and other employees so that they are equipped
with up-to-date knowledge of various aspects of our operations and 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 where we 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 to attract or retain the quality personnel that we
need to achieve our business objectives.
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In addition, we place substantial reliance on the real estate industry experience and knowledge of our senior management team
as well as their relationships with other industry participants. For example, Mr. Xin Zhou, our chairman, and Mr. Yinyu He, our director
and chief executive officer, are both particularly important to our future success. We do not carry key person insurance on any member of
our senior management team. The loss of one or more members of our senior management team could hinder our ability to effectively
manage our business and implement our growth strategies. 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 lose competitiveness 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 products and 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
estate service operations. Although we generally have been able to effectively manage the growth of this product and maintain
contractual arrangements with third-party property developers who allow us to sell discount coupons to prospective real estate purchasers
on acceptable terms, there can be no assurance that we will continue to be able to do so in the future. Customer complaints or negative
publicity about our services could diminish consumer 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 and there can be no
assurance that such products or initiatives may be successfully developed, will perform as expected, or be well-received by customers.
Failure to successfully develop or launch new products could materially and adversely affect our business, results of operations and
revenue growth prospects.
We derive a substantial portion of our revenues from several major urban centers in China, and we face market risk due to our
concentration in these major urban areas.
We derive a substantial portion of our revenues from major urban centers in China, including Yangtze River Delta, Guangzhou
and Changchun. In the year ended December 31, 2023, approximately 64% of our revenues was derived from Yangtze River Delta,
Guangzhou and Changchun. We expect these three urban centers to continue to be important sources of revenues. If any of these major
urban centers experiences an event that negatively impacts the local real estate industry or online advertising, such as a serious economic
downturn or contraction, a natural disaster, or slower growth due to adverse governmental policies or otherwise, demand for our services
could decline significantly and our business and growth prospects could 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
financial condition.
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 had been adopted by the central banks and financial authorities of some of the world’s leading economies, including problems that
may arise from the unwinding of those policies. The Federal Reserve has signaled its intention to raise interest rates in the United States.
The Russia-Ukraine conflict has caused, and continues to intensify, significant geopolitical tensions in Europe and across the world. This
conflict 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.
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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 success of our business. The brand is integral to our sales and marketing efforts. Our continued success in maintaining and
enhancing our brands and image depends 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.
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 quarter of each year generally contributes the smallest portion of our annual revenues due to reduced real estate transactions,
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 fourth quarters of each year generally contribute a larger portion of our annual revenues due to increased real estate transactions,
advertising and marketing activities during the months of September and October. For this reason, our results of operations may not be
comparable from quarter to quarter.
If we cannot manage our growth effectively and efficiently, our results of operations or profitability could be adversely affected.
We intend to continue to conduct our operations primarily in our current markets. The growth of our business may place,
substantial demands on our managerial, operational, technological and other resources. Our planned growth may also place significant
demands on us 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 estate service professionals as well as other administrative and sales and marketing personnel, particularly as we
expand into new markets. We may not be able to effectively and efficiently manage the growth of our operations, recruit and retain
qualified personnel and integrate new expansion into our operations. As a result, our quality of service may deteriorate and our results of
operations or profitability could be adversely affected.
Unexpected network interruptions or security breaches, including “hacking” or computer virus attacks, may cause delays or
interruptions of 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 of
bandwidth 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 cause significant harm to our reputation and our ability to attract and maintain customers and visitor traffic. Major risks
related to our network infrastructure include:
● any breakdown or system failure resulting in a sustained shutdown of our servers, including failures which may be
attributable to sustained power shutdowns, or efforts to gain unauthorized access to our systems causing loss or corruption
of data or malfunctions of software 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.
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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 security and inadvertent disclosure of confidential or sensitive information, inadvertent transmissions of computer viruses
and interruptions of access to our websites through the use of denial-of-service or similar attacks. In addition, the inadvertent
transmission of computer viruses could expose us to a material risk of loss or litigation and possible liability. We maintain most of our
servers and backup servers in Beijing, and all information on our websites is backed up weekly. Any hacking, security breach or other
system disruption or failure that occurs in between our weekly backup procedures could disrupt our business or cause us to lose, and be
unable to recover, data such as real estate listings, contact information and other important customer information.
Ensuring secured transmission of confidential information through public networks is essential to maintaining the confidence of
our customers and users. Our existing security measures may not be adequate to protect such confidential information. In addition,
computer and network systems are susceptible to breaches by computer hackers. Security breaches could expose us to litigation and
potential liability for failing to secure confidential customer information, and could harm our reputation and reduce our ability to attract
customers and users. Future security breaches, 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 respect to any loss of business and reputation that may occur. To improve our performance and to prevent disruption of
our services, we may have to make substantial investments to deploy additional servers or create one or more copies of our websites to
mirror our 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
our trademarks and other intellectual property rights could harm our business. Historically, China’s track record for protection of
intellectual property rights has been poor, and infringement of intellectual property rights continues to pose a serious risk of doing
business in China. Monitoring and preventing unauthorized use is difficult and the measures we take to protect our intellectual property
rights may not be adequate. We have registered the software copyrights of substantially all of our mobile applications and software
copyrights are still enforceable absent registration in China, but registration by itself may not be adequate protection from potential
misuse, infringement or other challenges from third parties claiming rights on our intellectual property.
Furthermore, the application of laws governing intellectual property rights in China and abroad is uncertain and evolving, and
could expose us to risks. If we are unable to adequately protect our brand, trademarks and other intellectual property rights, we may lose
these rights and our business may suffer materially. We typically impose contractual obligations on employees and consultants and have
taken other precautionary measures to maintain the confidentiality of our proprietary information and restricted the use of the proprietary
information other than for our company’s benefit. However, if our employees and consultants do not honor their contractual obligations
or misappropriate our database and other proprietary 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
domain names elements similar in writing or pronunciation to the “Leju” trademark or its Chinese equivalent. This may result in
confusion between those companies 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 incur
substantial 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 against us. We provide training to our staff with respect to procedures designed to reduce the likelihood that we may use, develop
or make available any content or applications without the proper licenses or necessary third-party consents. However, these procedures
may not be effective in completely preventing the unauthorized posting or use of copyrighted material or the infringement of other rights
of third parties.
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The validity, enforceability and scope of protection of intellectual property rights in internet-related industries, particularly in
China, is uncertain and still evolving. For example, as we face increasing competition and as litigation becomes a more common way to
resolve disputes in China, we face a higher risk of being the subject of intellectual property infringement claims. Pursuant to the laws and
regulations, internet service providers may be held liable for damages if such providers have reason to know that the works uploaded or
linked infringe the copyrights of others, or if such providers fail to adopt the requisite measures promptly after receiving relevant notice
from intellectual property right holders. Any proceeding resulted from cases involving the unauthorized posting of copyrighted content
by users on websites could result in significant costs to us and divert our management’s time and attention from 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
United States, by virtue of our ADSs being quoted on the OTC Pink, the ability of users to access, download and use our products and
services in the United States and other jurisdictions, the ownership of our ADSs by investors in the United States and other jurisdictions,
or the extraterritorial application of foreign law by foreign courts or otherwise, among other reasons. If a claim of infringement brought
against us in the United States or other jurisdictions is successful, we may be required to pay substantial penalties or other damages and
fines, remove relevant content or enter into license agreements which may not be available on commercially reasonable terms or at all.
Even though the allegations or claims could be baseless, defense against any of these allegations or claims would be both costly and
time-consuming and could significantly divert the efforts and resources of our management and other personnel.
We are required to comply with PRC and other applicable laws relating to privacy and cybersecurity. The improper use or
disclosure of data 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. In particular, 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 or improper 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 personal information,
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,
both domestically and globally, as well as attract continued or greater public scrutiny and attention going forward, which could increase
our compliance costs and subject us to heightened risks and challenges associated with data security and protection. If we are unable to
manage these risks, we could become subject to penalties, including fines, suspension of business and revocation of required licenses,
and our reputation and results of operations 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
different interpretations or significant changes. Moreover, different PRC regulatory bodies, including the Standing Committee of the
National People’s Congress, the Ministry of Industry and Information Technology, or the MIIT, the CAC, the Ministry of Public Security
and the State Administration for Market Regulation, or the SAMR, have enforced data privacy and protections laws and regulations with
varying standards and applications. See “Item 4. Information on the Company—B. Business Overview—Regulation.” The following are
examples of certain recent PRC regulatory activities in this area:
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Data Security
● In June 2021, the Standing Committee of the National People’s Congress promulgated the Data Security Law, which took
effect in September 2021. The Data Security Law, among other things, provides for security review procedure for data-
related activities that may affect national security. In July 2021, the state council promulgated the Regulations on
Protection of Critical Information Infrastructure, which became effective on September 1, 2021. Pursuant to this regulation,
critical information infrastructure means key network facilities or information 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 data leakage of which may endanger national
security, people’s livelihoods and the public interest. In December 2021, the CAC, together with other authorities, jointly
promulgated the Cybersecurity Review Measures, which became effective on February 15, 2022. Pursuant to the
Cybersecurity Review Measures, critical information infrastructure operators that procure internet products and services
must be subject to the cybersecurity review if their activities affect or may affect national security. The Cybersecurity
Review Measures further stipulates that critical information infrastructure operators or network platform operators that
hold personal information of over one million users shall apply with the Cybersecurity Review Office for a cybersecurity
review before any public offering at a foreign stock exchange. As of the date of this annual report, no detailed rules or
implementation rules have been issued by any authority and we have not been informed that we are a critical information
infrastructure 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 the interpretation and enforcement of the applicable laws. Therefore, it is uncertain whether we would be
deemed to be a critical information infrastructure operator under PRC law. If we are deemed to be a critical information
infrastructure operator under the PRC cybersecurity laws and regulations, we may be subject to obligations in addition to
what we have fulfilled under the PRC cybersecurity laws and regulations.
● In November 2021, the CAC released the Regulations on the Network Data Security (Draft for Comments). These draft
regulations provide that data processors refer to individuals or organizations that, during their data processing activities
such as data collection, storage, utilization, transmission, publication and deletion, have autonomy over the purpose and the
manner of data processing. In accordance with these draft regulations, data processors shall apply for a cybersecurity
review for certain activities, including, among other things, (i) the listing abroad of data processors that process the
personal information 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 authorities as of the date of this annual report as to the
standards for determining whether an activity is one that “affects or may affect national security.” In addition, the
regulations require that data processors that process “important data” or are listed overseas must conduct an annual data
security assessment by itself or commission a data security service provider to do so, and submit the assessment report of
the preceding year to the municipal cybersecurity department by the end of January each year. As of the date of this annual
report, these draft regulations were released for public comment only, and their respective provisions and anticipated
adoption or effective date may be subject to change with substantial uncertainty.
Personal Information and Privacy
● The Anti-monopoly Guidelines in the Field of Internet Platforms 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 National People’s Congress promulgated the Personal Information
Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and
took effect on November 1, 2021. We update our privacy policies from time to time to meet the latest regulatory
requirements of PRC government authorities and adopt technical measures to protect data and ensure cybersecurity in a
systematic way. Nonetheless, the Personal Information Protection Law elevates the protection requirements for personal
information processing, and many specific requirements of this law remain to be clarified by the CAC, other regulatory
authorities, and courts in practice. We may be required to make further adjustments to our business practices to comply
with the personal information protection laws and regulations.
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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 for protection and management of such data. The Cybersecurity Review Measures and the Regulations on the Network
Data Security (Draft for Comments) remain unclear on whether the requirements will be applicable to companies that are already listed
in the United States, such as us. We cannot predict the impact of these measures and regulations, if any, at this stage, and we will closely
monitor and assess any development in the rule-making process. If the Cybersecurity Review Measures and the enacted version of the
Regulations on the Network Data Security (Draft for Comments) mandate clearance of cybersecurity review and other specific actions to
be taken by issuers like us, we face uncertainties as to whether these additional procedures can be completed by us timely, or at all, which
may subject us to government enforcement actions and investigations, fines, penalties, suspension of our non-compliant operations, or
removal of our app from the 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 such basis.
In general, compliance with the existing PRC laws and regulations, as well as additional laws and regulations that PRC
regulatory bodies may enact in the future, related to data security and personal information protection, may be costly and result in
additional expenses to us, and subject us to negative publicity, which could harm our reputation and business operations. There are also
uncertainties with respect to how such laws and regulations will be implemented and interpreted in practice.
In addition, regulatory authorities around the world have adopted or are considering a number of legislative and regulatory
proposals concerning 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 effect on our business and results of operations. The European Union General Data Protection Regulation
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. This regulation establishes new requirements applicable to the processing of personal data,
affords new data protection rights to individuals and imposes penalties for serious data breaches. Individuals also have a right to
compensation under this regulation for financial or non-financial losses. Although we do not conduct any business in the European
Economic Area, in the event that residents of the European Economic Area access our website or our mobile platform and input
protected information, we may become subject to provisions of this regulation.
If we fail to obtain or keep licenses, permits or approvals applicable to the various online real estate services provided by us, we
may incur significant 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 the PRC government, such as the State Council, the MIIT, the SAMR, the General Administration of Press and Publication,
Radio, Film and Television, or the GAPPRFT, and the Ministry of 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, to address issues that arise from time to time. As a result,
substantial uncertainties exist regarding the interpretation and implementation of any current and future PRC laws, rules and regulations
applicable to the internet and online advertising industries.
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Each of the variable interest entities, including Beijing Leju, Leju Hao Fang and Beijing Jiajujiu, as well as their respective
subsidiaries, is required to obtain and maintain a value-added telecommunications service operating license, or ICP license, from the
MIIT or its local counterpart in order to provide internet information services and a business license from the SAMR or its local branches
which specifically includes operating advertising business in order to engage in advertising activities in China, to the extent applicable to
their respective business. Beijing Leju, Beijing Jiajujiu, Beijing Yisheng Leju Finance Culture Media Co., Ltd. And Beijing Weike Union
Information Technology Co., Ltd., both subsidiaries of Beijing Leju, Beijing Yisheng Leju Internet Technology Co., Ltd., a subsidiary of
Beijing Jiajujiu, and Leju Hao Fang, each holds a valid ICP license issued by the local provincial branch of the MIIT for the operation of
our value-added telecommunication business. Beijing Leju and Beijing Yisheng Leju Finance Culture Media Co., Ltd. each holds a radio
and television program production business license issued by the local branch of the National Radio and Television Administration for
the production and distribution of radio and television programs. The business scope of the business licenses of Beijing Leju and its
subsidiaries which engage in the advertising business includes operating advertising business. These licenses are essential to the
operation of our online real estate business. The ICP licenses are subject to annual review by the government authorities. The annual
review of ICP licenses and business licenses is for the government authorities to conduct an annual inspection of the status of compliance
of the license-holding entity. We have submitted the application documents for the annual review of the ICP licenses. At the time of and
for the purpose of the annual review of these licenses, the government authorities did not ask for disclosure of our full corporate structure
and thus we did not provide such information. They have not so far expressed any opinion with respect to our corporate structure in
connection with these annual reviews. Moreover, the regulations relating to ICP licenses also provide that an ICP license holder must
first obtain approvals from, or make filings with, competent counterparts of the MIIT in connection with subsequent updates to its
shareholding structure or certain other matters relating to such ICP license holder. We cannot assure you that we will be able to
successfully pass the annual review of our ICP 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
additional licenses. For example, the release, broadcasting and transmission of graphics, video and audio programs or weblinks to such
programs, other websites or data on the websites may be deemed as providing internet publication services as well as transmission of
video and audio programs on the internet, which could require internet publication licenses and licenses for online transmission of audio-
visual programs. During operation of our e-commerce business, we post information, including graphics, weblinks to videos, live-
broadcasting, other websites or data on websites operated by us. The variable interest entities and their subsidiaries do not have internet
publication licenses and licenses for online transmission of audio-visual programs, and are not applying for these licenses. For those
video/audio programs and certain other forms of content that we believe are subject to the requirements of these licenses, such programs
and content are hosted by SINA through our contractual arrangement with SINA. In the case that SINA does not possess the necessary
licenses and permits, our video/audio programs and other content hosted by SINA are 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 and those websites licensed to us even if the underlying hosting of the relevant content 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 procure and 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 our business may subject our affected consolidated variable interest entities to various penalties, including confiscation of
revenues, imposition of fines and/or restrictions on their business operations, or the discontinuation of their operations. Any such
disruption in the business operations of the variable interest entities could materially and adversely affect our business, financial
condition and results of operations.
Moreover, under PRC advertising laws and regulations, we shall ensure that our advertising content is true and accurate and in
compliance with applicable laws and regulations. See “Item 4. Information on the Company—B. Business Overview—Regulation—
Regulations relating to Advertising Services.” Violation of these laws and regulations may subject us to penalties, including imposition
of fines, orders to cease dissemination of the advertisements and orders to publish an announcement correcting the misleading
information. While we have made significant efforts to ensure that our advertisements are in full compliance with applicable PRC laws
and regulations, we cannot assure you that all the content contained in such advertisements is true and accurate and in compliance with
laws and regulations, especially given the uncertainty in the interpretation of these PRC laws and regulations. If we are found to be In
violation of applicable PRC advertising laws and regulations, we may be subject to penalties and our reputation may be harmed, which
may have a material and adverse effect on our business, financial condition, and results of operations
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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
effective on January 1, 2019. The E-Commerce Law generally provides that e-commerce operators must obtain administrative licenses if
business activities conducted by the e-commerce operators are subject to administrative licensing requirements under applicable laws and
regulations. In addition, the E-Commerce Law imposes a number of new obligations on e-commerce platform operators, including the
obligations: (i) to verify and register platform merchants, (ii) to ensure platform cybersecurity including data privacy, (iii) to ensure fair
dealing and the legitimate rights and interests of consumers on the platform, (iv) to publicize transaction information preservation and
transaction rules, and (v) to protect intellectual properties. See “Regulation—Regulations Relating to E-Commerce” for further details.
These regulatory requirements may have an adverse impact on our business and results of operations. As no detailed interpretation and
implementation rules have been promulgated, it remains uncertain how the E-Commerce Law will be interpreted and implemented. We
cannot assure you that our current business operations satisfy the obligations provided under the E-Commerce Law in all respects. If the
PRC governmental authorities determine that we are not in compliance with all 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 incur significant costs and damage to our reputation as a result of defending against such potential liability and could be
subject to penalties or other 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 platform for third-party home furnishing distributors to offer their products and services to consumers. We could be
exposed to liability with respect to such third-party information or the goods and services sold through our website. Among other things,
we may face assertions that, by directly or indirectly providing such third-party content or links to other websites, we should be liable for
defamation, negligence, copyright or trademark infringement, or other actions by parties providing such content or operating those
websites. We may also face assertions that content on our websites, including statistics or other data we compile internally, or
information contained in websites linked to our websites contains false information, errors or omissions, and users and our customers
could seek damages for losses incurred as a result of their reliance upon or otherwise relating 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 to monitor the advertising
content shown on our websites for compliance with applicable law.
Especially, on February 25, 2023, the SAMR issued the Measures for the Administration of Internet Advertising, effective on
May 1, 2023, which requires that advertisers shall be responsible for the authenticity of the content of Internet advertisements, including
checking the advertising supporting documents and verify the advertising contents. Violation of applicable law may result in penalties,
including fines, confiscation of advertising fees, orders to cease dissemination of the offending advertisements and orders to publish
advertisements correcting the misleading information. In case of serious violations, the PRC authorities shall revoke the approval
documents for advertisement review and shall not accept the party’s application for advertisement review for one year. In addition, our
websites could be used as a platform for fraudulent transactions. The measures we take to guard against liability for third-party content or
information may not be adequate to exonerate us from relevant civil and other liabilities. Any such claims, with or without merit, could
be time-consuming to defend and result in litigation and significant diversion of management’s attention and resources. Even if these
claims do not result in liability to us, we could incur significant costs in investigating and defending against these claims and suffer
damage to our reputation. Our general liability insurance may not cover all potential claims to which we are exposed to and may not be
adequate to indemnify us for all liability that may be imposed.
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Failure to maintain effective internal controls over financial reporting could cause us to inaccurately report our financial result
or fail to prevent 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 rules require public companies to include a report of management on their internal control over financial reporting in their annual
reports. This report must contain an assessment by management of the effectiveness of a public company’s internal control over financial
reporting. We sometimes hire a professional consultant to assist us in such efforts. Our efforts to implement standardized internal control
procedures and develop the internal tests necessary to verify the proper application of the internal control procedures and their
effectiveness are a key area of focus for our board of directors, our audit committee and senior management.
We had been an “emerging growth company”, as defined in the JOBS Act, and ceased to be an “emerging growth company”, as
defined in the JOBS Act, as of the end of the fiscal year ended December 31, 2019. We took advantage of certain exemptions from
requirements applicable to other public companies that are not emerging growth companies including, most significantly, not being
required to comply with the auditor attestation requirements of Section 404. Although we ceased to be an “emerging growth company”,
as a “non-accelerated filer” as defined under Rule 12b-2 of the Exchange Act, we are still not required to have an attestation report on
internal control over financial reporting from our external auditors.
Our management has concluded that our internal control over financial reporting was effective as of December 31, 2023. See
“Item 15. Controls and Procedures.” However, if we fail to maintain effective internal control over financial reporting in the future, our
management may not be 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, such accountant might have identified material weaknesses and deficiencies or might issue a qualified report if it is
not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it
interprets the requirements differently from 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
over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. We may not be able to anticipate and
identify accounting issues, or other risks critical to financial reporting that could materially impact the consolidated financial statements.
Generally, if we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our
financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported
financial information. This could in turn limit our access to capital markets, harm our results of operations, and lead to a decline in the
trading price of our ADSs. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or
misuse of corporate assets and subject us to 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. The average wage in China are expected to continue
to grow. The average wage level for our employees has also increased in recent years. Unless we are able to pass on these increased labor
costs to our customers by increasing prices for our products or services, our profitability and results of operations may be materially and
adversely affected.
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In addition, we have been subject to regulatory requirements in terms of entering into labor contracts with our employees and
paying various statutory employee benefits, including pensions, housing fund, medical insurance, work-related injury insurance,
unemployment insurance and childbearing insurance to designated government agencies for the benefit of our employees. Pursuant to the
PRC Labor Contract Law and its implementation 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 our employees or otherwise change our employment or labor practices, the PRC Labor
Contract Law and its implementation rules may limit our ability to effect those changes in a desirable or cost-effective manner, which
could adversely affect our business and results of operations. Besides, pursuant to the PRC Labor Contract Law, dispatched employees
are intended to be a supplementary form of employment and the fundamental form should be direct employment by enterprises and
organizations that require employees. Further, it is expressly stated in the Interim Provisions on Labor Dispatch that the number of
seconded employees an employer uses may 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 PRC subsidiaries, consolidated variable interest entities and their subsidiaries use seconded
employees for their principal business activities. The transition period ended on February 29, 2016, and those PRC subsidiaries,
consolidated variable interest entities and their subsidiaries have completed reducing the percentage of seconded employees to less than
10% as required. If the PRC companies are deemed to have violated the limitation on the use of seconded employees under the labor
laws and regulations, we may be subject to fines and incur other costs 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 our
employment practice does not and will not violate labor-related laws and regulations in China, which may subject us to labor disputes or
government investigations. If we are deemed to have violated the labor laws and regulations, we could be required to provide additional
compensation 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 and
telecommunications networks in China.
Our business depends on the performance and reliability of the internet infrastructure in China. Substantially all access to the
internet is maintained through state-controlled telecommunication operators under the administrative control and regulatory supervision
of the MIIT. In addition, the national networks in China are connected to the internet through international gateways controlled by the
PRC government. These international gateways are generally the only websites through which a domestic user can connect to the
internet. We cannot assure you that a more sophisticated internet infrastructure will be developed in China. We may not have access to
alternative networks in the event of disruptions, failures or other problems with China’s internet infrastructure. In addition, the internet
infrastructure in China may not support the demands associated with continued growth in internet usage.
We also rely on China Unicom and China Telecom to provide us with data communications capacity primarily through local
telecommunications 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 Telecom otherwise fails to provide such services. Any unscheduled service interruption could disrupt our operations,
damage our reputation and result in a decrease in our revenues. Furthermore, we have no control over the costs of the services provided
by China Unicom and China Telecom. If the prices that we pay for telecommunications and internet services rise significantly, our gross
margins could be significantly reduced. In addition, if internet 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
have increased 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 regulatory authorities in China and the Cayman Islands, and to new and evolving regulatory measures under applicable law.
Our efforts to comply with new and changing laws and regulations have resulted in and are likely to continue to result in, increased
general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance
activities.
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Moreover, because these laws, regulations and standards are subject to varying interpretations, their application in practice may
evolve over time as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters
and additional costs necessitated by ongoing revisions to our disclosure and governance practices. If we fail to address and comply with
these regulations and any subsequent changes, we may be subject to penalty and our business may be harmed.
Any natural or other disasters, including outbreaks of health epidemics, and other extraordinary events could severely disrupt
our business operations.
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 occur in the area where we operate, our ability to operate our business could be seriously impaired. Our business could
also be materially and adversely affected 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 adversely affect our results of operations.
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 require significant 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 management will need to ensure that the acquired or new business is effectively integrated into our existing
operations. The diversion of our management’s attention 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;
● 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 or investment.
Certain of our leased office premises contain defects in the leasehold interests and if we are forced to relocate operations affected
by such defects, our operations may be adversely affected.
As of March 31, 2024, we had leased 15 office premises in 13 cities in China, in addition to a branch office in Hong Kong and
our principal executive offices in Beijing, China. A number of these leased properties contain defects in the leasehold interests, including
the landlords’ failure to duly register the leases with the PRC government authority with respect to 15 leased premises.
Under PRC regulations, in situations where a tenant lacks evidence of the landlord’s title or right to lease, the lease agreement
may not be valid or enforceable and may also be subject to challenge by third parties. In addition, under PRC laws and regulations, while
the failure to register the lease agreement does not affect its effectiveness between the tenant and the landlord, such lease agreement may
be subject to challenge by and unenforceable against a third party who leases the same property from the landlord and the lease
agreement entered into by such third party has been duly registered with the competent PRC government authority. This risk may be
mitigated if we continue to occupy the leased premises under our lease. Furthermore, the landlord and the tenant may be subject to
administrative fines for such failure to register the lease.
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We have taken steps to cause our landlords to procure valid evidence as to the title or right to lease, to complete the lease
registration procedures, 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. Our operations 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
business insurance products. As a result, we do not have any business disruption insurance or litigation insurance coverage for our
operations in China. Any business disruption, litigation or natural disaster may cause us to incur substantial costs and result in the
diversion of our resources, as well as significantly 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 our company, we may not be able to resolve such conflicts on favorable terms for us.
E-House Enterprise became our controlling shareholder in November 2020. On November 24, 2021, TM Home, a company
incorporated in the Cayman Islands with limited liability and owned as to 70.23% and 29.77% by E-House Enterprise and Alibaba
Investment Limited, respectively, completed the acquisition of an aggregate of 55.8% interest in our issued share capital previously held
directly by E-House Enterprise by purchasing 76,401,247 of our ordinary shares from E-House Enterprise. E-House Enterprise remains
to be our ultimate controlling beneficial owner.
E-House Enterprise, through its holdings in TM Home, may from time to time make strategic decisions that it believes are in the
best interests of its business and its shareholders. These decisions may be different from the decisions that we would have made on our
own. E-House Enterprise’s decisions with respect to us or our business may be resolved in ways that favor E-House Enterprise and
therefore E-House Enterprise’s own shareholders, which may not coincide with the interests of our other shareholders. We may not be
able to resolve any potential conflicts, and even 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 to transact business on terms intended to approximate those that could have been
achieved among unaffiliated parties, this may not succeed in practice.
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 and executive 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 all or a portion of our shares that it holds to a third party, including to one of our competitors, thereby giving that
third party substantial influence over our business and our affairs. Such a sale could be contrary to the interests of certain of
our shareholders, including our employees or our public shareholders.
● Allocation of business opportunities. Business opportunities may arise that both we and E-House Enterprise find attractive,
and which would complement our respective businesses. E-House Enterprise may decide to take the opportunities itself,
which would prevent 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 into
agreements 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.”
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Our controlling beneficial owner, E-House Enterprise, is contemplating on a restructuring plan, and if consummated, we could
experience a change in control.
In April 2023, E-House Enterprise announced a proposed restructuring of certain notes previously issued by E-House
Enterprise, or the Proposed Restructuring, which may potentially result in a change in the controlling beneficial owner of our company.
As contemplated in the Proposed Restructuring, a result of a series of steps to be taken by E-House Enterprise, a special purpose vehicle
established for the holders of certain notes of E-House Enterprise, or the Creditor SPV, and Alibaba Investment and its affiliate will hold
approximately 54.207% and 10.793% of the shares of TM Home, respectively, which will result in E-House Enterprise ceasing to be a
controlling beneficial owner of Leju. The remaining 35% of the shares of TM Home will be held by E-House Enterprise and its affiliates,
of which 15% will be transferred to a special purpose vehicle held by the members of senior management of TM Home appointed by E-
House Enterprise. E-House Enterprise will further use reasonable endeavors to sell or procure the sale of the shares of TM Home held by
the Creditor SPV and Alibaba Investment, which will cause further changes in the beneficial ownership of Leju. The potential change in
Leju’s controlling beneficial owners is subject to the consummation of the Proposed Restructuring. As of the date of this annual report,
E-House Enterprise has not consummated the Proposed Restructuring. In addition, E-House Enterprise has commenced discussions with
its advisers on formulating a new restructuring plan.
There can be no assurance that our relationship with SINA will continue on satisfactory terms.
Through an agreement in 2009 entered into between SINA and E-House, we owned SINA’s real estate operations. The domain
names of some major websites of our business were owned by SINA and licensed to us through agreements which we initially entered
into with SINA in 2009 with terms through 2019 and which we amended and restated in 2014 to extend through March 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 estate advertisers through March 2024. As
the date of the annual report, we have yet to renew the agreements with SINA and are in the process of negotiating potential cooperation
in the future. To a certain extent, we relied on SINA’s continued cooperation to enjoy our rights pursuant to our agreements with SINA.
There can be no assurance that our relationship with SINA will continue on satisfactory terms. In addition, SINA’s dual role as our
principal shareholder and contractual counterparty could result in conflicts of interest.
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 beneficial owner, and its affiliates such as E-House in
marketing our services, including providing services to their clients. Our business and brand continue to be closely connected with those
of E-House Enterprise and its affiliates. SINA is a principal shareholder of ours. The success 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 or SINA loses its market position or suffers
any negative publicity, it could have 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 Structure
If the PRC government finds that the agreements that establish the structure for operating our advertising services business and
real estate online business in China do not comply with PRC governmental restrictions on foreign investment in the advertising
industry or the internet 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
restrictions on foreign investment in the internet industry and the uncertainty over administrative practice in advertising industries, we
conduct part of our business through contractual arrangements with our affiliated PRC entities. Our e-commerce business with respect to
new residential properties is operated through our contractual arrangements with Leju Hao Fang and its shareholders. Our e-commerce
business with respect to home furnishing is operated through our contractual arrangements with Beijing Jiajujiu and its shareholders. Our
online advertising business for new residential properties 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 are essential for our business operations.
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We have entered into, through our PRC subsidiaries, 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. 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 subsidiaries and branches; (ii) receive substantially all of the economic benefits from the three
consolidated variable interest entities and their subsidiaries in consideration for the services provided by our PRC subsidiaries; and (iii)
have an exclusive option to purchase all or part of the equity interests in the variable interest entities, when and to the extent permitted by
PRC law, or request any existing shareholder of the variable interest entities to transfer all or part of the equity interest in the variable
interest entities to another PRC person or entity designated 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 the variable interest entities, and we conduct
our operations in China primarily through the variable interest entities. Holders of Leju’s ADSs hold equity interest in Leju Holdings
Limited, our Cayman Islands holding company, and do not have direct or indirect interest in the variable interest entities in China. If the
PRC government deems that our contractual arrangements with the variable interest entities do not comply with PRC regulatory
restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change or
are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.
We may not 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 our contractual control rights over the assets of our PRC subsidiaries, which contribute to 100.0% of our revenues in 2023. 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 the contractual arrangements with the variable interest entities and,
consequently, significantly affect the financial performance of the 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
internet business or advertising industry, or if the PRC government otherwise finds that we, Beijing Leju, Leju Hao Fang or Beijing
Jiajujiu, or any of their subsidiaries and branches is in violation of PRC laws or regulations or lack the necessary permits or licenses to
operate our business, the PRC regulatory authorities, including the SAMR, 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;
● 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
of operations. If any of these penalties results in our inability to direct the activities of any of Beijing Leju, Leju Hao Fang or Beijing
Jiajujiu that most significantly impact its economic performance, and/or our failure to receive the economic benefits from any of Beijing
Leju, Leju Hao Fang or Beijing Jiajujiu, we may not be able to consolidate the entity in our consolidated financial statements in
accordance with U.S. GAAP.
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Although we believe we, our PRC subsidiaries and the variable interest entities comply with current PRC laws and regulations,
we cannot assure you that the PRC government would agree that our contractual arrangements comply with PRC licensing, registration
or other regulatory requirements, with existing policies or with requirements or policies that may be adopted in the future. The PRC
government has broad discretion in determining rectifiable or punitive measures for non-compliance with or violations of PRC laws and
regulations. If the PRC government determines that we or the variable interest entities do not comply with applicable law, it could revoke
the variable interest entities’ business and operating licenses, require the variable interest entities to discontinue or restrict the variable
interest entities’ operations, restrict the variable interest entities’ right to collect revenues, block the variable interest entities’ websites,
require the variable interest entities to restructure our operations, impose additional conditions or requirements with which the variable
interest entities may not be able to comply, impose restrictions on the variable interest entities’ business operations or on their customers,
or take other regulatory or enforcement actions against the variable interest entities that could be harmful to their business. Any of these
or similar occurrences could significantly disrupt our or the variable interest entities’ business operations or restrict the variable interest
entities from conducting a substantial portion of their business operations, which could materially and adversely affect the variable
interest entities’ business, financial condition and results of operations. If any of these occurrences results in our inability to direct the
activities of any of the variable interest entities that most significantly impact its economic performance, and/or our failure to receive the
economic benefits from any of the variable interest entities, 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 a portion 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
operate our online real estate business. For descriptions of these contractual arrangements, see “Item 4. Information on the Company—C.
Organizational Structure.” These contractual arrangements may not be as effective as direct ownership in providing us with control over
Beijing Leju, Leju Hao Fang or Beijing Jiajujiu. These contractual arrangements are governed by PRC law and provide for the resolution
of disputes through arbitration in China. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes
would be resolved in accordance with PRC legal procedures. If any of the other parties fails to perform their obligations under these
contractual arrangements, we may have to incur substantial costs and resources to enforce such arrangements, and we would have to rely
on legal remedies under PRC law, including seeking specific performance or injunctive relief and claiming damages, which we cannot
assure you will be effective. Furthermore, the legal environment in 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 our ability to enforce these contractual arrangements, which may
make it difficult to exert effective control over Beijing Leju, Leju Hao Fang and Beijing Jiajujiu, and our ability to conduct our business
may be negatively affected.
In 2021, 2022 and 2023, Beijing Leju, Leju Hao Fang, Beijing Jiajujiu and their respective subsidiaries and branches
contributed in aggregate 99.9%, 100.0% and 100.0% of our total net revenues, respectively. In the event we are unable to enforce the
contractual arrangements, we may 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 not be able to consolidate the financial results of Beijing Leju, Leju Hao Fang,
Beijing Jiajujiu and their respective subsidiaries and branches into our consolidated financial statements in accordance with U.S. GAAP.
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The shareholders of the variable interest entities may have potential conflicts of interest with us, and if any such conflicts of
interest 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 the variable interest entities in China. These
individuals may have conflicts of interest with us. We cannot assure you that when conflicts of interest arise, they will act in the best
interests of our company or that conflicts of interests will be resolved in our favor. In addition, they may breach or cause the variable
interest entities and their subsidiaries to breach or refuse to renew the existing contractual arrangements that allow us to effectively
control the variable interest entities and their subsidiaries and receive economic benefits from them. Currently, we do not have
arrangements to address potential conflicts of interest between the shareholders of the variable interest entities and our company. We rely
on them to abide by the laws of the Cayman Islands and China, which provide that directors and/or officers owe a fiduciary duty to our
company, which requires them to 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 potential conflicts of interest or disputes between us and the individual shareholders of the variable
interest entities which may arise, we would have 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
Jiajujiu may be subject to limitations based on PRC laws and regulations.
Pursuant to the equity pledge agreements relating to the variable interest entities, Beijing Leju, Leju Hao Fang and Beijing
Jiajujiu, the shareholders of the variable interest entities pledge their equity interest in the variable interest entities to our subsidiaries to
secure their and the relevant consolidated variable interest entities’ performance of the obligations under the relevant contractual
arrangements. The equity pledges under these equity pledge agreements have been registered with the local branch of the SAMR.
According to the PRC Civil Code, 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 the ownership of the pledged equity to the pledgee when the obligor fails to pay the debt due. However, under the PRC
Civil Code, when an obligor fails to pay its debt when due, the pledgee may choose to either conclude an agreement with the pledgor to
obtain the pledged equity or seek payments from the proceeds of the auction or sell-off of the pledged equity. If any of the variable
interest entities or its shareholders fails to perform its obligations secured by the pledges under the equity pledge agreements, one remedy
in the event of default under the agreements is to require the pledgor to sell the equity interests in the relevant consolidated variable
interest entity in an auction or private sale and 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 receipt of the full value of the equity interests in the relevant consolidated variable interest
entity. We consider it very unlikely that the public auction process would be undertaken since, in an event of default, our preferred
approach would be to ask our PRC subsidiary that is a party to the exclusive call option agreement with the variable interest entity’s
shareholder, to designate another PRC person or entity to acquire the equity interest in the 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 the SAMR for the pledges over the equity interests under the equity
pledge agreements, the amount of registered equity interests pledged to our PRC subsidiaries was stated as the pledgor’s portion of the
registered capital of the variable interest entity. The equity pledge agreements with the shareholders of the variable interest entities
provide that the pledged equity interest constitutes continuing security for any and all of the indebtedness, obligations and liabilities
under the relevant contractual arrangements, and therefore the scope of pledge should not be limited by the amount of the registered
capital of the variable interest entities. However, there is no guarantee that a PRC court will not take the position that the amount listed
on the equity pledge registration forms represents the full amount of the collateral that has been registered and perfected. If this is the
case, the obligations that are supposed to be secured in the equity pledge agreements in excess of the amount listed on the equity pledge
registration forms could be determined by 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 have agreements that pledge the assets of the variable interest entities and their subsidiaries for
the benefit of us or our PRC subsidiaries, although the variable interest entities grant our PRC subsidiaries options to purchase the assets
of the variable interest entities and their equity interests in their subsidiaries under the exclusive call option agreement.
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Contractual arrangements we have entered into with Beijing Leju, 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 Fang or Beijing Jiajujiu owe additional taxes
could reduce our net income and the value of your investment
Under PRC laws and regulations, arrangements and transactions among related parties may be audited or challenged by the PRC
tax authorities. We could face material and adverse consequences if the PRC tax authorities determine that the contractual arrangements
we have entered into with Beijing Leju, Leju Hao Fang or Beijing Jiajujiu do not represent an arm’s-length price and adjust the taxable
income of Beijing Leju, Leju Hao Fang, Beijing Jiajujiu or their subsidiaries and branches in the form of a transfer pricing adjustment. A
transfer pricing adjustment could, among other things, result in a reduction of expense deductions recorded by Beijing Leju, Leju Hao
Fang, Beijing Jiajujiu or their subsidiaries and branches, which could in turn increase their PRC tax liabilities. In addition, the PRC tax
authorities may impose late payment fees and other penalties on the variable interest entities for underpayment of taxes. Our consolidated
net income may be materially and adversely affected if the variable interest entities’ tax liabilities increase or if they are found to be
subject to late payment fees or other penalties.
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
could adversely affect our business.
We conduct substantially all of our business in China. As the real estate industry is highly sensitive to business spending, credit
conditions and personal discretionary spending levels, it tends to decline during general economic downturns. Accordingly, our results of
operations, financial condition and prospects are subject, to a significant degree, to economic developments in China. While China’s
economy has experienced significant growth in the past three decades, growth has been uneven across different periods, regions and
among various economic sectors of China. The PRC government may implement measures that are intended to benefit the overall
economy even if they would be expected to have a negative effect on the real estate industry. The real estate industry is also sensitive to
credit policies. In recent years, the PRC government adjusted the 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 could negatively affect overall demand for real estate
and adversely affect our operating and financial results. We cannot assure you that China will continue to have rapid or stable economic
growth in the future or that changes in credit or other government policies that are intended to create stable 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 China are governed by PRC laws and regulations. Our subsidiaries are generally subject to laws and regulations applicable to foreign
investments in China and, in particular, laws applicable to foreign-invested enterprises. The PRC legal system is based on written
statutes. Prior court decisions may be cited for reference but have limited precedential value. PRC legislation and regulations have
gradually enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully
integrated legal system and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China.
In particular, because these laws and regulations are relatively new, the interpretation and enforcement of these laws and regulations
involve uncertainties. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and
management attention.
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The PRC government’s significant oversight over our business operation could result in a material adverse change in our
operations and the value of our ADSs.
We conduct our business primarily in China. Our operations in China are governed by PRC laws and regulations. The PRC
government has significant oversight over the conduct of our business, and may intervene or influence our operations, which could result
in a material adverse change in our operation and/or the value of our ADSs. The PRC government has recently published new policies
that significantly affected certain industries and we cannot rule out the possibility that it will in the future release regulations or policies
that directly or indirectly affect our industry or require us to seek additional permission to continue our operations, which could also
result in a material adverse change in our operation and/or the value of our ADSs. Therefore, investors of our company and our business
face potential uncertainty from actions taken by the PRC government affecting our business.
Substantial uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and
how it may impact 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 and permits 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 the Foreign Investment Law, which came into effect on January 1, 2020. The Foreign Investment Law
embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international
practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. However, since it
is relatively new, uncertainties still exist in relation to its interpretation and implementation. For instance, under the Foreign Investment
Law, “foreign investment” refers to the investment activities directly or indirectly conducted by foreign individuals, enterprises or other
entities in China. Though it does not explicitly classify contractual arrangements as a form of foreign investment, there is no assurance
that foreign investment via contractual arrangement would not be interpreted as a type of indirect foreign investment activities under the
definition in the future. In addition, the definition contains a catch-all provision which includes investments made by foreign investors
through means stipulated in laws or administrative regulations or other methods prescribed by the State Council. Therefore, it still leaves
leeway for future laws, administrative regulations or provisions promulgated by the State Council to provide for contractual
arrangements as a form of foreign investment. In any of these cases, it will be uncertain whether our contractual arrangements 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 by companies
with respect to existing contractual arrangements, we may face substantial uncertainties as to whether we can complete such actions in a
timely manner, or at all. Failure to take timely and appropriate measures to cope with any of these or similar regulatory compliance
challenges could 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
remittance of currency out of China. Restrictions on currency exchanges between the Renminbi and other currencies may limit our
ability to utilize our revenues and funds, in particular in relation to capital account transactions such as investments and loans. We
receive substantially all of our revenues 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 the variable interest entities to remit 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
things dividend payments and payments for the import of goods and services, subject to compliance with certain procedural
requirements. Although the Renminbi has been fully convertible for current account transactions since 1996, we cannot assure you that
the PRC government authorities will not limit or eliminate our ability to purchase and retain foreign currencies for current account
transactions in the future.
Conversion of the Renminbi into foreign currencies and of foreign currencies into the Renminbi for payments relating to
“capital account transactions”, which principally include investments and loans, generally requires the approval of SAFE and other PRC
governmental authorities.
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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 vetting procedures for PRC-based companies’ outbound remittance of foreign currency for overseas acquisitions,
dividend payments and shareholder loan repayments. For instance, on January 26, 2017, SAFE issued the a SAFE Circular 3, which
stipulates several capital control measures on the outbound remittance of profit from domestic entities to offshore entities, including: (i)
under the principle of genuine transaction, banks must check board resolutions regarding profit distribution, original version of tax filing
records and audited financial statements; and (ii) domestic entities must hold 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 affiliated PRC operating companies to
make investments overseas or to obtain foreign exchange through debt or equity financing, including by means of loans 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.
The Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. The value of Renminbi against the U.S.
dollar and other currencies is affected by changes in China’s political and economic conditions and by China’s foreign exchange policies,
among other things. We cannot assure you that Renminbi will not appreciate or depreciate significantly in value against the U.S. dollar in
the future. 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.
As our costs and expenses are mostly denominated in Renminbi, the appreciation of the Renminbi against the U.S. dollar would
increase our costs in U.S. dollar terms. In addition, as our operating subsidiaries and consolidated variable interest entities in China
receive revenues in Renminbi, 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 to convert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi against
the U.S. dollar would have an adverse effect on the Renminbi amount we receive from the conversion. Conversely, if we decide to
convert our Renminbi into U.S. dollars for the purpose of making payments for dividends on our ordinary shares or for other business
purposes, appreciation of the U.S. dollar against the Renminbi would have a negative 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 the Renminbi 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 into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to
enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to
adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified by PRC exchange control
regulations that restrict our ability to convert 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 our business 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 a result of the conflict in Ukraine, sanctions on Russia, the Hamas-Israel conflict and the attacks on shipping in the Red Sea.
The U.S. government has made statements and taken certain actions that may lead to potential changes to U.S. and international trade
policies towards China. Against this backdrop, China has implemented, and may further implement, measures in response to the
changing trade policies, treaties, tariffs and sanctions and restrictions against Chinese companies initiated by the U.S. government.
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Rising trade and political tensions could reduce levels of trades, investments, technological exchanges and other economic
activities between 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, as well as our overseas expansion, our financial condition, and results of operations. While cross-border business
currently may not be an area of our focus, if we plan to expand our business internationally in the future, any unfavorable government
policies on international trade or any restriction on Chinese companies may affect the consumer demands for our products and service,
impact our competitive position, or prevent us from being able to conduct business in certain countries. In addition, our results of
operations could be adversely affected if any such tensions or unfavorable government 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
resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC
subsidiaries, limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us, or may otherwise
adversely affect us.
In July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic
Residents’ Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37. SAFE
Circular 37 requires PRC residents to register with local branches of SAFE in connection with their direct establishment or indirect
control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or
equity interests in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special purpose vehicle.” The
term “control” under SAFE Circular 37 is broadly defined as the operation rights, beneficiary rights or decision-making rights acquired
by the PRC residents in the offshore special purpose vehicles or PRC companies by such means as acquisition, trust, proxy, voting rights,
repurchase, convertible bonds or other arrangements. SAFE Circular 37 further requires amendment to the registration in the event of any
changes with respect to the basic information of the special purpose vehicle, such as changes in a PRC resident individual shareholder,
name or operation period; or any significant changes with respect to the special purpose vehicle, 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, the PRC subsidiaries may be
prohibited from distributing their profits and proceeds from any reduction in capital, share transfer or liquidation to the offshore
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 of applicable foreign exchange restrictions.
We have requested our beneficial owners who are PRC residents to make the necessary applications, filings and amendments
required by SAFE. However, we cannot provide any assurances that all of our beneficial owners who are PRC residents will continue to
make, obtain or amend any applicable registrations or approvals required by these SAFE regulations. The failure or inability of our PRC
resident beneficial owners to comply 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 other distributions to our company or otherwise adversely affect our business. Moreover,
failure to comply with the SAFE registration requirements could result in liability under PRC laws for evasion of foreign exchange
restrictions. Furthermore, pursuant to our agreements with Tencent, our PRC subsidiaries, Shanghai SINA Leju, Shanghai Yi Yue and
Beijing Maiteng are restricted from paying dividends to us until each of our individual beneficial shareholders who are PRC residents
and subject to SAFE registration as described above submits its application to SAFE and each 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 our business operations or future strategy. For example, we may be subject to a more stringent review and approval process with
respect to our foreign exchange activities, including the remittance of dividends and foreign currency-denominated borrowings, which
may adversely affect our results of operations and financial condition. In addition, if we decide to acquire a PRC domestic company, we
cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete
the necessary filings and registrations required by the SAFE regulations. This may restrict our ability to implement our acquisition
strategy and could adversely affect our business and prospects.
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Failure to comply with PRC regulations regarding the registration requirements for employee stock ownership plans or share
option plans may 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
option plan in an overseas publicly listed company are required to register with SAFE and complete certain other procedures. In February
2012, SAFE promulgated the Notices on Issues concerning the Foreign Exchange Administration for Stock Incentive Plan of Overseas
Publicly-Listed Company. Pursuant to these rules, if a PRC resident participates in any stock incentive plan of an overseas publicly-listed
company, a qualified PRC domestic agent must, among other things, file on behalf of such participant an application with SAFE to
conduct the SAFE registration with respect to such stock incentive plan and obtain approval for an annual allowance with respect to the
purchase of foreign exchange in connection with the exercise or sale of stock options or stock such participant holds. Such participating
PRC residents’ foreign exchange income received from the sale of stock and dividends distributed by the overseas publicly-listed
company must be fully remitted into a PRC collective foreign currency account opened and managed by the PRC agent before
distribution to such participants. We and our PRC employees who have been granted stock options are subject to this rule, and we have
registered our existing employee stock ownership plan and stock option plan with the local SAFE branch in Shanghai. However, if there
is any change to our existing employee stock ownership plan or stock option plan, we cannot assure you that we 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 with these regulations, we
or our PRC optionees may be subject to fines and legal sanctions. See “Item 4. Information on the Company—B. Business Overview—
Regulation—Foreign Exchange Registration of Employee Stock Incentive Plans.”
The approval of and/or report and filing with the CSRC or other PRC government authorities may be required in connection
with our offshore offerings under 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 and reporting obligations.
The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, adopted by six
PRC regulatory agencies in 2006 and amended in 2009, requires an overseas special purpose vehicle formed for listing purposes through
acquisitions of PRC domestic companies and controlled by PRC persons or entities to obtain the approval of the CSRC prior to the
listing and trading of such special purpose vehicle’s securities on an overseas stock exchange. The interpretation and application of the
regulations remain unclear, and our historical and future offshore offerings may ultimately require approval of the CSRC. If the CSRC
approval is required, it is uncertain whether we can 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 to obtain or delay in obtaining the CSRC approval for any of our offshore
offerings, or a rescission of such approval if obtained by us, would restrict our ability to raise funds, subject us to sanctions imposed by
the CSRC or other PRC regulatory authorities, which could include fines and penalties on our operations in China, restrictions or
limitations on our ability to pay dividends outside of China, and other forms of sanctions that may materially and adversely affect our
business, financial condition, and results of operations.
On December 27, 2021, the NDRC and Ministry of Commerce jointly issued the Special Administrative Measures (Negative
List) for Foreign Investment Access (2021 Version), which became effective on January 1, 2022. Pursuant to these administrative
measures, if a domestic company engaging in the prohibited business stipulated in the negative list seeks an overseas offering and listing,
it shall obtain the approval from the competent governmental authorities. Besides, the foreign investors of the company shall not be
involved in the company’s operation and management, and their shareholding percentage shall be subject, mutatis mutandis, to the
regulations on the domestic securities investments by foreign investors. As the negative list is relatively new, there remain substantial
uncertainties as to the interpretation and implementation of these new requirements, and it is unclear as to whether and to what extent
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
on a timely basis, if at all, our business operation, financial conditions, business prospect and ability of financing, may be adversely and
materially affected.
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On February 17, 2023, the CSRC released the Overseas Listing Trial Measures and five supporting guidelines, which came into
effect on March 31, 2023. According to the Overseas Listing Trial Measures, domestic companies that seek to offer or list securities
overseas, both directly and indirectly, should fulfill the filing procedure and report their information to the CSRC; if a domestic company
fails to complete the filing procedure or conceals any material fact or falsifies any major content in its filing documents, such domestic
company may be subject to administrative penalties, such as order to rectify, warnings, fines, and its controlling shareholders, actual
controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as
warnings and fines. If the issuer meets both of the following conditions, the overseas offering and listing shall be determined as an
indirect overseas offering and listing by a domestic company: (i) any of the total assets, net assets, revenues or profits of the domestic
operating entities of the issuer in the most recent accounting year accounts for more than 50% of the corresponding figure in the issuer’s
audited consolidated financial statements for the same period; (ii) its major operational activities are carried out in China or its main
places of business are located in China, or the senior managers in charge of operation and management of the issuer are mostly Chinese
citizens or are domiciled in China; and (iii) where a domestic company seeks to indirectly offer and list securities in an overseas market,
the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and where an issuer
makes an application for listing in an overseas market, the issuer shall submit filings with the CSRC within three business days after such
application is submitted.
On the same day, the CSRC also held a press conference for the release of the Overseas Listing Trial Measures and issued the
Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, clarifies that the
domestic companies that have already been listed overseas on or before the effective date of the Overseas Listing Trial Measures (i.e.,
March 31, 2023) shall be deemed as existing issuers. These existing issuers are not required to complete the filling procedures, and they
shall be required to file with the CSRC when subsequent matters such as refinancing are involved.
According to the Overseas Listing Trial Measures, an overseas listed company shall file with the CSRC within three business
days after the completion of its subsequent securities offering on the same market, and an overseas listed company shall file with the
CSRC within three business days after its application of its offering and listing on a different market. If an overseas listed company
purchase PRC domestic assets through a single or multiple acquisitions, share swaps, shares transfers or other means, and such purchase
constitutes direct or indirect listing of PRC domestic assets, a filing with the CSRC is also required. In addition, an overseas listed
company is required to report to the CSRC the occurrence of any of the following material events within three business days after the
occurrence and announcement thereof: (i) a change of control of the listed company; (ii) the investigation, sanction or other measures
undertaken by any foreign securities regulatory agencies or the competent authorities in respect of the listed company; (iii) a change of
listing status or transfer of listing segment; and (iv) the voluntary or mandatory delisting of the listed company. If there is any material
change of the principal business of the listed company after the overseas offering and listing so that the listed company is no longer
required to file with the CSRC, it shall file a specific report and a legal opinion issued by a domestic law firm to the CSRC within three
business days after the occurrence hereof.
In addition, we cannot assure you that any new rules or regulations promulgated in the future will not impose additional
requirements on us or otherwise tightening the regulations on companies with a variable interest entity structure. If it is determined in the
future that approval and filing from the CSRC or other regulatory authorities or other procedures, including the cybersecurity review
under the enacted version of the revised Measures for Cybersecurity Review and the draft of Regulations on the Network Data Security,
are required for our offshore offerings or delisting arrangements, it is uncertain whether we can or how long it will take us to obtain such
approval or complete such filing and reporting procedures and any such approval, filing or report could be rescinded or rejected. Any
failure to obtain or delay in obtaining such approval or completing such filing and reporting procedures for our offshore offerings and
delisting arrangements, or a rescission of any such approval or filing if obtained by us, would subject us to sanctions by the CSRC or
other PRC regulatory authorities. These regulatory authorities may impose fines and penalties on our operations in China, limit our
ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from
our offshore offerings into China or take other actions that could materially and adversely affect our business, financial condition, results
of operations, and prospects, as well as the trading price of our securities. The CSRC or other PRC regulatory authorities also may take
actions requiring us, or making it advisable for us, to halt our offshore offerings before settlement and delivery of the shares offered, or to
change our current delisting arrangements. Consequently, if investors engage in market trading or other activities in anticipation of and
prior to settlement and delivery, they do so at the risk that settlement and delivery may not occur. Any uncertainties or negative publicity
regarding such approval requirement could materially and adversely affect our business, prospects, financial condition, reputation, and
the trading price of our securities.
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PRC regulations relating to acquisitions in China require us to obtain certain approvals from the Ministry of Commerce and the
failure to obtain such approvals could have a material and adverse effect on our business, results of operations, reputation and
the trading price of our ADSs.
The M&A Rules jointly issued by six PRC regulatory agencies and amended by the Ministry of Commerce in 2009, include
provisions that purport to require the Ministry of Commerce’s approval for acquisitions by offshore entities established or controlled by
domestic companies, enterprises or natural persons of onshore entities that are related to such domestic companies, enterprises or natural
persons. However, the interpretation and implementation of the M&A Rules remain unclear with no consensus currently existing
regarding the scope and applicability of the Ministry of Commerce approval requirement on foreign acquisitions among related parties.
We have entered into contractual arrangements with each of Beijing Leju, Leju Hao Fang and Beijing Jiajujiu and their
respective shareholders, which provide us with substantial ability to control each of these entities. See “Item 4. Information on the
Company—C. Organizational Structure.”
If the Ministry of Commerce subsequently determines that their approval was required for such contractual arrangements, we
may need to apply for a remedial approval. There can be no assurance that we will be able to obtain such approval or waiver of such
approval from the Ministry of Commerce. Inability to obtain such approval or waiver from the Ministry of Commerce may have a
material and adverse effect on our business. Further, we may be subject to certain administrative punishments or other sanctions from the
Ministry of Commerce. The Ministry of Commerce or other regulatory agencies may impose fines and penalties on our operations in
China, limit our operating privileges in China, delay or restrict the repatriation of U.S. dollars into China, or take other actions that could
have further material and adverse effects on our business, financial condition, results of operations, reputation and prospects, as well as
the trading price of our ADSs.
The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of PRC companies by
foreign investors, 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 and requirements that could make merger and acquisition activities by foreign investors more time consuming and complex.
For example, the M&A Rules require that the Ministry of Commerce be notified in advance of any change-of-control transaction in
which a foreign investor takes control of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction
involves factors that have or may have impact on the national economic 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 on another market player must also be notified in advance to
the Ministry of Commerce when the threshold under the Provisions on Thresholds for Prior Notification of Concentrations of
Undertakings issued by the State Council in August 2008 and amended in 2018 is triggered. In addition, the Implementing Rules
Concerning Security Review on the Mergers and Acquisitions by Foreign Investors of Domestic Enterprises, issued by the Ministry of
Commerce 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 the Ministry of Commerce, and prohibit any activities attempting to bypass such security review,
including by structuring the transaction through a proxy or contractual control 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 the NDRC and the Ministry of Commerce and took effect from January 18, 2021. These
measures specified provisions concerning the security review mechanism on foreign investment, including the types of investments
subject to review, review scopes and procedures, among others. As these measures are recently promulgated, official guidance has not
been issued by the designated office in charge of such security review yet. At this stage, the interpretation of those measures remains
unclear in many aspects such as what would constitute “important information technology and internet services and products” and
whether these measures may apply to foreign investment that is implemented or completed before the enactment of these new measures.
In the future, we may grow our business by acquiring complementary businesses.
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In the future, we may grow our business by acquiring complementary businesses. Complying with the requirements of the
above-mentioned regulations and other rules to complete such transactions could be time consuming, and any required approval
processes, including obtaining approval from the Ministry of Commerce or its local counterparts may delay or inhibit our ability to
complete such transactions. We believe that our business is not in an industry related to national security but we cannot preclude the
possibility that the Ministry of Commerce or other government agencies may publish explanations contrary to our understanding or
broaden the scope of such security reviews in the future, in which case our future acquisitions in China, including those by way of
entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited. Our ability to expand our
business or maintain or expand our market share through future acquisitions would as such be materially and adversely affected.
Our PRC subsidiaries and consolidated variable interest entities are subject to restrictions on paying dividends or making other
payments to us, which may restrict our ability to satisfy our liquidity requirements.
Leju is a holding company incorporated in the Cayman Islands. It relies on dividends from its PRC subsidiaries as well as
service and other fees paid to its PRC subsidiaries by the variable interest entities for our cash and financing requirements, such as the
funds necessary to pay dividends and other cash distributions to its shareholders, including holders of its ADSs, and service any debt it
may incur.
The variable interest entities are directly held by certain PRC individuals designated by us and thus are not able to make
dividend payments to our PRC subsidiaries and holding companies outside China. We have the right to charge the variable interest
entities service fees through our relevant PRC subsidiaries pursuant to the exclusive business cooperation agreements entered into with
the variable interest entities, which together with the other agreements with the variable interest entities and their respective shareholders,
enable us to enjoy substantially all of the economic benefits of the variable interest entities. These contractual arrangements we have
entered into with the variable interest entities may be subject to scrutiny by the PRC tax authorities. See “Item 3. Key Information—D.
Risk Factors—Risks Related to Our Corporate Structure—Contractual arrangements we have entered into with Beijing Leju, 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 Fang or
Beijing Jiajujiu owe additional taxes could reduce our net income and the value of your investment.” The variable interest entities have
paid and will continue to pay the service fees to our relevant PRC subsidiaries pursuant to the exclusive technical support agreements
between them.
Current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of their accumulated profits, if any,
determined in accordance with PRC accounting standards and regulations. In addition, each of our PRC subsidiaries is required to set
aside a certain amount of its after-tax profits each year, if any, to fund certain statutory reserves. These reserves are not distributable as
cash dividends. In addition, the PRC Enterprise Income Tax Law and its implementation rules provide that withholding tax rate of 10%
will be applicable to dividends payable by PRC companies to non-PRC-resident enterprises unless otherwise exempted or reduced
according to treaties or arrangements between the PRC central government and governments of other countries or regions where the non-
PRC-resident enterprises are incorporated. We have not received any dividend payments or other distributions from our PRC
subsidiaries, and as we currently intend to retain all of the available funds and any future earnings of our PRC subsidiaries to fund the
development and growth of our business, we do not expect to receive any dividend payments 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, the
instruments governing the debt may restrict the ability of the variable interest entities to pay service fees to our PRC subsidiaries or the
ability of our PRC subsidiaries to pay dividends to us, which may restrict our ability to satisfy our liquidity requirements. Our contractual
arrangements with the variable interest entities enable us to prevent them from entering into debt arrangements that may be detrimental
to us because these contractual arrangements provide us with the ability to direct the activities that most significantly affect the economic
performance of the 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 entity
shall not, and its shareholders shall ensure that the variable interest entity does not, incur any loan or offer any guarantee without the
prior written consent of our applicable PRC subsidiary. However, any limitation on the ability of our PRC subsidiaries or consolidated
variable interest entities to pay dividends or make other payments to us could materially and adversely limit our ability to grow, make
investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.
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PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from
making loans or 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
consolidated variable interest entities, or may make additional capital contributions to its PRC subsidiaries, subject to satisfaction of
applicable governmental registration and approval requirements.
Any loans we extend to our PRC subsidiaries, which are treated as foreign-invested enterprises under PRC law, cannot exceed
the statutory 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 registered capital of such
foreign-invested company as approved by the Ministry of Commerce or its local counterpart. According to a notice issued by the
People’s Bank of China regarding foreign debt on January 11, 2017, the total amount of foreign debt of our PRC subsidiaries or
consolidated variable interest entities or other PRC domestic entities shall not exceed two times of their respective net assets. Pursuant to
the above notice and other PRC law regarding foreign 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 registered capital as approved by the Ministry of Commerce or its local
counterpart, or two times of their respective net assets. It is very likely that our PRC subsidiaries will elect 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 grace period. We may extend
loans to the relevant PRC subsidiary in an amount that does not exceed the difference between the amount of its total investment and the
amount of its registered capital or two times of its net assets referenced above. With respect to the variable interest entities or other
domestic PRC entities, the limit for the total amount of foreign amount is two times of their respective net assets pursuant to the above
notice. According to the Administrative Measures for Examination and Registration of Medium and Long Term Foreign Debts of
Enterprises issued by the NDRC on January 1, 2023, which came into effect on February 10, 2023, any loans we extend to the variable
interest entities or other PRC operating companies that are domestic PRC entities for more than one year must be filed with the NDRC or
its local counterpart and must also be registered with SAFE or its local branches.
We may also decide to finance our PRC subsidiaries by means of capital contributions. On December 30, 2019, Ministry of
Commerce and the SAMR jointly promulgated Measures for the Reporting of Foreign Investment Information, which came into effect on
January 1, 2020. According to these measures, foreign investors or foreign-invested enterprises shall report investment information 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 to
commerce departments in a timely manner. SAFE has also issued a few circulars with respect to the conversion by a foreign-invested
enterprise of foreign currency registered capital into Renminbi and the flow and use of such Renminbi fund. Capital contributions are
currently required to be filed in the Foreign Investment Comprehensive Management Information System. In March 2015, SAFE issued
the Circular on the Reforming of the Management Method of the Settlement of Foreign Currency Capital of Foreign-Invested
Enterprises, or SAFE Circular 19, which became effective in June 2015 and was amended in 2019 and March 2023. Under SAFE
Circular 19, a foreign-invested enterprise may choose to convert its registered capital from foreign currency to Renminbi on a
discretionary basis, and the Renminbi capital converted can be used for equity investments within China, which will be regarded as the
reinvestment of foreign-invested enterprise.
SAFE also promulgated a circular in November 2011, which prohibits a foreign-invested enterprise from using Renminbi funds
converted from its foreign currency registered capital to provide entrustment loans or repay loans borrowed from non-financial
enterprises. Violation of these circulars could result in severe monetary or other penalties. These circulars may limit our ability to transfer
funds to the variable interest entities and the subsidiaries of our PRC subsidiaries, and we may not be able to convert funds into
Renminbi to invest in or acquire any other PRC companies, or establish other consolidated variable interest entities in China. Despite the
restrictions under these SAFE circulars, our PRC subsidiaries may use their income in Renminbi generated from their operations to
finance the relevant consolidated variable interest entities through entrustment loans to the variable interest entities or loans to such
variable interest entities’ shareholders for the purpose of making capital contributions to such variable interest entities. In addition, our
PRC subsidiaries can use Renminbi funds converted from foreign currency registered capital to carry out any activities within their
normal course of business and business scope, including to purchase or lease servers and other equipment and fund other operational
needs in connection with their provision of services to the relevant consolidated variable interest entities under the applicable exclusive
technical support agreements.
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In light of the various requirements imposed by PRC regulations on loans to, and direct investment in, PRC entities by offshore
holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary
government approvals on a timely basis, if at all, with respect to future loans to our PRC subsidiaries or any consolidated variable
interest entity or future capital contributions by us to our PRC subsidiaries. If we fail to complete such registrations or obtain such
approvals, our ability to fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity
and our ability to fund and expand our business.
The discontinuation of any of the preferential tax treatments currently available to us in China or imposition of any additional
PRC taxes on 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 and the
Ministry of Finance effective in February 2008, as partially amended by a Circular on Enterprise Income Tax Policies for Further
Encouraging the Development of the Software Industry and the Integrated Circuit Industry, a qualified software enterprise is eligible to
be exempted from income tax 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. Shanghai SINA Leju renewed its qualification of software enterprise in August 2022, and conducted inspection
on an annual basis. In 2021, Shanghai SINA Leju renewed its qualification of “high and new technology enterprise” to enjoy the
favorable statutory tax rate of 15% for the following three years. In 2024, Shanghai SINA Leju will renew its qualification of “high and
new technology enterprise” to enjoy the favorable statutory tax rate of 15% for the following three years. If Shanghai SINA Leju fails to
maintain “high and new technology enterprise” status, its applicable enterprise income tax rate may increase to up to 25%. The loss or
potential loss of preferential tax treatments enjoyed by Shanghai SINA Leju could have a material and adverse effect on our financial
condition and results of operations.
Various local governments in China have also provided discretionary preferential tax treatments to us. However, at any time,
these local governments may decide to reduce or eliminate these preferential tax treatments. Furthermore, these local implementations of
tax laws may be found in violation of national laws or regulations, and as a consequence, we may be subject to retroactive imposition of
higher taxes as a result. We are required under U.S. GAAP to accrue taxes for these contingencies. The change in accounting requirement
for reporting tax contingencies, any reduction or elimination of these preferential tax treatments and any retroactive imposition of higher
taxes could have an adverse effect on our results of operations.
We face uncertainty with respect to indirect transfer of equity interests in PRC resident enterprises or other assets attributed to a
PRC establishment 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
transactions involving the transfer of shares in our company by investors who are non-PRC resident enterprises.
In February 2015, the State Administration of Taxation issued the Notice on Several Issues Concerning Enterprise Income Tax
for Indirect Share Transfer by Non-PRC Resident Enterprises, or the SAT Bulletin 7. Pursuant to the SAT Bulletin 7, an “indirect
transfer” of assets of a PRC resident enterprise, including equity interests in a PRC resident enterprise, by non-PRC resident enterprises
may be re-characterized and treated as a direct transfer of PRC taxable assets, if such transaction arrangement lacks a reasonable
commercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived
from such indirect transfer may be subject to PRC enterprise income tax. According to the SAT Bulletin 7, “PRC taxable assets” include
assets attributed to an establishment in China, immovable properties located in China, and equity interests in PRC resident enterprises, in
respect of which gains from their transfer by a direct holder, being a non-PRC resident enterprise, would be subject to PRC enterprise
income taxes. In respect of an indirect transfer of assets of a PRC establishment, the resulting gain is to be included with the enterprise
income tax filing of the PRC establishment or place of business being transferred, and would consequently be subject to PRC enterprise
income tax at a rate of 25%. If the underlying transfer relates to immovable properties located in China or to equity interests in a PRC
resident enterprise, which is not related to a PRC establishment or place of business of a non-resident enterprise, a PRC enterprise
income tax at 10% would apply, subject to preferential tax treatment under applicable tax treaties or similar arrangements, if any, and the
party who is obligated to make payments for the transfer has a withholding obligation. Although the SAT Bulletin 7 does not apply to
share transfers of publicly traded companies, there is uncertainty as to the application of the SAT Bulletin 7. We and our non-PRC
resident investors may be at risk of being subject to tax filing or withholding obligations under the SAT Bulletin 7 and we may be
required to expend valuable resources to comply with the SAT Bulletin 7 or to establish that we should not be taxed under the SAT
Bulletin 7.
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We cannot assure you that the PRC tax authorities will not, at their discretion, adjust any capital gains and impose tax return
filing and withholding or tax payment obligations on the transferors and transferees, while our PRC subsidiaries may be requested to
assist in the filing. Any PRC 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 negative impact 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 our worldwide income, and dividends distributed to our investors may be subject to PRC withholding taxes under the
Enterprise Income Tax Law and our investors may be subject to PRC withholding tax on the transfer of our ordinary shares or
ADSs.
Under the Enterprise Income Tax Law and its implementation rules, all domestic and foreign invested companies would be
subject to a uniform enterprise income 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 of 10%, 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,
effective in November 2015, our Hong Kong subsidiaries need to obtain approval from the local branch of the State Administration of
Taxation in order to enjoy the preferential withholding tax rate of 5% in accordance with the Arrangement between Mainland China and
Hong Kong for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income. The State
Administration of Taxation 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 our PRC
subsidiaries paid to us through our Hong Kong subsidiaries. However, it is possible that our Hong Kong subsidiaries might not be
considered as “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 a result, there is no assurance that our Hong Kong subsidiaries will be able to enjoy the preferential withholding tax rate.
In addition, under the Enterprise Income Tax Law, enterprises organized under the laws of jurisdictions outside China with their
“de facto management bodies” 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 Enterprise Income Tax Law,
“de facto management bodies” are defined as the bodies that have material and overall management and control over the business,
personnel, accounts and properties of the enterprise. A subsequent circular issued by the State Administration of Taxation 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 core management
departments in charge of its daily operations function mainly in China; (ii) its financial and human resources decisions are subject to
determination or approval by persons or bodies in China; (iii) its major assets, accounting books, company seals, and minutes and files of
its board and shareholders’ meetings are located or kept in China; and (iv) more than half of the enterprise’s directors or senior
management with voting rights reside in China.
The Enterprise Income Tax Law and its implementation rules are relatively new and ambiguities exist with respect to the
interpretation of the provisions relating to resident enterprise issues. Although our offshore holding companies are not controlled by any
PRC company or company group, we cannot assure you that we will not be deemed to be a PRC resident enterprise under the Enterprise
Income Tax Law and its implementation rules. If we were considered a PRC resident enterprise, we would be subject to the PRC
enterprise income tax at the rate of 25% on our worldwide income; dividend income we receive from the PRC subsidiaries, however,
may be exempt from PRC tax since such income is exempted under the Enterprise Income Tax Law to a PRC resident recipient.
However, as there is still uncertainty as to how the Enterprise Income Tax 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 entities that are treated as PRC resident enterprises, we cannot assure you that we are eligible for such PRC enterprise
income tax exemptions or reductions. 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 such investors 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 or applicable PRC law.
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If we became a PRC resident enterprise under the new PRC tax system and received income other than dividends, our
profitability and cash flows would be adversely affected due to our worldwide income being taxed in China under the Enterprise Income
Tax Law. Additionally, 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 they would 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 our ability to provide real estate agency and brokerage services or establish new PRC operating entities.
Currently, we mainly use the VIEs, and their subsidiaries to provide support for our e-commerce business. Certain of the support
services provided by the VIEs and their subsidiaries may be regarded as real estate agency and brokerage services under PRC law.
Pursuant to the previous Foreign Investment Industrial Guidance Catalogue issued in 2011, foreign ownership of the real estate agency
and brokerage business in 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 their subsidiaries may be, subject to approval of the Ministry of Commerce or its local counterparts
which should be obtained before registering such company with the SAMR or its local counterparts. Although the VIEs have not
obtained approvals from the competent local branches of the Ministry of Commerce in connection with their establishment of, or
investment in, their subsidiaries with a registered business scope of real estate brokerage business, the subsidiaries of the VIEs which are
engaged in real estate agency and brokerage business have obtained and maintained a business license with such business scope, and
none of such subsidiaries has received any notice of warning or penalties from the competent authorities for lacking such approval.
The Foreign Investment Industrial Guidance Catalogue, effective in April 2015, loosens the restrictions on foreign ownership of
the real estate agency and brokerage business in China by removing it from the restricted category for foreign investment. Under the new
catalogue, the VIEs no longer needs the approval of the Ministry of Commerce or its local counterparts for the establishment of, or
investment in any new PRC subsidiary with a registered business scope of real estate agency and brokerage services. However, we
cannot assure you that the historical non-compliance of the VIEs’ not obtaining the requisite government approval would not be found as
a violation by the PRC government authorities. If the historical non-compliance were found and determined by the PRC government
authorities as a violation, our relevant subsidiaries would be subject to warnings, fines or even revocation of its licenses.
In addition, pursuant to the regulations regarding real estate agency and brokerage businesses, a real estate broker must conduct
a filing with the real estate administrative authority within 30 days after issuance of its business license. We have completed the filing
with the competent local real estate administrative authorities for our 25 PRC operating entities which currently provide support services
considered to be real estate agency and brokerage services under the PRC law.
Although our independent registered public accounting firm is registered with the PCAOB and currently subject to periodic
PCAOB inspection, if it is later determined that the PCAOB is unable to inspect or investigate our auditor completely, investors
would be deprived of the benefits of such inspection and our ADSs may be prohibited from trading.
We have appointed Yu CPA, for the audit of our consolidated financial statements since the fiscal year 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 was our predecessor auditor and audited our consolidated financial statements for the fiscal
years 2012 to 2018. The audit work by Deloitte Touche Tohmatsu Certified Public Accounts LLP 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
the PCAOB, our auditor is required under the laws of the United States to undergo regular inspections by the PCAOB to assess its
compliance with the laws of the United States and professional standards. There is no guarantee, however, that our current auditors or
any future auditor engaged by us would remain subject to full PCAOB inspection during the entire term of our engagement.
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The PCAOB is currently unable to conduct inspections in China without the approval of Chinese government authorities. Since
we have substantial operations in China, if it is later determined that the PCAOB is unable to inspect or investigate our auditor
completely, investors may be deprived of the benefits of such inspection. Any audit reports not issued by auditors that are completely
inspected by the PCAOB, or a lack of PCAOB inspections of audit work undertaken in China that prevents the PCAOB from regularly
evaluating our auditors’ audits and their quality control procedures, could result in a lack of assurance that our financial statements and
disclosures are adequate and accurate.
Pursuant to the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm
that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares or ADSs from being
traded in the over-the-counter trading market in the United States.
On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to
inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. Yu CPA is not
headquartered in mainland China or Hong Kong and was not identified in this report as a firm subject to the PCAOB’s determination.
Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong,
among other jurisdictions. If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely
accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue
an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following the
filing of the annual report on Form 20-F for the relevant fiscal year. In accordance with the HFCAA, our securities would be prohibited
from being traded in the United States if we are identified as a Commission-Identified Issuer for two consecutive years in the future. If
that happens and we are unable or have not yet listed on a non-U.S. exchange and a market does not develop outside of the United States,
your ability to sell or purchase our securities when you wish to do so would be substantially impaired, which would have a negative
impact on the price of our securities. Also, these circumstances would significantly affect our ability to raise capital on terms acceptable
to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.
Risks Related to Our ADSs
The delisting of our ADSs from the New York Stock Exchange, or the NYSE, may continue to have a material adverse effect on
the trading and price of our ADSs, and we cannot assure you that our ADSs will be relisted, or that once relisted, they will
remain listed.
On April 29, 2024, the NYSE filed a Form 25 with the SEC to strike our ADSs from listing, which became effective 10 days
after the filing. Our ADSs have been quoted on the OTC Pink under the symbol “LEJUY” after the NYSE suspended the trading of our
ADSs on April 11, 2024. The delisting of our ADSs from the NYSE has had a material adverse effect on us by, among other things,
causing investors to dispose of our ADSs and limiting:
● the liquidity of our ADSs;
● the market price of our ADSs;
● the number of institutional and other investors that will consider investing in our ADSs;
● the availability of information concerning the trading prices and volume of our ADSs;
● the number of broker-dealers willing to execute trades in our ADSs; and
● our ability to obtain equity or debt financing for the continuation of our operations.
The lack of an active trading market may limit the liquidity of an investment in our ADSs, meaning you may not be able to sell
our ADSs you own at times, or at prices, attractive to you. Any of these factors may materially and adversely affect the price of our
ADSs.
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The market price of our ADSs has been and may continue to be highly volatile.
Our ADSs were listed on the NYSE since our initial public offering in April 2014. On April 29, 2024, the NYSE filed a Form
25 with the SEC to strike our ADSs from listing, which became effective 10 days after the filing. Our ADSs have been quoted on the
OTC Pink under the symbol “LEJUY” after the NYSE suspended the trading of our ADSs on April 11, 2024.
The OTC Market is a significantly more limited market than NYSE. The quotation of our ADSs on the OTC Market may result
in a less liquid market available for existing and potential shareholders to trade our ADSs, could depress the trading price of our ADSs
and could have a long-term adverse impact on our ability to raise capital in the future.
In 2023, the closing price of our ADSs on the NYSE, varied from a low of $0.94 to a high of $5.52. Since NYSE’s trading
suspension on April 11, 2024, the closing trading prices of our ADSs quoted from the OTC marked ranged from US$0.19 to US$1.08 per
ADS up to the date of this annual report. The market price of our ADSs has been and may continue to be highly volatile and subject to
wide fluctuations due to factors beyond our control, such as broad market and industry factors, including the performance and fluctuation
of the market prices of other real estate services companies based in China that have listed their securities in the United States. In
addition, the global financial crisis and the ensuing economic recessions in many countries have contributed and may continue to
contribute to extreme volatility in the global stock markets.
In addition to the broad market and industry fluctuations, factors specific to our own operations may adversely affect the market
price of our 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;
● 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;
● sales of additional ADSs in the public market or other equity-linked securities, or the perception of these events; 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.
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As Leju is an exempted company incorporated in the Cayman Islands and not listed on any stock exchange, its corporate
governance practices may differ significantly from those of companies incorporated in Delaware or other states in the United
States or those of companies listed on a stock exchange, and these practices may afford less protection to shareholders.
Leju is an exempted company incorporated under the laws of the Cayman Islands and not currently listed on any stock
exchange. As a Cayman Islands company, Leju’s corporate affairs are governed by its memorandum and articles of association, the
Companies Act (As Revised) of the Cayman Islands and the common law of the Cayman Islands. The common law of the Cayman
Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of
England, but does not follow recent English statutory enactments.
In addition, as a Cayman Islands exempted company, Leju is not required to hold an annual general meeting pursuant to its
currently effective memorandum and articles of association.
Furthermore, as Leju is not currently listed on any stock exchange, Leju is not subject to any listing rules or listing standards. To
the extent that Leju continues to follow the NYSE corporate governance listing standards that were previously applicable to it, Leju may
stop following any or all of those listing standards at any time at the discretion of its board of directors or management, as the case may
be. In May 2024, Leju’s independent directors resigned from the board and Leju’s board resolved to dissolve the audit committee, the
compensation committee and the nominating and corporate governance committee. Leju’s board has been assuming the functions and
responsibilities of these committees since May 2024 and there are no independent directors on Leju’s board as of the date of this annual
report. The lack of independent directors on Leju’s board could create a potential conflict of interest in that the directors have the
authority to determine issues concerning audit, management compensation, and director nominations that may conflict with the interest
of the shareholders of Leju. As a result, Leju’s corporate governance practices may afford shareholders less protection than they would
otherwise enjoy as shareholders of companies incorporated in Delaware or other states in the United States or under the corporate
governance listing standards of the NYSE, the Nasdaq Stock Market or other stock exchanges.
We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain
provisions 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 and regulations 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;
● the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security
registered under the Exchange Act;
● the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and
liability for insiders 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. Press releases relating
to financial results and material events are also furnished to the SEC on Form 6-K. However, the information we are required to file with
or furnish to the SEC is 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 not be afforded the same protections or information, which would be made available to you, were you investing in a
U.S. domestic issuer.
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If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the
market price of 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 our business. If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts
who covers us downgrades our ADSs or publishes inaccurate or unfavorable research about our business, the market price of our ADSs
would likely decline. If one or more of 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 their market 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
to decline. As of March 31, 2024, we had 137,839,249 ordinary shares outstanding (excluding the 3,180,170 ordinary shares issued to
our depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards granted under our
share incentive plan). TM Home, SINA and Tencent held an aggregate of approximately 82.9% of our ordinary shares outstanding as of
March 31, 2024. The sale or perceived sale of a substantial amount of our ADSs by any of these principal shareholders could adversely
affect the prevailing market price for our ADSs. 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 and price that we deem appropriate. In addition, if we pay for our future acquisitions in
whole or in part with additionally issued ordinary shares, your ownership interests in our company would be diluted and this, in turn,
could have an adverse effect on the price of our ADSs.
Our articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of
our ordinary 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 us to engage in change-of-control transactions. These provisions could have the effect of depriving our shareholders of an
opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of
our company in a tender offer or similar transaction. For example, our board of directors has the authority, without further action by our
shareholders, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges, and relative
participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights,
voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our
ordinary shares, in the form of ADS, or otherwise. Preferred shares could be issued quickly with terms calculated to delay or prevent a
change in control of our company or make removal of management more difficult. 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 of our 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 we are 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 by our memorandum and articles of association, as amended and restated from time to time, the Companies Act (As Revised)
of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions
by minority shareholders and the 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. The common law of the Cayman Islands is derived in part from comparatively limited judicial
precedent in the Cayman Islands as well as from the English common law, the decisions of whose courts are of persuasive authority, but
are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman
Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States.
In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as
Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, with
respect to Cayman Islands companies, plaintiffs may face special obstacles, including but not limited to those relating to jurisdiction and
standing, in attempting to assert derivative claims in state or federal courts of the United States.
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Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect
corporate records (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 determine whether or not, and under what conditions, our corporate records may be inspected by our
shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the
information needed to establish any facts necessary for a shareholder motion 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 for companies incorporated in other jurisdictions such as the United States. Therefore, our shareholders may be afforded
less protection 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 by management, members of the board of directors or controlling shareholders than they would as public shareholders of a
company incorporated in the 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
significant percentage of our current operations are conducted in China. In addition, a significant majority of our current directors and
officers are nationals and residents of countries other than the United States. As a result, it may be difficult or impossible for you to effect
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
United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even
if you are successful 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 our assets or the assets of our directors and officers.
Although there is no statutory recognition in the Cayman Islands of judgments obtained in the federal or state courts of the
United States, and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments, a
foreign money judgment obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common
law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the
Grand Court of the Cayman Islands based on the principle that a judgment of a competent foreign court imposes upon the judgment
debtor an obligation to pay the liquidated sum for which such judgment has been given, 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 the judgment
has been given, (iii) is final and conclusive, (iv) is not in respect of taxes, a fine or a penalty, (v) is not inconsistent with a Cayman
Islands judgment in respect of the same matter, and (vi) is not impeachable on the grounds of fraud and was not obtained in a manner and
is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands.
However, the Cayman Islands courts are unlikely to enforce a judgment obtained from the U.S. courts under civil liability
provisions of the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise to
obligations to make payments that are penal or punitive in nature. A Cayman Islands court may stay enforcement proceedings if
concurrent proceedings are being brought elsewhere.
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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 or practicality in China. For example, in China, there are significant legal and other obstacles to providing information needed for
regulatory investigations or litigation initiated outside China. Although the authorities in China may establish a regulatory cooperation
mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and
administration, such cooperation with the securities 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, which became effective
in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the
territory of the PRC. While detailed interpretation of or implementation rules under this article have yet to be promulgated, the inability
for an overseas securities regulator to directly conduct investigation 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 may be 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 those rights.
Holders of ADSs do not have the same rights of our shareholders and may only exercise the voting rights with respect to the
underlying ordinary shares in accordance with the provisions of the deposit agreement. Under our memorandum and articles of
association, the minimum notice period required to convene a general meeting is seven calendar days. When a general meeting is
convened, you may not receive sufficient notice of a shareholders’ meeting to permit you to withdraw the underlying ordinary shares
represented by your ADSs to allow you to cast your vote 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 out your voting instructions in a timely manner. We will make all reasonable
efforts to cause the depositary to extend voting rights to you in a timely manner, but we cannot assure you that you will receive the
voting materials in time to ensure that you can instruct the depositary to vote the underlying ordinary shares represented by your ADSs.
Furthermore, the depositary and its agents will not be responsible for any failure to carry out any 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 exercise your right to vote and you may lack
recourse if the underlying ordinary shares represented by your ADSs are not voted as you requested. In addition, in your capacity as an
ADS holder, you will not be able to call a shareholders’ meeting.
The 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
discretion as to whether to distribute dividends. Our shareholders may by ordinary resolution declare a dividend, but not exceeding the
amount recommended by our board of directors. Even if our board of directors decides to declare and pay dividends, the timing, amount
and form of dividends will depend 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 no guarantee that our ADSs will appreciate in value or even maintain the price at
which you purchased the ADSs. You may not realize a return on your investment in our ADSs and you may even lose your entire
investment in our ADSs.
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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 or impractical 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
ordinary shares or other deposited securities underlying our ADSs, after deducting its fees and expenses. You will receive these
distributions in proportion to the number of ordinary shares your ADSs represent. However, the depositary is not responsible if it decides
that it is unlawful or impractical to make 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 of securities that require registration under the Securities Act but that are not properly
registered or distributed under an applicable exemption from registration. The depositary may also determine that it is not feasible to
distribute certain property through the mail. Additionally, the value of certain distributions may be less than the cost of mailing them. In
these cases, the depositary may determine not to distribute such property. We have 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 make them 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, the depositary will not distribute rights to holders of ADSs unless the distribution and sale of rights and the securities to
which these rights relate are either exempt from registration under the Securities Act with respect to all holders of ADSs, or are
registered under the provisions of the Securities Act. 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 may be unable to establish an exemption from registration under the Securities Act,
and we are under no obligation to file a registration statement with respect to these rights or underlying securities or to endeavor to have
a registration statement declared effective. Accordingly, holders of ADSs may be 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 time to time when it deems expedient in connection with the performance of its duties. In addition, the depositary may refuse to
deliver, transfer or register 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 it advisable 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 year ended December 31, 2023, 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, if either (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 of passive income. Although the law in this regard is unclear, we treat the variable interest entities as being
owned by us for U.S. federal income tax purposes, not only because we exercise effective control over the operation of such entities but
also because we are entitled to substantially all of their economic benefits, and, as a result, we consolidate their 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, 2023,
and we will likely be a 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 other passive assets we hold in assets that produce or are held for the production of active income.
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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”) may incur significantly increased U.S. federal income tax on gain recognized on the sale or other disposition of the
ADSs or ordinary shares and on the receipt 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, we generally will continue to be treated as a PFIC for all succeeding years
during which such U.S. holder holds our ADSs or ordinary shares. Each U.S. holder is urged to consult its tax advisor concerning the
U.S. federal income tax consequences of an investment in our ADSs or ordinary shares 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
Foreign Investment Company Rules” concerning the U.S. federal income tax consequences of an investment in the ADSs or ordinary
shares if we are or become classified as a PFIC, including the possibility of making a “mark-to-market” election.
ITEM 4.
INFORMATION ON THE COMPANY
A.
History and Development of the Company
Leju Holdings Limited was incorporated as our holding company in November 2013 by E-House, a leading real estate services
company in China listed on the NYSE at the time. E-House had remained our parent company and controlling shareholder after our
initial public offering in April 2014 until December 30, 2016. Substantially all of our operations are conducted through the PRC
subsidiaries and consolidated variable interest entities under China Online Housing Technology Corporation, or China Online Housing,
Omnigold Holdings Limited, or Omnigold, China E-Real Estate Holdings Limited, or E-Real, and E-House China (Tianjin) Holdings
Limited, or E-House Tianjin, each of which became our subsidiary 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. China Online Housing became a consolidated subsidiary of E-House
in 2009 and a wholly owned subsidiary of E-House in 2012. Omnigold was incorporated by E-House in October 2010 to operate the
home furnishing services business and is currently 84% owned by us. E-Real and E-House Tianjin were incorporated by E-House in June
2011 and March 2012, respectively, and are wholly owned by us. E-Real was incorporated to operate the 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, we conduct such activities through contractual arrangements with the variable interest entities in China. Our e-commerce
business with respect 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 contractual arrangements with Beijing Jiajujiu and its shareholders. Our online advertising business for new
residential properties websites and our secondary listings business are operated through our contractual arrangements with Beijing Leju
and its shareholders. We have entered into, through our PRC subsidiaries, 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 these entities into our financial statements in
accordance with U.S. GAAP. For a description of these contractual arrangements, see “Item 4. Information on 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
offering approximately $101.4 million in net proceeds after deducting underwriting commissions and the offering expenses payable by
us. Concurrently with our initial public offering, we also raised from Tencent in a private placement $18.9 million in net proceeds after
deducting estimated fees and expenses payable by us.
On May 20, 2022, we effected a change in the ratio of our ADSs to ordinary shares from one ADS representing one ordinary
share to one ADS representing ten ordinary shares. Except as otherwise indicated, all information in this annual report concerning share
and per share data gives retroactive effect to the ADS Ratio Change.
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On April 29, 2024, the NYSE filed a Form 25 with the SEC to strike our ADSs from listing, which became effective 10 days
after the filing. Our ADSs have been quoted on the OTC Pink under the symbol “LEJUY” after the NYSE suspended the trading of our
ADSs on April 11, 2024.
Our Relationship with E-House Enterprise and TM Home
On November 4, 2020, E-House Enterprise completed the acquisition of a controlling stake in our company. E-House Enterprise
purchased (i) 51,925,996 ordinary shares from Mr. Xin Zhou and certain of his affiliated entities, or the Zhou Parties by issuing to the
Zhou Parties 166,918,440 of its ordinary shares, or E-House Enterprise Shares, and (ii) 24,475,251 ordinary shares of Leju from SINA
Corporation and an affiliated entity thereof, or the SINA Parties, by issuing to the SINA Parties 78,676,790 E-House Enterprise Shares.
Upon completion of these transactions, E-House Enterprise acquired the beneficial ownership of 76,401,247 ordinary shares of us, and
we became a subsidiary of E-House Enterprise and our financial results have been consolidated into the accounts of E-House Enterprise
since then. On November 24, 2021, TM Home, a company incorporated in the Cayman Islands with limited liability and then owned as
to 70.23% and 29.77% by E-House Enterprise and Alibaba Investment Limited, or Alibaba Investment, respectively, 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 ordinary shares. As of March 31, 2024, TM Home owned
76,401,247 ordinary shares of us, representing approximately 55.4% of our total outstanding ordinary shares.
In April 2023, E-House Enterprise announced a proposed restructuring of certain notes previously issued by E-House
Enterprise, or the Proposed Restructuring, which may potentially result in a change in the controlling beneficial owner of our company.
As contemplated in the Proposed Restructuring, a result of a series of steps to be taken by E-House Enterprise, a special purpose vehicle
established for the holders of certain notes of E-House Enterprise, or the Creditor SPV, and Alibaba Investment and its affiliate will hold
approximately 54.207% and 10.793% of the shares of TM Home, respectively, which will result in E-House Enterprise ceasing to be a
controlling beneficial owner of Leju. The remaining 35% of the shares of TM Home will be held by E-House Enterprise and its affiliates,
of which 15% will be transferred to a special purpose vehicle held by the members of senior management of TM Home appointed by E-
House Enterprise. E-House Enterprise will further use reasonable endeavors to sell or procure the sale of the shares of TM Home held by
the Creditor SPV and Alibaba Investment, which will cause further changes in the beneficial ownership of Leju. The potential change in
Leju’s controlling beneficial owners is subject to the consummation of the Proposed Restructuring. As of the date of this annual report,
E-House Enterprise has not consummated the Proposed Restructuring. In addition, E-House Enterprise has commenced discussions with
its advisers on formulating a new restructuring plan.
We also have ongoing relationship with E-House, an affiliate of E-House Enterprise. Our agreements with E-House include a
master transaction 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 Party Transactions— Transactions and Agreements with E-House.”
Our Relationship with SINA
Through an agreement entered into between SINA and E-House in 2009, we own SINA’s real estate operations. The domain
names of some websites of our business are owned by SINA and licensed to us through agreements which we initially entered into with
SINA in 2009 with terms through 2019 and which we amended 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 estate advertisers through 2024. As of the date of the annual report, we
have yet to renew the agreement with SINA and are in the process of negotiating potential cooperation in the future.
On March 21, 2017, we entered into a registration rights agreement with SINA, which grants SINA the same registration rights
with respect 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 with SINA” for more information.
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Our Relationship with Tencent
In March 2014, pursuant to a share purchase and subscription agreement we entered into with E-House and Tencent, Tencent
acquired from 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 restricted shares and any other rights to acquire our shares that were granted and outstanding, for $180 million in cash.
Concurrent with the consummation of our initial public offering, Tencent purchased 2,029,420 ordinary shares from us at a price per
ordinary share equal to the initial public offering price 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. In connection with the sale of shares to Tencent, we have entered into an investor
rights agreement on March 31, 2014 with E-House and Tencent, which grants E-House and Tencent certain registration rights with
respect to our ordinary shares owned by them, grants certain board representation rights to Tencent and places certain restrictions on the
transfer of our ordinary 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
advertising agency agreements, we are the exclusive real property advertising agent of Tencent for selling advertising to real estate
advertisers in certain areas of China, including, Tianjin and Sichuan, Anhui, Shanxi, Guangxi and Fujian provinces. In March 2019, we
entered into an advertising agency agreement 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 Tencent in 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 advertising agency agreements with Tencent, and the
cooperative areas remain the same as those in 2020. At the beginning of 2022, we renewed our advertising agency agreements with
Tencent, and the cooperative areas are currently Beijing, Tianjin, Hebei, Fujian, Sichuan, Chongqing, Guizhou, Yunnan, and some cities
in Jiangsu Province.
See “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Transactions and
Agreements with Tencent” for more information.
Corporate Information
Our principal executive offices are located at S7-02, Building 1, Yard 22, Xidawang Road, Chaoyang District, Beijing 100022,
People’s Republic of China. Our telephone number at this address is +86 10 8515 0515. Our registered office in the Cayman Islands is
located at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.
In addition, we have 17 branch offices in mainland China and a branch office in Hong Kong.
B.
Business Overview
Overview
We are a leading O2O real estate services provider in China. We offer real estate e-commerce and online advertising services
through our online platform, which comprises local websites covering 405 cities, various mobile applications and Weixin mini programs.
E-Commerce. We offer e-commerce services primarily in connection with new residential property sales. Our O2O services for
new residential properties include (i) selling discount coupons and facilitating online property viewing, physical property visits,
marketing events and pre-sale customer support, and (ii) issuing commission coupons and providing an information platform to
individual brokers on which they can refer potential individual property buyers to real estate developers with whom we work to earn
commission for the successful referrals.
Online Advertising. In respect of the online advertising services, we mainly provide comprehensive advertisement placement
services to advertisers, mainly property developers, through a packaged online cross-media and cross-platform product portfolio,
including those owned by us and other independent outlets. We also purchased advertising resources from Tencent and other independent
media outlets. In late 2017, we launched Leju Finance, an online platform that provides information and news on the real estate industry,
market, and developers featuring their financial performances. We earn revenue primarily from advertising sales and brand promotion
services provided to advertisers, including real estate developers and home furnishing suppliers.
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We historically sold advertising primarily on the SINA new residential properties and home furnishing websites, which were
operated by us. In addition, we were the exclusive advertising agent for the SINA home page and non-real estate websites with respect to
advertising sold to advertisers, including real estate developers and home furnishing suppliers. We also offered fee-based online property
listing services to real estate agents and free services to individual property sellers.
We generated total revenues of $534.1 million, $343.2 million and $316.9 million in 2021, 2022 and 2023, respectively. We had
net loss of $149.9 million, $89.7 million and $55.8 million in 2021, 2022 and 2023, respectively.
Our O2O Platform
We offer multiple online and offline access points for consumers. We reach consumers through our own websites, Weibo,
Weixin, Tmall, various mobile applications, and Weixin mini programs. These websites and mobile applications enable us to better reach
potential purchasers for whom we are then able to provide our offline services. We also provide complementary offline services to
cultivate customer loyalty and ensure superior customer experience.
Websites
Our internet presence includes local real estate websites across China that we either operate directly or outsource to local
outsourcing partners. These local websites provide region-specific real estate news, information, property data and access to online
communities to real estate consumers 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 China. We operate the following
websites:
● new residential property websites, including leju.com, where viewers are automatically directed to a local website with
localized information and services, covering 405 cities; on leju.com, we offer customers the ability to purchase discount
coupons for property purchases; and
● real estate media website, including lejucaijing.com, a B2B platform, which provides information and news on the real
estate industry, market and developers featuring their financial performances.
We sell online advertising on each of our direct-operated local websites covering 71 cities. We also outsource 334 local websites
to third parties 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 to achieve user demographic characteristics that are attractive to advertisers, and our ability to demonstrate such user
traffic and demographic characteristics through website traffic tracking tools and reporting systems are important factors in maintaining
our advertising revenue from websites that we operate directly and fixed fees from websites that we outsource to third parties. We track
such data internally and identify cities to convert to direct operations on an ongoing basis.
Mobile Applications
Our major mobile applications include “Leju Home Purchase” (an upgraded version of “Pocket Leju”), “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. It provides personalized services to consumers and potential buyers of new and existing homes, and potential
residential renters. These services include local market news, scheduling home visits, selection, access to purchase
discounts, special offer recommendations, local housing price interpretations, purchase guides, property assessment, tax
calculation, housing loan calculation and others.
● Lai Ke is a communication tool between property consultants and potential home buyers. It pushes information to potential
home buyers through real-time big data analytics and helps property consultants reach out to targeted clients.
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● Leju Finance is a mobile app, which provides information and news on the real estate industry, market and developers
featuring their financial 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 media platforms. Our mobile platform aims to connect home buyers and developers and real estate agents through mobile devices
to allow potential buyers 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 agents with potential home buyers and sellers, including through live chat services, in addition to providing
updated customer data and analysis and a facility 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 developers with three unique groups of mobile promotional tools, including media channels, communication tools and e-
commerce tools, to further enhance mobile marketing for our clients. Since then we have continually added new product offerings on our
mobile platform, including various interactive marketing games.
In July 2015, we launched an innovative mobile product in cooperation with Didi Chuxing, a leading mobile transportation
platform in China, to arrange individual site visits for customers using private cars.
Complementary Offline Services
Our offline services include physical property visits and a call center, which enables our website viewers to contact us or
representatives of property developers for information on new residential properties and our services. Our services are also available at
developers’ show rooms and through real estate brokers. We also organize and conduct offline marketing events for property developers
to promote their new resident properties.
Our Services
We offer e-commerce services in connection with new residential property sales, and online advertising services in connection
with new residential property sales and home furnishing.
E-Commerce
Our e-commerce revenue is primarily derived from the sale of discount coupons for new residential properties that are promoted
by developers and the commission paid by the developers from the commission coupons business. We commenced the sale of discount
coupons from the first quarter of 2012 and the sale of commission coupons from the second half of 2022. Our revenues generated from e-
commerce services in 2021, 2022 and 2023 were $411.1 million, $278.5 million and $266.1 million, respectively, representing 77.0%,
81.1% and 84.0%, respectively, of our total revenues for those periods.
O2O Services for New Residential Properties
Our O2O offering includes selling discount coupons for new residential properties. Our O2O services can be accessed by
prospective purchasers through 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.
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Discount Coupons. A discount coupon entitles a purchaser to purchase a property from the property developer at a particular
development at a discount from the advertised price. Discount coupons can be purchased by prospective property purchasers online at
leju.com and its respective local websites as well as offline in showrooms for new property developments. We enter into arrangements
with developers whereby we offer O2O services, including the sale of discount coupons, to promote and facilitate property sales. Each
such arrangement is specific to a particular development. The arrangement may terminate at a pre-agreed date or continue until all
properties at the development 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 a promotional period, or when all properties at the development to which the coupon relates have been sold. When
a prospective property purchaser purchases a discount coupon as part of our O2O services, the purchaser remits the payment for the
coupon to an account maintained by the purchaser with an independent payment platform provider or to Leju’s Alipay or Weixin pay
accounts directly. Upon confirmation from a purchaser that a discount coupon is redeemed to purchase property, the payment for the
discount coupon is transferred to us. However, if for any reason the coupon is not redeemed, the payment is refunded to the purchaser
and we do not earn revenue from the transaction.
Commission coupons. We issue commission coupons and provide an information platform to individual brokers on which they
can provide information about potential individual property buyers to specific listings of real estate developers with whom we work. As
long as the potential buyers who are referred by the individual brokers reach a specific deal transaction with the real estate developer, the
individual brokers will redeem the commission coupons for the successful referrals, and we can earn the commission from the developer
for the successful referrals. We will recognize service revenue at a certain point in time when the obligations were fulfilled which were
confirmed by real estate developers. At the same time, the payment for the commission coupons by individual brokers is transferred to
us. However, if for any reason the coupon is not redeemed, the payment will be refunded to the individual broker. Any commissions and
other payments received in advance will be deferred until the obligations are fulfilled. We will pay commissions for the individual
brokers’ successful referrals only after the redemption of the commission coupons and the confirmation of the successful referrals from
real estate developers. In order to promote the commission coupons business, we issued a majority of the commission coupons in 2022
for free or with small considerations.
The following table sets forth certain operating metrics with respect to our sales of coupons for the periods specified.
Number of coupons issued to prospective purchasers (number of transactions)
Number of coupons redeemed (number of transactions)(1)
Note:
Six months
ended
June 30, 2023
Six months
ended
December 31, 2023
22,301
24,565
29,983
29,448
(1) The number of coupons issued to prospective purchasers that were used by the purchaser to obtain a discount in connection with a property purchase during the
period or to obtain the commission from real estate developers for the successful referral. We recognize revenue from the sale coupons that are redeemed. In terms of
the commission coupons business, in addition to the redemption of coupons, the confirmation from developers to certify the fulfillment of the obligation would be a
pre-condition to recognize revenue. See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Critical Accounting Estimates.”
We have entered into arrangements with China Unionpay to use its payment platform to collect payments for discount coupons.
The term of this agreement has been extended to 2025. Either party may terminate the agreement upon 30 days written notice to the other
party. Under the agreement, China Unionpay provides customers with the ability to make online or on-site payments.
Online Advertising
The majority of our online advertising revenues are generated from sale of advertising on real estate and home furnishing
websites to advertisers including real estate developers and home furnishing suppliers. Our revenues generated from advertising services
in 2021, 2022 and 2023 were $122.5 million, $64.7 million and $50.7 million, respectively, representing 22.9%, 18.9% and 16.0%,
respectively, of our total revenues for those periods.
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From 2009 to early 2024, we operated the SINA real estate website, house.sina.com.cn, and the SINA home furnishings
website, jiaju.sina.com.cn, and we were entitled to all advertising revenues from these websites. In addition, pursuant to an agency
agreement with SINA, we were the exclusive advertising agent of the SINA homepage and non-real estate websites, for advertising sold
to advertisers, including real estate developers and home furnishing suppliers. We were 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 helped real estate advertisers reach their target audiences in many of China’s major cities. Real estate advertisers primarily
included real estate developers, agents and brokers as well as suppliers and providers of home furnishing and improvement products and
services.
Furthermore, as the exclusive real estate advertising agency for SINA non-real estate websites, we facilitated advertising by our
real estate advertising clients on the SINA real estate websites as well as non-real estate websites. Real estate advertising offerings on
SINA websites included online advertising and sponsorship arrangements. Online advertising arrangements allowed advertisers to place
advertisements on particular areas of SINA websites, in particular formats, such as banners and text links, and over particular periods of
time. Sponsorship arrangements allowed advertisers to sponsor a particular area on SINA websites in exchange for a fixed payment over
the contract period. Real estate advertising on SINA websites also included revenue from outsourcing arrangements with local business
partners. Revenues from outsourcing arrangements were on a fixed fee and recognized ratably over the term of the contract.
We and SINA entered into a number of agreements governing our relationship with SINA, including an advertising inventory
agency agreement, an amended and restated domain name and content license agreement, an amended and restated trademark license
agreement and an amended and restated software license and support services agreement. For descriptions of these agreements, see “Item
7. Major Shareholders and Related 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
advertising agent of Tencent, including having exclusive advertising rights in certain areas of China. We also generated advertising
revenues from various other websites and mobile applications such as Weixin, Weibo, Toutiao and UC Web from 2019 to 2021. We earn
revenue from the sale of online advertising on each of these websites. Revenues for online advertising are typically based on a fixed fee
for the period of the advertising and are recognized ratably.
Historically, we offered online residential listing services for sales and leases of existing residential properties. Our revenues
generated from online listing services in 2021, 2022 and 2023 were $0.5 million, $11,274 and nil, respectively. Real estate brokers used
our listing services. Payment of the listing fees entitled them to post multiple listings for properties over the subscription period. Our
listing subscription contracts were typically for a term of up to one year with fixed fees payable on a monthly basis. The subscription fees
were generally fixed and vary from city to city.
Brand Promotion
We employ a variety of marketing and brand promotion methods to enhance our brand recognition and attract developer clients
and real estate purchasers, including advertising arrangements and the Leju Membership Club. Membership in the Leju Membership
Club is free. Users can sign up to join the Leju Membership Club online at our website, leju.com, and become members following email
or phone number confirmation through text message.
We conduct advertising activities in 71 cities where we directly operate local websites through promotional events for
developers and other industry participants, including industry award ceremonies, panel discussions and similar events.
Sales and Marketing
Most of our new home advertising revenue and home furnishing advertising revenue is derived from our direct sales force. We
also derive new home and home furnishing advertising revenue from sales through third party advertising agencies.
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We have built a sales and marketing team that is experienced in the online advertising, internet and real estate industries. Our
sales and marketing team comprised 240 personnel as of December 31, 2023. Our sales and marketing personnel work closely with our
customers in local markets and help us gain insight into developments in these local markets, the competitive landscape and new market
opportunities, which help us set 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
commissions and bonuses. Sales quotas are assigned to all sales personnel according to monthly, quarterly and annual sales plans. In
addition, we have adopted a merit-based promotion system to motivate our sales personnel.
Seasonality
The real estate sector in China is characterized by seasonal fluctuations, which may cause our revenues to fluctuate significantly
from quarter to quarter. The first quarter of each year generally contributes the smallest portion of our annual revenues due to reduced
real estate transactions, 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 fourth quarters of each year generally contribute a larger portion of our annual revenues due to increased
real estate transaction, advertising and marketing activity during the months of September and October.
Competition
We face competition from other companies in each of our primary business activities. We compete with these companies
primarily on our ability to attract consumers to our websites. We compete for consumers principally on the basis of the quality and
quantity of real estate listings and other 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. For example, we compete with fang.com, formerly soufun.com, a leading
real estate internet portal in China and compete with anjuke.com, which is operated by 58.com, a major online real estate listing platform
in China. In addition, we also compete with mobile-based providers of news, such as toutiao.com, for our online advertising business.
Our competitors may have more established brand names, larger visitor numbers and more extensive distribution channels than we do,
either overall, or in specific regions in which we operate. We also compete with traditional advertising media such as general-purpose
and real estate-focused newspapers, magazines, television and outdoor advertising that compete for spending on real estate advertising
and listings.
Some of our competitors may have greater access to capital markets, more financial and other resources and a longer operating
history than us. For instance, major general-purpose websites, which provide real estate and real estate-related information services, may
have an advantage over us due to their more established brand name, larger user base and extensive internet distribution channels.
Technology
To better serve our customers, we have utilized our key proprietary technologies and developed a technology infrastructure that
is specifically 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 search function, our search platform provides additional search functions that improve search accuracy with various
search criteria, including searches based on the location, price and type of the property. In addition, our search engine is
able to refine the search by conditional filtering 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 to handle large amounts of data flow with a high degree of scalability and reliability. We use parallel computing
technology and clusters of low-cost computers to handle high-volume visitor traffic and process large amounts of
information.
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● Anti-fraud and anti-spam technology. We have anti-fraud technology incorporated in our IT systems with a view to
addressing the potential for non-compliant activities at our local branch offices. We maintain advertising price and discount
data in our customer relationship management master file. Our system automatically triggers a risk alert for any deviation
from pre-set discounts, in which case, a pre-approval email from our headquarters is required. Our system also generates a
weekly report of any such exceptions for review by our headquarters. We also have an anti-spam system through which we
are able to detect identify and filter spam messages with a view to protecting our staff. We attempt to continually improve
the accuracy and effectiveness of our technology through machine-learning capability 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 other external causes of service interruption. We have not experienced any material system failures.
Insurance
We maintain property insurance to cover potential damages to a portion of our property. In addition, we provide medical,
unemployment and other insurance to our employees in compliance with applicable laws, rules and regulations. We do not maintain
insurance policies covering losses relating to our systems and do not have business interruption insurance.
Regulation
We are subject to a number of laws and regulations in China relating to real estate service companies. This section summarizes
the principal PRC laws and regulations that are currently applicable to our business and operations.
General
The telecommunications industry, including internet information services, is highly regulated by the PRC government.
Regulations issued or implemented by the State Council, the MIIT and other government authorities cover virtually every aspect of
telecommunications network operations, including entry into the telecommunications industry, the scope of permissible business
activities, tariff policy and foreign investment.
The 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
rules applicable 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 in October 2018 and April 2021. In addition, the SAMR and other ministries and agencies have issued regulations that further
regulate our advertising business, as discussed below.
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Restrictions on Foreign Investment in the Value-Added Telecommunication Industry
In 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
telecommunications businesses. According to the Classification of Telecommunications Business effective on March 1, 2016 and
amended on June 6, 2019, internet information services are classified as value-added telecommunications businesses.
The State Council promulgated the Administrative Rules on Foreign-invested Telecommunications Enterprises in December
2001, as amended in September 2008, February 2016 and March 2022 and became effective in May 1, 2022. These regulations set forth
detailed requirements with respect to capitalization, investor qualifications and application procedures in connection with the
establishment of a foreign-invested telecommunications enterprise. Pursuant to these administrative rules, the ultimate capital
contribution ratio of the foreign investor or investors in a foreign-invested telecommunications enterprise that aims to provide value-
added telecommunications services may not exceed 50%. In addition, pursuant to the Special Administrative Measures (Negative List)
for Foreign Investment Access (2021 Version) promulgated by the NDRC and the Ministry of Commerce on December 27, 2021 and the
Catalog of Industries for Encouraging Foreign Investment (2022 Version) which was promulgated on October 26, 2022 and became
effective on January 1, 2023, other than E-commerce, domestic multiparty communication, store and forward, and call center services,
the permitted foreign investment in value-added telecommunications service providers may not be more than 50%.
In July 2006, the MIIT publicly released the Notice on Strengthening the Administration of Foreign Investment in Operating
Value-added Telecommunications Business, or the MIIT Notice, which reiterates certain provisions under the Administrative Rules on
Foreign-invested Telecommunications Enterprises. According to the MIIT Notice, if any foreign investor intends to invest in a PRC
telecommunications business, a foreign-invested telecommunications enterprise must be established and such enterprise must apply for
the telecommunications business licenses. Under the MIIT Notice, domestic telecommunications 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 any telecommunications business in China.
Regulations relating to Internet Information Services
General
The provision of real estate and home-related and other content on internet websites is subject to applicable PRC laws, rules and
regulations relating to the telecommunications industry and the internet, and regulated by various government authorities, including the
MIIT and the SAMR. Under the applicable regulations, internet information services are classified as value-added telecommunications
businesses, and a commercial operator must obtain an ICP license from the MIIT or its provincial counterparts in order to carry out
commercial internet information service operations in China. If an internet information service provider is not engaged in commercial
internet information service, it is only required to file a record with the MIIT or its provincial counterparts. In addition, the regulations
also provide that operators involved in internet content provision in sensitive and strategic sectors, including news, publishing, education,
health care, medicine and medical devices, must obtain additional approvals from the authorities in relation to those sectors.
In compliance with these laws and regulations, Beijing Leju, the variable interest entity, Beijing Yisheng Leju Internet
Technology Co., Ltd., a subsidiary of the variable interest entity Beijing Jiajujiu, and Leju Hao Fang, the variable interest entity, each
hold a valid ICP license issued by the local provincial branch of the MIIT for the operation of our value-added telecommunication
business.
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The MIIT Notice requires that a value-added telecommunications business operator (or its shareholders) must own domain
names and trademarks used by it in the value-added telecommunications business, and have premises and facilities appropriate for such
business. To comply with the MIIT Notice, Beijing Leju, a consolidated variable interest entity, has been registered as the owner or is
applying to be the owner of the Chinese and English dual-language “Leju” trademark in several categories and has obtained the domain
names of leju.com and leju.cn. Beijing Yisheng Leju Online Technology Co., Ltd., a subsidiary of the variable interest entity Beijing
Jiajujiu, has registered the domain name of jiaju.com.
On December 31, 2022, the CAC and three other authorities issued Administrative Provisions on Algorithm Recommendation
for Internet Information Services, which became effective on March 1, 2022. Pursuant to these provisions, Algorithm recommendation
service providers shall not take advantage of algorithm recommendation services to engage in activities prohibited by laws and
administrative regulations, such as endangering the national security and public interests, disturbing the economic order and social order
and infringing upon the legitimate rights and interests of others, and shall not take advantage of algorithm recommendation services to
disseminate information prohibited by laws and administrative regulations. Instead, algorithm recommendation service providers shall
take measures to prevent and reject the dissemination of adverse information. In Addition, algorithm recommendation service providers
shall fulfill their responsibilities as subjects for algorithm security, establish and improve the management systems and technical
measures for algorithm mechanism and principle review, 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 disclose the rules for algorithm recommendation services, and be
equipped with professional staff and technical support appropriate to the scale of the algorithm recommendation service.
Network Publication Service License
According to the Provisions on Network Publication Service Administration, jointly issued by the GAPPRFT and the MIIT in
February 2016, all entities that are engaged in network publication service in China must obtain the Network Publication Service License
from the GAPPRFT. Network publication service is broadly defined in the Provisions on Network Publication Service Administration
Regulation as the use of information networks to provide the public with digital works that have characteristics of publication such as
editing, creation or processing. The variable interest entities and their subsidiaries do not have network publication licenses. For content
which we believe are subject to the requirements of these licenses, such content is hosted by SINA through our contractual arrangement
with SINA. In the case that SINA does not possess 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 and those websites licensed to us even if the underlying hosting of the relevant
content is provided by a qualified third party. See “Item 3. Key Information—D. Risk Factors—Risks related to Our Business—If we fail
to obtain or keep licenses, permits or approvals applicable to the various online real estate services provided by us, we may incur
significant financial penalties and other government sanctions.”
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Online Transmission of Audio-Visual Programs
The GAPPRFT and the MIIT jointly promulgated the Administrative Provisions on Internet Audio-visual Program Service,
effective in January 2008 and amended in August 2015. These administrative provisions apply to the provision of audio-visual program
services to the public via internet (including mobile network) within the territory of China. Providers of internet audio-visual program
services are required to obtain a license for online transmission of audio-visual programs issued by the GAPPRFT or complete certain
registration procedures with the GAPPRFT. Providers of internet audio-visual program services are generally required to be either state-
owned or state-controlled by the PRC government, and the business to be carried out by such providers must satisfy the overall planning
and guidance catalog for internet audio-visual program services determined by the GAPPRFT. In May 2008, the GAPPRFT issued a
Notice on Relevant 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 of audio-visual programs. The notice also provides that providers of internet audio-visual program
services who engaged in such services prior to the promulgation of these administrative provisions shall also be eligible to apply for the
license so long as their violation of the laws and regulations (if any) is minor and can be rectified timely and they have no record of
violation during the latest three months prior to the promulgation of these administrative 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. The variable interest entities and their subsidiaries do not have Licenses for Online Transmission of
Audio-visual Programs. For content which we believe is subject to the requirements of these licenses, such content is hosted by SINA
through our contractual arrangement with SINA. In the case that SINA does not possess 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 and those websites licensed to us even if the
underlying hosting of the relevant content is provided by a qualified third party. See “Item 3. Key Information—D. Risk Factors—Risks
related to Our Business—If we fail to obtain or keep licenses, permits or approvals applicable to the various online real estate services
provided by us, we may incur significant financial penalties and other government sanctions.”
Regulations relating to Mobile Internet Application Information Services
According to the Provisions on Administration of Mobile Internet Application Information Services promulgated by the CAC
on June 29, 2016, which was amended and became effective on August 1, 2022, entities providing information services through mobile
internet application shall obtain the qualifications according to laws and regulations. Mobile internet application provider shall not use
mobile internet application program to carry out activities prohibited by laws and regulations, such as endangering national security,
disturbing public orders, and infringing other’s legal rights and interests, or use mobile internet applications to produce, copy, publish
and spread illegal information prohibited by laws and regulations. The CAC shall be responsible for the supervision and administration
of information on mobile internet applications. The local cyberspace administrations shall be responsible for the supervision and
administration of information on mobile internet application program within the administrative regions.
On July 21, 2023, the MIIT issued the Notice on Carrying Out the Filing of Mobile Internet Applications, requiring app
operators engaged in internet information services within the territory of the People’s Republic of China to complete filing formalities in
accordance with the PRC Anti-telecommunications Network Fraud Law and the Administrative Measures on Internet Information
Services. App operators shall complete filing formalities with the provincial-level communications administration bureau where they are
domiciled, and their network access service providers and app distribution platforms (including the distribution platforms of mini
programs, quick applications and others) shall submit such applications online for inspection and review through the National Internet
Basic Resources Management System.
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Regulations Relating to Internet Privacy
The PRC Constitution states that PRC law protects the freedom and privacy of communications of citizens and prohibits
infringement of these rights. In recent years, PRC government authorities have enacted legislation on internet use to protect personal
information from any unauthorized disclosure. The Decision on Strengthening Network Information Protection provides that electronic
information that identifies a citizen or involves privacy of any citizen is protected by law and must not be unlawfully collected or
provided to others. ICP operators collecting or using personal electronic information of citizens must specify the purposes, manners and
scopes of information collection and uses, obtain consent of the citizens, and keep the collected personal information confidential. ICP
operators are prohibited from disclosing, tampering with, damaging, selling or illegally providing others with, collected personal
information. ICP operators are required to take technical and other measures to prevent the collected personal information from any
unauthorized disclosure, damage or loss. The Administrative Measures on Internet Information Services prohibit an ICP operator from
insulting or slandering a third party or infringing upon the lawful rights and interests of a third party. According to the Provisions on
Protection of Personal Information of Telecommunication and Internet Users, which was promulgated by MITT and became effective in
September 2013, telecommunication business operators and ICP operators are responsible for the security of the personal information of
users they collect or use in the course of their provision of services. Without obtaining the consent from the users, telecommunication
business operators and ICP operators may not collect or use the users’ personal information. The personal information collected or used
in the course of provision of services by the telecommunication business operators or ICP operators must be kept in strict confidence,
and may not be divulged, tampered with or damaged, and may not be sold or illegally provided to others. The ICP operators are required
to take certain measures to prevent any divulgence of, damage to, tampering with or loss of users’ personal information. In accordance
with the PRC Cybersecurity Law, network operators are required to collect and use personal information in compliance with the
principles of legitimacy, properness and necessity, and strictly within the scope of authorization by the subject of personal information
unless otherwise prescribed by laws or regulations. In the event of any unauthorized disclosure, damage or loss of collected personal
information, network operators must take immediate remedial measures, notify the affected users and report the incidents to the
authorities in a timely manner. If any user knows that a network operator illegally collects and uses his or her personal information in
violation of laws, regulations or any agreement with the user, or the collected and stored personal information is inaccurate or wrong, the
user has the right to request the network operator to delete or correct the collected personal information.
The telecommunications authorities are further authorized to order ICP operators to rectify unauthorized disclosure. ICP
operators are subject to legal liability, including warnings, fines, confiscation of illegal gains, revocation of licenses or filings, closing of
the websites, administrative punishment, criminal liabilities, or civil liabilities, if they violate the provisions on internet privacy. Pursuant
to the Ninth Amendment to the Criminal Law issued by the Standing Committee of the National People’s Congress in August 2015 and
becoming effective in November 2015, the standards of crime of infringing citizens’ personal information were amended accordingly and
the criminal culpability of unlawful collection, transaction, and provision of personal information has been reinforced. In addition, any
ICP provider that fails to fulfill the obligations related to internet information security administration as required by applicable laws and
refuses to rectify upon orders, will be 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’s information; (iii) any serious loss of evidence of criminal activities; or (iv) other severe
situations, and any individual or entity that (x) sells or provides personal information to others unlawfully, or (y) steals or illegally
obtains any personal information, will be subject to criminal liability in severe situations. In addition, the Interpretations of the Supreme
People’s Court and the Supreme People’s Procuratorate of the PRC on Several Issues Concerning the Application of Law in Handling
Criminal Cases of Infringing Personal Information, effective in June 2017, have clarified certain standards for the conviction and
sentencing in relation to personal information infringement. The PRC government has the power and authority to order ICP operators to
turn over personal information if an internet user posts any prohibited content or engages in illegal activities on the internet. The Civil
Code further provides in a stand-alone chapter of right of personality and reiterate that the personal information of a natural person shall
be protected by the law. Any organization or individual shall legitimately obtain such personal information of others in due course on a
need-to-know basis and ensure the safety and privacy of such information, and refrain from excessively handling or using such
information.
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With respect to the security of information collected and used by mobile apps, pursuant to the Announcement of Conducting
Special Supervision against the Illegal Collection and Use of Personal Information by Apps, which was issued on January 23, 2019, app
operators should collect and use personal information in compliance with the PRC Cybersecurity Law and should be responsible for the
security of personal information obtained from users and take effective measures to strengthen the personal information protection.
Furthermore, app operators should not force their users to make authorization by means of bundling, suspending installation or in other
default forms and should not collect personal information in violation of laws, regulations or breach of user agreements. Such regulatory
requirements were emphasized by the Notice on the Special Rectification of Apps Infringing upon User’s Personal Rights and Interests,
which was issued by the MIIT on October 31, 2019. On November 28, 2019, the CAC, the MIIT, the Ministry of Public Security and the
SAMR jointly issued the Methods of Identifying Illegal Acts of Apps to Collect and Use Personal Information. This regulation further
illustrates certain commonly-seen illegal practices of apps operators in terms of personal information protection, including “failure to
publicize rules for collecting and using personal information”, “failure to expressly state the purpose, manner and scope of collecting and
using personal information”, “collection and use of personal information without consent of users of such App”, “collecting personal
information irrelevant to the services provided by such app in violation of the principle of necessity”, “provision of personal information
to others without users’ consent”, “failure to provide the function of deleting or correcting personal information as required by laws” and
“failure to publish information such as methods for complaints and reporting”. Among others, any of the following acts of an app
operator will constitute “collection and use of personal information without consent of users”: (i) collecting an user’s personal
information or activating the permission for collecting any user’s personal information without obtaining such user’s consent; (ii)
collecting personal information or activating the permission for collecting the personal information of any user who explicitly refuses
such collection, or repeatedly seeking for user’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 by the app operator or the permission for collecting any user’s personal information
activated by the app operator is beyond the scope of personal information which such user authorizes such app operator to collect; (iv)
seeking for any user’s consent in a non-explicit manner; (v) modifying any user’s settings for activating the permission for collecting any
personal information without such user’s consent; (vi) using users’ personal information and any algorithms to directionally push any
information, without providing the option of non-directed pushing such information; (vii) misleading users to permit collecting their
personal information or activating the permission for collecting such users’ personal information by improper methods such as 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 app operator.
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 the child’s guardians in a noticeable and clear manner and obtain their consents. Meanwhile, internet service operators
should take measures like encryption when storing children’s personal information. On March 12, 2021, the CAC and three other
authorities jointly issued the Rules on the Scope of Necessary Personal Information for Common Types of Mobile Internet Applications.
The Rules specifies the scope of necessary personal information 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 Personal Information Protection in Internet
Mobile Applications (Draft for Comment). The draft sets forth two principles of collection and utilization of personal information,
namely “explicit consent” and “minimum necessity.”
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On August 20, 2021, the Standing Committee of the National People’s Congress adopted the Personal Information Protection
Law which took effect on November 1, 2021. The Personal Information Protection Law requires, among others, that (i) the processing of
personal information should have a clear and reasonable purpose which should be directly related to the processing purpose, in a method
that has the least impact on personal rights and interests, and (ii) the collection of personal information should be limited to the minimum
scope necessary to achieve the processing purpose to avoid the excessive collection of personal information. Different types of personal
information and personal information processing will be subject to various rules on consent, 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 to correct, suspend or
terminate the provision of services, and face confiscation of illegal income, fines or other penalties. On June 7, 2022, the Measures on
Security Assessment of Cross-Border Transfer of Data was released by the CAC, which became effective on September 1, 2022,
stipulating that before cross-border data transfer under certain circumstances, data processors shall conduct assessment of the risks, and
shall apply for security assessment. These laws and regulations require, among others, that the personal information and important data
generated and collected during the operations in the PRC should be stored within the PRC unless, prior to the intended data transfer,
certain specified criteria have been satisfied, such as a completed official security assessment carried out by the PRC government
authorities.
On February 22, 2023, the CAC promulgated the Provisions on the Standard Agreement on Cross-border Transfer of Personal
Information, which took effect on June 1, 2023. These provisions attach the standard template for cross-border data transfer agreement
that could be used as an available option to satisfy the condition for cross-border transfer of personal information under Article 38 of the
Personal Information Protection Law.
Regulations on Overseas Offering and Listing
On July 6, 2021, the PRC government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities in
Accordance with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the
supervision on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction
of the regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies.
On December 27, 2021, the NDRC and the Ministry of Commerce jointly issued the Special Administrative Measures (Negative
List) for Foreign Investment Access (2021 Version), which became effective on January 1, 2022. Pursuant to these administrative
measures, if a domestic company engaging in the prohibited business stipulated in the negative list seeks an overseas offering and listing,
it shall obtain the approval from the competent governmental authorities. Besides, the foreign investors of the company shall not be
involved in the company’s operation and management, and their shareholding percentage shall be subject, mutatis mutandis, to the
regulations on the domestic securities investments by foreign investors.
On February 17, 2023, the CSRC released the Overseas Listing Trial Measures and five supporting guidelines, which came into
effect on March 31, 2023. According to the Overseas Listing Trial Measures, domestic companies that seek to offer or list securities
overseas, both directly and indirectly, should fulfill the filing procedure and report their information to the CSRC; if a domestic company
fails to complete the filing procedure or conceals any material fact or falsifies any major content in its filing documents, such domestic
company may be subject to administrative penalties, such as order to rectify, warnings, fines, and its controlling shareholders, actual
controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as
warnings and fines. If the issuer meets both of the following conditions, the overseas offering and listing shall be determined as an
indirect overseas offering and listing by a domestic company: (i) any of the total assets, net assets, revenues or profits of the domestic
operating entities of the issuer in the most recent accounting year accounts for more than 50% of the corresponding figure in the issuer’s
audited consolidated financial statements for the same period; (ii) its major operational activities are carried out in China or its main
places of business are located in China, or the senior managers in charge of operation and management of the issuer are mostly Chinese
citizens or are domiciled in China; and (iii) where a domestic company seeks to indirectly offer and list securities in an overseas market,
the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and where an issuer
makes an application for listing in an overseas market, the issuer shall submit filings with the CSRC within three business days after such
application is submitted.
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On the same day, the CSRC also held a press conference for the release of the Overseas Listing Trial Measures and issued the
Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, clarifies that the
domestic companies that have already been listed overseas on or before the effective date of the Overseas Listing Trial Measures (i.e.,
March 31, 2023) shall be deemed as existing issuers. These existing issuers are not required to complete the filling procedures, and they
shall be required to file with the CSRC when subsequent matters such as refinancing are involved.
According to the Overseas Listing Trial Measures, an overseas listed company shall file with the CSRC within three business
days after the completion of its subsequent securities offering on the same market, and an overseas listed company shall file with the
CSRC within three business days after its application of offering and listing on a different market. If an overseas listed company
purchases PRC domestic assets through a single or multiple acquisitions, share swaps, shares transfers or other means, and such purchase
constitutes direct or indirect listing of PRC domestic assets, a filing with the CSRC is also required. In addition, an overseas listed
company is required to report to the CSRC the occurrence of any of the following material events within three business days after the
occurrence and announcement thereof: (i) a change of control of the listed company; (ii) the investigation, sanction or other measures
undertaken by any foreign securities regulatory agencies or the competent authorities in respect of the listed company; (iii) a change of
listing status or transfer of listing segment; and (iv) the voluntary or mandatory delisting of the listed company. If there is any material
change of the principal business of the listed company after the overseas offering and listing so that the listed company is no longer
required to file with the CSRC, it shall file a specific report and a legal opinion issued by a domestic law firm to the CSRC within three
business days after the occurrence hereof.
On February 24, 2023, the CSRC, together with the Ministry of Finance, the National Administration of State Secrets Protection
and the National Archives Administration of China, issued the Provisions on Strengthening Confidentiality and Archives Administration
of Overseas Securities Offering and Listing by Domestic Companies, which came into effect on March 31, 2023. These rules reiterate
that working papers produced in the PRC by securities companies and securities service providers for direct and indirect international
offering and listing by domestic companies, should be retained in mainland China, and, without prior approval by competent authorities
of mainland China, such working papers shall not be brought, mailed or otherwise transferred to recipients outside of mainland China.
Furthermore, the rules establish a cross-border regulatory cooperation mechanism as prescribed in the PRC Securities Law and
strengthen cross-border regulatory cooperation as prescribed in the Overseas Listing Trial Measures, which shifts the overall direction of
cross-border supervision of international offering and listing from a “dominated by domestic regulators or depend on the conclusions of
inspections by domestic regulators” approach to a “cross-border regulatory cooperation” mechanism.
The rules provide that, among other things, (i) in relation to the international offering and listing activities of domestic
enterprises, the domestic enterprises are required to strictly comply with the requirements on confidentiality and archives management,
establish a sound confidentiality and archives system, and take necessary measures to implement their confidentiality and archives
management responsibilities; (ii) during the course of an international offering and listing, if a domestic enterprise needs to publicly
disclose or provide to securities companies, accounting firms or other securities service providers and international regulators, any
materials that contain the state secrets, work secrets of government agencies or that have a sensitive impact (i.e., be detrimental to
national security or the public interest if divulged), the domestic enterprise should complete the approval/filing and other regulatory
procedures; and (iii) working papers produced in mainland China by securities companies and securities service institutions, which
provide domestic enterprises with securities services during their international issuance and listing, should be stored in mainland China,
and the transmission of all such working papers to recipients outside of mainland China is required to be approved by competent
authorities of mainland China.
Regulations relating to Information Content and Confidentiality of User Identity and Information
Internet content in China is also regulated and restricted from a state security standpoint. Pursuant to the Decision Regarding the
Protection of Internet Security enacted by the Standing Committee of the National People’s Congress, any effort to undertake the
following actions may 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;
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● 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, result in the leakage of government secrets or the spread of socially destabilizing content. The Ministry of Public Security and its
local counterparts have supervision and inspection powers in this regard, and we may be subject to the jurisdiction of the local security
bureaus. If an internet information service provider violates these measures, the PRC government may revoke its license and shut down
its website.
On December 15, 2019, the CAC promulgated the Provisions of Ecological Governance of Network Information Content,
which came into effect on March 1, 2020. According to these provisions, a network information content producer shall not make, copy or
publish any illegal information containing: (i) violation the fundamental principles set forth in the Constitution; (ii) jeopardizing national
security, divulging state secrets, subverting the state power, or undermining the national unity; (iii) damaging the reputation or interests
of the state; (iv) infringing name, portrait, reputation or honor of a hero or a martyr; (v) advocating terrorism or extremism; (vi) inciting
ethnic hatred or 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 network information content platform shall set up the censorship and management mechanism of
network information content, and develop the detailed rule. The platform shall set up the person in charge, equip itself with the
professional personnel commensurate with the business scope and service scale, strengthen training and examination and improve the
quality of practitioners, set up convenient channels for filing complaints and reports in prominent places and publish the ways of filing
complaints and reports, and compile an annual report. If a network information content producer 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 records and report to the competent
authorities. If a network information content platform violates the provisions, the cyberspace authorities shall hold interviews, give
warnings, order it to suspend information update, take measures including restricting it from engaging in network information services,
and impose online behavior restrictions and industry bans. The Measures for Cybersecurity Review was promulgated on April 13, 2020,
amended on December 28, 2021 and became effective on February 15, 2022. According to these measures, a critical information
infrastructure operator, before purchasing network products and services, shall prejudge the national security risks that may arise after the
products and services are put into use. If such products and services will or may affect national security, the operator shall apply to the
cybersecurity review office for cybersecurity review. In Addition, the Measures for Cybersecurity Review as amended in 2021 has
inserted the procedures for additional oversight of “foreign” listings in relation to cybersecurity. Critical information infrastructure
operators and data processors that possess the personal data of at least one million users must apply for a cybersecurity review by the
Cybersecurity Review Office, if they plan listing of companies in foreign countries. The Cybersecurity Review Office may voluntarily
conduct cybersecurity review if any network products and services, 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, the sanctions under which include, among others, government enforcement actions and
investigations, fines, penalties, suspension of our non-compliant operations.
To comply with these laws and regulations, we require our users to accept the user terms or service agreement for registration
with, and use of, our websites, whereby they agree to comply with the applicable PRC laws and regulations in using our websites, and we
also maintain constant surveillance and monitoring on the information posted on our websites. However, the measures we take may not
be adequate to ensure that all 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—We are required to comply with PRC and other applicable laws relating
to privacy and cybersecurity. The improper use or disclosure of data could have a material and adverse effect on our business and
prospects.”
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The security and confidentiality of information on the identity of internet users are also regulated in China. The Internet
Information Service Administrative Measures promulgated by the PRC State Council require internet information service providers to
maintain an adequate system that protects the security of user information. In December 2005, the Ministry of Public Security
promulgated the Regulations on Technical Measures 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 by prohibiting internet information service providers from
unauthorized collection, disclosure or use of personal information of their users. In December 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 provide real identity
information when entering into service agreements or providing services to the users. In July 2013, the MIIT issued Provisions on
Protecting Personal Information of Telecommunication and Internet Users, under which Internet information service providers are
subject to strict requirements to protect personal information of internet users. The internet information service providers are prohibited
from collecting personal information of internet users without obtaining consent from the users. Personal information collected shall be
used only in connection with the services to be provided by Internet information service providers to such users and shall be kept in strict
confidence. To comply with these laws and regulations, we require our users to accept the user terms or service agreement for
registration with and use of our websites whereby they agree to provide certain personal information to us and agree to our use of their
provided personal information under certain agreed circumstances, and we have established information security systems to protect
users’ privacy. In May 2017, the Supreme People’s Court and the Supreme People’s Procuratorate released the Interpretations of the
Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning the Application of Law in the Handling
of Criminal Cases Involving Infringement of Citizens’ Personal Information, effective in June 2017. These interpretations provide more
practical conviction and sentencing criteria for the infringement to citizens’ personal information.
On December 8, 2022, the MIIT issued the Measures for Data Security Administration in the Industry and Information
Technology Field (Trial Implementation) which became effective on January 1, 2023. In accordance with these 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 a
regular basis, to classify and identify data based on the industry requirements, business needs, data sources and purposes and other
factors, and to make a data classification list. In addition, the industrial and telecommunication data processors shall establish and
improve a sound data classification management system, file the important data and core data catalog with the local industry regulatory
department, and implement the protection with the highest level of requirement if different levels of data are processed at the same time
and it is difficult to take separate protective measures. The measures also impose certain obligations on industrial and telecommunication
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.
On September 15, 2021, the CAC promulgated the Opinions on Further Enforcing Responsibilities on Website Platforms as the
Main Responsible Party for Information Content Management. In accordance with the Opinions, website platforms are required to
perform specific responsibilities as the main responsible party for information content management, including, among others, enhancing
the platform community rules, strengthening the regulation and management of accounts, improving the content vetting mechanism,
improving the quality of information content, managing the dissemination of information content, and strengthening the management of
key functions.
On October 26, 2021, the CAC issued the Regulations on the Management of Internet User Account Name Information (Draft
for comments) for public comment. These regulations provide that the Internet user account service platform shall, in accordance with
the principle of “background real name and foreground voluntary”, require internet user account users to provide real identity
information when registering an account. The Internet user account service platform shall take necessary measures to ensure the security
of the 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 or disclosed without the authorization and consent of the user of the Internet user account. No illegal trading of
Internet user account name information is allowed. After the Internet user account user cancels his/her account, the Internet user account
service platform shall delete his personal information and account name information according to law.
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On June 27, 2022, the CAC issued the Administrative Provisions on the Account Information of Internet Users, which sets out
guidelines on the provisions of the account information of internet users and became effective on August 1, 2022. According to the
provisions, internet information service providers shall perform their responsibilities as the administrative subjects of the account
information of internet users, have in place professionals and technical capacity appropriate to the scale of services, and establish,
improve and strictly implement the authentication of real identity information, verification of account information, security of
information content, ecological governance, emergency responses, protection of personal information and other management systems.
Regulations Relating to Information Security
The National People’s Congress has enacted legislation that prohibits use of the internet that breaches the public security,
disseminates socially destabilizing content or leaks state secrets. Breach of public security includes breach of national security and
infringement on legal rights and interests of the state, society or citizens. Socially destabilizing content includes any content that incites
defiance or violations of PRC laws or regulations 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, state affairs and other matters as determined by the PRC authorities.
Pursuant to applicable regulations, ICP operators must complete mandatory security filing procedures and regularly update
information security and monitoring systems for their websites with local public security authorities, and must also report any public
dissemination of prohibited content.
In December 2015, the Standing Committee of the National People’s Congress promulgated the PRC Anti-Terrorism Law,
which took effect on January 1, 2016 and was amended on April 27, 2018. According to this 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 investigate terrorist activities; (iii)
implement network security and information monitoring systems as well as safety and technical prevention measures to avoid the
dissemination of terrorism information, delete the terrorism information, immediately halt its dissemination, keep relevant records and
report to the competent departments once the terrorism information is discovered; and (iv) examine customer identities before providing
services. Any violation of the PRC 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 PRC Cybersecurity Law, which
took effect on June 1, 2017. In accordance with this law, network operators must comply with applicable laws and regulations and fulfill
their obligations to safeguard network security in conducting business and providing services. Network service providers must take
technical and other necessary measures as required by laws, regulations and mandatory requirements to safeguard the operation of
networks, respond to network security effectively, prevent illegal and criminal activities, and maintain the integrity, confidentiality and
usability of network data. On September 12, 2022, the CAC proposed a series of draft amendments to the PRC Cybersecurity Law, which
impose more stringent legal liabilities for certain violations. Such draft amendments were released for soliciting public comments and its
final form, interpretation and implementation remain substantially uncertain. On August 20, 2021, the Standing Committee of the
National Peoples’ Congress promulgated the Personal Information Protection Law, which integrates the scattered rules with respect to
personal information rights and privacy protection.
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For 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
development interests, on June 10, 2021, Standing Committee of the PRC National People’s Congress published the PRC Data Security
Law, 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 for data security and privacy obligations on entities and individuals carrying out data activities. The Data Security Law also
introduces a data classification and hierarchical protection system based on the importance of data in economic and social development,
and the degree of harm it may 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 respective category of data. For example, a processor of important data is required to designate the
personnel and the management body responsible for data security, carry out risk assessments of its data processing activities and file the
risk assessment reports with the competent authorities. State core data, i.e., data having a bearing on national security, the lifelines of
national economy, people’s key livelihood and major public interests, shall be subject to stricter management system. Moreover, the Data
Security Law provides a national security review procedure for those data activities which affect or may affect national security and
imposes export restrictions on certain data and information. In addition, the Data Security Law also provides that any organization or
individual within the territory of the PRC shall not provide any foreign judicial body and law enforcement body with any data without
the approval of the competent PRC governmental authorities. As the Data Security Law was recently promulgated, we may be required
to make further adjustments to our business practices to comply with this law, as well as any adjustments that may be required by the
ultimate Personal Information Protection Law.
On July 6, 2021, the PRC regulatory authorities issued Opinions on Strictly Cracking Down on Illegal Securities Activities,
which, among others, provides for improving the laws and regulations on data security, cross-border data transmission, and confidential
information management. It provided that efforts will be made to revise the regulations on strengthening the confidentiality and file
management relating to the offering and listing of securities overseas, to implement the responsibility on information security of overseas
listed companies, and to strengthen the standardized management of cross-border information provision mechanisms and procedures.
On December 28, 2021, the CAC amended the Measures for Cybersecurity Review, which became effective on February 15,
2022. The scope of review under these amended measures extends to critical information infrastructure 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 over a million users shall apply
to the Cybersecurity Review Office for cybersecurity reviews before listing in a foreign country. Besides, the amended measures also
provide that if the authorities consider that certain network products and services, data processing activities and listings in foreign
countries affect or may affect national security, the authorities may initiate a cybersecurity review even if the operators do not have an
obligation to report for a cybersecurity review under such circumstances. The amended measures also elaborated the factors to be
considered when assessing the national security risks of the relevant activities, including among others, risks of core data, important data
or a large amount of personal information being stolen, leaked, destroyed, and illegally used or exited the country and risks of critical
information infrastructure, core data, important data or a large amount of personal information data being affected, controlled and
maliciously used by foreign governments in a foreign listing.
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On November 14, 2021, the CAC released the Regulations on the Network Data Security (Draft for Comments). These draft
regulations provide that data processors refer to individuals or organizations that autonomously determine the purpose and the manner of
processing data. In accordance with these 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 which process over one million users’ personal information; (iii) listing in Hong Kong which affects or may affect
national security; or (iv) other data processing activities that affect or may affect national security. Besides, data processors that are listed
overseas shall carry out an annual data security assessment. The draft regulations remain unclear on whether the requirements will be
applicable to companies that have been listed in the United States and Hong Kong, such as us. We cannot predict the impact of these
draft regulations, if any, at this stage, and we will closely monitor and assess any development in the rule-making process. If the enacted
versions of the draft regulations mandate clearance of cybersecurity review and other specific actions to be completed by China-based
companies listed on a U.S. stock exchange and Hong Kong Exchanges, 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 the draft regulations is adopted, we may be subject to review when
conducting data processing activities and annual data security assessment and may face challenges in addressing its requirements and
make necessary changes to our internal policies and practices in data processing. Based on the foregoing, our PRC legal counsel does not
expect that, as of the date of this annual report, the current applicable PRC laws on cybersecurity would have a material adverse impact
on our business.
On December 8, 2023, the CAC issued the Administrative Measures for Cybersecurity Incident Reporting (Draft for Comment)
and attached the Classification Guide for Cybersecurity Incidents and the Information Report Form for Cybersecurity Incidents for public
comments. Pursuant to these draft measures, network operators who build, operate networks or provide services through networks in the
PRC shall report incidents that endanger network security in accordance with these draft measures. Cybersecurity incidents refer to
incidents that cause harm to the network and information systems or data therein and have an adverse impact on society caused by
human factors, software or hardware defects or failures, natural disasters, etc. The draft measures classify cybersecurity incidents into
four levels: general, serious, material or extremely material. Cybersecurity incidents of serious level or above must be reported to the
regulators using the Information Report Form for Cybersecurity Incidents within one hour. If an operator fails to report a cybersecurity
incident according to the draft measures, the cyberspace administration will impose penalties according to the laws and administrative
regulations. If material harmful consequences are caused due to the operator’s delay in reporting, omission, false reporting, or
concealment of cybersecurity incidents, the operator and the liable persons will be subject to heavier punishments in accordance with
applicable law. As of the date of this annual report, this draft has not been formally adopted. Uncertainties exist with respect to the
enactment timetable, final content, interpretation and implementation thereof.
On July 30, 2021, the State Council issued the Regulations on Protection of Critical Information Infrastructure. Pursuant to
these regulations, critical information infrastructure shall mean the important network facilities or information systems of key industries
or fields such as public communication and information service, energy, transportation, water conservation, finance, public services, e-
government affairs and national defense science, and important network facilities or information systems which may endanger national
security, people’s livelihood and public interest once there occur damage, malfunctioning or data leakage to them. The regulations
provide that no individual or organization may carry out any illegal activity of intruding into, interfering with, or sabotaging any critical
information infrastructures, or endanger the security of any critical information infrastructures. The regulations also require that critical
information infrastructure operators shall establish a cybersecurity protection system and accountability system, and that the main
responsible person of a critical information infrastructure operator shall take full responsibility for the security protection of the critical
information infrastructures operated by it. In addition, the administration departments of each important industry and sector shall be
responsible for formulating the rule of critical information infrastructure determination applicable to their respective industry or sector,
and determine the critical information infrastructure operators in their industry or sector.
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On July 12, 2021, the MIIT and two other authorities jointly issued the Provisions on the Administration of Security
Vulnerabilities of Network Products. The provisions state that, no organization or individual may abuse the security vulnerabilities of
network products to engage in activities that endanger network security, or to illegally collect, sell, or publish the information on such
security vulnerabilities. Anyone who is aware of the aforesaid offences shall not provide technical support, advertising, payment
settlement and other assistance to the offenders. According to these provisions, network product providers, network operators, and
platforms collecting network product security vulnerabilities shall establish and improve channels for receiving network product security
vulnerability information and keep such channels available, and retain network product security vulnerability information reception logs
for at least six months. The provisions also ban provision of undisclosed vulnerabilities to overseas organizations or individuals other
than to the product providers.
On July 7, 2022, the CAC issued the Measures for Security Assessment of Cross-border Data Transfer, which came into effect
on September 1, 2022. Pursuant to these measures, a data processor shall apply to competent authorities for security assessment prior to
transferring any data abroad if the transfer involves (i) important data; (ii) personal information transferred overseas by a critical
information infrastructure operator and a data processor that has processed personal information of more than one million individuals;
(iii) personal information transferred overseas by a data processor who has already provided personal information of 100,000 persons or
sensitive personal information of 100,000 persons overseas since January 1 of the previous year; or (iv) other circumstances as requested
by the CAC. Furthermore, on August 31, 2022, the CAC promulgated the Guidelines for filing the Outbound Data Transfer Security
Assessment (Version 1), which provides that acts of outbound data transfer include (i) overseas transmission and storage by data
processors of data generated during PRC domestic operations; (ii) the access to, use, download or export of the data collected and
generated by data processors and stored in the PRC by overseas institutions, organizations or individuals; and (iii) other acts as specified
by the CAC. On March 22, 2024, the CAC promulgated the second version of the Guidelines for Filing the Outbound Data Transfer
Security Assessment, which provides more clarity on how to apply for the security assessment. As of the date of this annual report, we
do not transfer any users’ personal information or important data outside of China.
On March 22, 2024, the CAC released the Provisions on Promoting and Standardizing Cross-Border Data Flows. The
provisions set forth the circumstances exempted from performing the security assessment or filing procedures for cross-border data
transfer and further clarify the thresholds and scenarios for data processors to go through these procedures as stipulated under the
aforementioned measures.
On August 20, 2021, the Standing Committee of the National People’s Congress of China promulgated the Personal Information
Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect on
November 1, 2021. The Personal Information Protection Law requires, among others, that (i) the processing of personal information
should have a clear and reasonable purpose which should be directly related to the processing purpose and should be conducted in a
method that has the minimum impact on personal rights and interests, and (ii) the collection of personal information should be limited to
the minimum scope as necessary to achieve the processing purpose and avoid the excessive collection of personal information. Personal
information processors shall adopt necessary measures to safeguard the security of the personal information they handle. The offending
entities could be ordered to correct, or to suspend or terminate the provision 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 state secrets or failing to comply with the 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 operating such services.
Furthermore, the Provisions on Technological Measures for Internet Security Protection, promulgated by the Ministry of Public
Security and became effective in March 2006, require all ICP operators to keep records of certain information about its users (including
user registration information, 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 as required by laws and regulations. The Decision on Strengthening Network Information Protection which was
promulgated by the PRC National People’s Congress in December 2012, states that ICP operators must request identity information from
users when ICP operators provide information publication services to the users. If ICP operators come across prohibited information,
they must immediately cease the transmission of such information, delete the information, keep relevant records, and report to the
government authorities.
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On October 21, 2019, the Supreme People’s Court and the Supreme People’s Procuratorate of the PRC jointly issued the
Interpretations on Certain Issues Regarding the Applicable of Law in the Handling of Criminal Case Involving Illegal Use of Information
Networks and Assisting Committing Internet Crimes, which came into effect on November 1, 2019, and further clarifies the meaning of
Internet service provider and the severe situations of the crimes.
Regulations on Anti-Monopoly Matters related to Internet Platform Companies
The PRC Anti-monopoly Law, which took effect on August 1, 2008, prohibits monopolistic conduct such as entering into
monopoly agreements, abusing market dominance and concentration of undertakings that may have the effect of eliminating or
restricting competition. On June 24, 2022, the Standing Committee of the National People’s Congress amended the Anti-Monopoly Law,
which became effective on August 1, 2022, which stipulates that the fines for illegal concentration of business operators has been
increased to “no more than ten percent of its preceding year’s sales revenue if the concentration of business operator has or may have an
effect of excluding or limiting competition; or a fine of up to RMB5 million if the concentration of business operator does not have an
effect of excluding or limiting competition.” The amended Anti-monopoly Law also stipulates that the authority has the right to
investigate transaction where there is evidence that the concentration has or may have the effect of eliminating or restricting competition,
even if such concentration does not reach the filing threshold.
On February 7, 2021, the Anti-monopoly Commission of the State Council officially promulgated the Anti-Monopoly
Guidelines in the Field of Internet Platforms. Pursuant to an official interpretation from the Anti-monopoly Commission of the State
Council, these guidelines mainly cover five aspects, including general provisions, monopoly agreements, abusing market dominance,
concentration of undertakings, and abusing of administrative powers eliminating or restricting competition. The guidelines prohibit
certain monopolistic acts of internet platforms so as to protect market competition and safeguard interests of users and undertakings
participating in internet platform economy, including, without limitation, prohibiting platforms with dominant position from abusing
their market dominance (such as discriminating customers in terms of pricing and other transactional conditions using big data and
analytics, coercing counterparties into exclusivity arrangements, using technology means to block competitors’ interface, favorable
positioning in search results of goods displays, using bundle services to sell services or products, compulsory collection of unnecessary
user data). In addition, the guidelines also reinforce antitrust merger review for internet platform related transactions to safeguard market
competition. On August 17, 2021, the SMAR issued the Provisions on Prohibition of Unfair Competition on the Internet (Draft for
Comments), which prohibits business operators from using data, algorithms and other technical means to commit traffic hijacking,
interference, malicious incompatibility and other improprieties to influence user choices or hinder or damage the normal operation of
network products or services offered by other business operators.
Regulations relating to Advertising Services
The SAMR is responsible for regulating advertising activities in China. Pursuant to applicable regulations, companies that
engage in advertising activities in China must obtain from the SAMR or its local branches a business license which specifically includes
operating an advertising 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 valid for the duration of its existence, unless the license is suspended or revoked due to a violation of any law
or regulation.
The business scope of the business licenses of Beijing Leju and its subsidiaries includes operating an advertising business,
which allows them to engage in the advertising business.
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The PRC advertising laws and regulations also set forth certain content requirements for advertisements in China including,
among other things, 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 are required by PRC advertising laws and regulations to ensure that the content of the advertisements they
prepare or distribute is true and in full compliance with applicable law. In providing advertising services, advertising operators and
advertising distributors must review the supporting documents provided by advertisers for advertisements and verify that the content of
the advertisements complies with applicable PRC laws and regulations. Prior to distributing advertisements that are subject to
government censorship and approval, advertising distributors are obligated to verify that such censorship has been performed and
approval has been obtained. Violation of these regulations may result in penalties, including fines, confiscation of advertising income,
orders to cease dissemination of the advertisements and orders to publish an advertisement correcting the misleading information. In
circumstances involving serious violations, the SAMR or its local branches may revoke violators’ licenses. To comply with these laws
and regulations, we maintain a task force to review the advertising materials to ensure the content does not violate the laws and
regulations before displaying such advertisements, and we also request the advertisers to provide proof of governmental approval if an
advertisement 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 estate advertisements must be truthful, legal, scientific and accurate, and must not deceive or mislead consumers, and make detailed
provisions for the specific requirements of real estate advertisements by real estate agencies and brokers.
On February 25, 2023, the SAMR issued the Measures for the Administration of Internet Advertising, which came into effect on
May 1, 2023. The Measures for the Administration of Internet Advertising requires that advertisers shall be responsible for the
authenticity and legality of the content of Internet advertisements. In addition, the Measures for the Administration of Internet
Advertising also requires that operators and publishers of Internet advertisements comply with the following provisions: (i) establish and
improve the Internet advertising business to undertake registration, audit, file management system in accordance with the state
regulations; (ii) review, check and register the advertiser’s name, address, effective contact information and other information, record and
save the electronic data of advertising activities, establish registration files and verify and update them regularly. The storage time of the
files shall not be less than three years from the date of termination of advertising release; (iii) check the advertising supporting
documents and verify the advertising contents. For advertisements with inconsistent contents, no administrative license where required,
or lacking other supporting documents, Internet advertising operators shall not provide design, production and agency services, and
Internet advertising publishers shall not publish them; (iv) be equipped with advertising reviewers who are familiar with advertising laws
and regulations, and if conditions permit, to set up a special agency to be responsible for reviewing Internet advertisements; (v)
participate in statistical surveys of the advertising industry in accordance with the law, and provide statistical data in a true, accurate,
complete and timely manner.
Regulations relating to Real Estate Brokerage Business
The principal regulations governing the real estate brokerage business in China include the Law on Administration of the Urban
Real Estate issued by the Standing Committee of National People’s Congress in July 1994 and was latest revised in August 2019, and the
Administrative Measures for Real Estate Brokerage issued in January 2011 and amended in March 2016. Pursuant to these laws, a
company must register with local offices of the SAMR in each locality where it does business in order to operate real estate brokerage
business. In addition, a real estate brokerage company and its branches shall file with the local real estate administrative authority within
30 days after it obtains the business license.
The NDRC and the Ministry of Commerce issued Foreign Investment Industrial Guidance Catalogue, effective in April 2015.
The catalogue removed the real estate agency and brokerage services from the restricted category. The catalogue as amended in June
2017 and the subsequent updates of Special Administrative Measures (Negative List) for Foreign Investment Access did not cover real
estate agency and brokerage services. Accordingly, the establishment of or the investment in a subsidiary to engage in real estate agency
and brokerage services is not subject to the approval of the Ministry of Commerce or its local counterparts.
On July 13, 2021, the PRC authorities promulgated Notice on the Continuous Rectification and Regulation of the Real Estate
Market Order, which provides for intensified punishment by local authorities for real estate agencies violating laws and regulations,
including warning and interview, suspension of business for rectification, revocation of business license and qualification certificate,
exposure to the public, and reference to security and judicial authorities for investigation and punishment in the case of criminal offence.
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On April 27, 2023, the Ministry of Housing and Urban-Rural Development and the SAMR issued the Opinions on Regulating
Real Estate Brokerage Services, which made following regulatory statements: (i) reiterates the register requirement for companies
operating real estate brokerage business; (ii) further specified the content of brokerage services; (iii) intensifies regulation on the price,
fees and transaction contracts for brokerage services; (iv) strengthens the obligations to protect personal information of real estate
brokerage institutions and practitioners.
We mainly use the VIEs and their subsidiaries to provide support for our e-commerce business. Each subsidiary of the VIEs
engaged in real estate agency and brokerage business has obtained and maintained a business license with such business scope, and 25 of
our PRC operating entities have completed the filing with the competent 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 ability to provide real estate agency and brokerage
services or establish new PRC operating entities.”
Regulations relating to E-commerce
On August 31, 2018, the Standing Committee of the National People’s Congress promulgated the E-Commerce Law, which
became effective 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 regulatory administrative 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 other measures to prevent online illegal and criminal activities. The E-Commerce Law also expressly
requires platform operators to take necessary actions to ensure fair dealing on their platforms to safeguard the legitimate rights and
interests of consumers, including to prepare platform service agreements 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 property infringement disputes, upon receipt of the notice
specifying preliminary evidence for alleged infringement, the platform operators are required to take necessary measures in a timely
manner, such as deleting, blocking and disconnecting the hyperlinks, terminating transactions and services, and to forward notices to
merchants on its platform. If an e-commerce platform operator fails to take necessary measures when it knows or should have known that
a merchant on the platform infringes any third-party intellectual property rights, products or services provided by a merchant on its
platform do not meet the requirements regarding personal or property safety, or any merchant otherwise impairs the lawful rights and
interests of consumers, 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 to income generated by sellers from transactions conducted on e-commerce platforms, including among others, submitting to the
tax authority information on the identities of sellers on e-commerce platforms and other information relating to tax payment. Failure to
comply with the requirement may result in operators of e-commerce platform being subject to fines and, in severe circumstances,
suspension of business operations of e-commerce platforms.
Regulations relating to Trademarks
Both the PRC Trademark Law and the Implementation Regulation of the PRC Trademark Law, as currently in effect, provide
protection to the holders of registered trademarks and trade names. The PRC Trademark Office handles trademark registrations and
grants a renewable term of rights of ten years to registered trademarks. In addition, trademark license agreements must be filed with the
PRC Trademark Office.
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After receiving a trademark registration application, the PRC Trademark Office will make a public announcement with respect
to the proposed trademark registration application if the trademark passes the preliminary examination. Any person may, within three
months after such public announcement, object to such trademark application. The PRC Trademark Office will then decide who is
entitled to the trademark registration, and its decisions may be appealed to the PRC Trademark Review and Adjudication Board, whose
decision may be further appealed through judicial proceedings. If no objection is filed within three months after the public announcement
period or if the objection has been overruled, the PRC Trademark Office will approve the registration and issue a registration certificate,
upon which the trademark is registered and will be effective for a renewable ten-year period, unless otherwise revoked. As of March 31,
2024, we owned or licensed 332 registered trademarks in China, and had 28 trademark applications in various industry categories
pending with the China Trademark Office.
Regulations relating to Employment
Under the PRC Labor Law, the PRC Labor Contract Law and its implementing rules, employers must enter into written labor
contracts with full-time employees. All employers must compensate their employees with wages equal to at least the local minimum
wage standards. Employers in 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 National and Local Taxes released by General Office of the Communist Party of China and
the State Council on July 20, 2018, all social insurance premiums, such as basic pension insurance premium, basic medical insurance
premium, unemployment insurance premium, work-related injury insurance premium and maternity insurance premium, shall be
collected uniformly by the 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 and employment benefits.
Pursuant to the PRC Labor Contract Law and its amendments, dispatched employees are intended to be a supplementary form
of employment and shall only apply to provisional, auxiliary or substitutive positions, and the fundamental form should be direct
employment by enterprises and organizations that require employees. It is expressly stated that the number of dispatched employees an
employer uses may not exceed a “certain percentage” of its total labor force. The Interim Provisions on Labor Dispatch effective in
March 2014, further set such percentage at 10% and provide a two-year transitional period for compliance with such requirement. Failure
to comply with these requirements may result in orders of rectification and imposition of fines. See “Item 3. Key Information—D. Risk
Factors—Risks Related to Our Business—Increases in labor costs in China may adversely affect our business and our profitability.”
Regulations relating to Foreign Investment
On March 15, 2019, the PRC National People’s Congress adopted the PRC Foreign Investment Law, which became effective on
January 1, 2020. Pursuant to the PRC Foreign Investment Law, China grants national treatment to foreign invested entities, except for
those foreign-invested entities that operate in “restricted” or “prohibited” industries prescribed in the “negative list”, which shall be
released by or approved by the State Council.
On December 30, 2019, the Ministry of Commerce and the SAMR jointly promulgated the Measures for Reporting of Foreign
Investment Information, which became effective on January 1, 2020. According to the Measures for the Reporting of Foreign Investment
Information, where foreign investors carry out investment activities directly or indirectly within China, foreign investors or foreign-
invested enterprises shall report investment information to commerce departments in accordance with these Measures. A foreign investor
who establishes a foreign-invested enterprise within China shall submit an initial report through the enterprise registration system when
undergoing formation registration of the foreign-invested enterprise. 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 the enterprise’s modification registration (recordation).
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On December 19, 2020, the NDRC and the Ministry of Commerce promulgated Measures for Security Review of Foreign
Investment, which became effective on January 18, 2021. The foreign investment 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 under the NDRC and led by the NDRC and the Ministry of Commerce to undertake routine work on the security review of
foreign investment. According to the Measures for Security Review of Foreign Investment, before making investment in important
cultural products and services, important information technologies and Internet products and services, important financial services, key
technologies or any other important field related to national security, resulting in the foreign investor’s acquisition of actual control of the
enterprise invested in, the foreign investor or relevant parties shall proactively report to the working mechanism office.
Regulations relating to Foreign Exchange Control and Administration
Foreign Exchange Administration
The principal regulation governing foreign currency exchange in China is the Regulations of the PRC on Foreign Exchange
Administration, as amended in August 2008. Under these regulations and other PRC regulations and rules, the Renminbi is convertible
into other currencies for the purpose of current account transactions, including the distribution of dividends, interest payments, trade and
service-related foreign exchange transactions. The conversion of the Renminbi into other currencies and remittance of the converted
foreign currency outside China for capital account transactions, such as capital injections, loans, repatriation of investments 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 or consolidated variable interest entities; or (iv) acquire offshore entities with business operations in China in an
offshore transaction. However, most of 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
investment must be approved by the Ministry of Commerce 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 and the amount of registered capital of such subsidiaries as approved by the Ministry of Commerce or its local
counterpart or the limit calculated by the approach set forth in the Notice of Matters Concerning the Macro-Prudential
Management of Full-Covered Cross-Border Financing issued 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 the variable interest entities must be filed with the NDRC and must also be registered with SAFE or its local
branches.
Under SAFE Circular 19, which became effective in June 2015 and was amended in 2019 and March 2023, a foreign-invested
enterprise may choose to convert its registered capital from foreign currency to Renminbi on a discretionary basis, and the Renminbi
capital converted can be used for equity investments within China, which will be regarded as the reinvestment of foreign-invested
enterprise. In addition, SAFE Circular 19 prohibits a foreign-invested enterprise from using Renminbi funds converted from its foreign
currency registered capital to provide entrustment loans or repay loans borrowed from nonfinancial enterprises. Violation of these
circulars could result in severe penalties, including heavy fines. These circulars may limit our ability to transfer funds to the variable
interest entities and the subsidiaries of our wholly foreign-owned subsidiaries in China, and we may not be able to convert foreign
currency-denominated funds into Renminbi to invest in or acquire any other PRC companies, or establish other consolidated variable
interest entities in China. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—PRC regulation
of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from making loans or additional
capital contributions to our PRC operating subsidiaries.”
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In November 2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration
Policies on Foreign Direct Investment, or SAFE Circular 59, as amended in October 2018 and December 2019, which substantially
amends and simplifies the then 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 of Renminbi 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
over Domestic Direct Investment by Foreign Investors and the Supporting Documents as amended in December 2019, which specifies
that the administration 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 foreign exchange business relating to the direct investment in China based on the registration information provided by
SAFE and its branches.
In February 2015, SAFE promulgated the Circular of Further Simplifying and Improving the Policies of Foreign Exchange
Administration Applicable to Direct Investment, or SAFE Circular 13, effective in June 2015 and amended in December 2019. Under
SAFE Circular 13, the current foreign exchange procedures will be further simplified, and foreign exchange registrations of direct
investment will be handled by banks instead of SAFE and its branches.
In January 2017, SAFE promulgated SAFE Circular 3, which stipulates several capital control measures on the outbound
remittance of profit from domestic entities to offshore entities, including: (i) under the principle of genuine transaction, banks must check
board resolutions regarding profit distribution, original version of tax filing records and audited financial statements; and (ii) domestic
entities must hold income to account 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 the
Development of Foreign-related Business, or SAFE Circular 8, which provides that under the condition that the use of the funds is
genuine and compliant with current administrative provisions regarding the use of income relating to capital account, enterprises are
allowed to use income under capital account such as capital funds, foreign debts and overseas listings for domestic payment, without
submission of materials evidencing the veracity of such payment to the bank prior to each transaction.
On December 4, 2023, SAFE issued the Notice on Further Deepening Reforms to Promote the Convenience of Cross-border
Trade and Investment, or SAFE Notice 28, which provides that qualified high-tech, “professional, sophisticated, unique and new” and
technology-based small and medium-sized enterprises in certain other areas can borrow foreign debt on their own within an amount not
exceeding the equivalent of US$10 million. SAFE Notice 28 abolished the restriction that the cumulative remittance amount of up-front
expenses of overseas direct investment by a domestic enterprise shall not exceed the equivalent of US$3 million, provided that the
cumulative remittance amount shall not exceed 15% of the total proposed investment amount by the PRC entity. Additionally, SAFE
Notice 28 restructured the asset realization account of capital accounts to the settlement account of capital accounts. The equity transfer
consideration funds in foreign currency received by a domestic equity transferor (including institutions and individuals) from domestic
parties, as well as the foreign exchange funds raised by domestic enterprises through overseas listing may be directly remitted to the
settlement account of capital accounts. Funds in the settlement account of capital accounts may be settled and used at discretion. The
equity transfer consideration funds received by a domestic equity transferor from foreign invested enterprises which are paid with RMB
funds derived from the settlement of foreign exchange (i.e., RMB funds derived from direct settlement of foreign exchange or from
settlement account for pending payment) may be transferred directly to the RMB account of the domestic equity transferor.
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Foreign Exchange Registration of Offshore Investments by PRC Residents
In July 2014, SAFE promulgated SAFE Circular 37, which requires PRC residents to register with local branches of SAFE in
connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing,
with such PRC residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in
SAFE Circular 37 as a “special purpose vehicle”. The term “control” under SAFE Circular 37 is broadly defined as the operation rights,
beneficiary rights or decision-making rights acquired by the PRC residents in the offshore special purpose vehicles by such means as
acquisition, trust, proxy, voting rights, repurchase, convertible bonds or other arrangements. SAFE Circular 37 further requires
amendment to the registration in the event of any changes with respect to the basic information of the special purpose vehicle, such as
changes in a PRC resident individual shareholder, name or operation period; or any significant changes with respect to the special
purpose vehicle, 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, the PRC subsidiaries may be prohibited from distributing their profits and proceeds from any reduction in
capital, share transfer or liquidation to the offshore 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 of applicable foreign exchange restrictions.
We have requested our beneficial owners who are PRC residents to make the necessary applications, filings and amendments
required by SAFE. However, we cannot provide any assurances that all of our beneficial owners who are PRC residents will continue to
make, obtain or amend any applicable registrations or approvals required by these SAFE regulations. The failure or inability of our PRC
resident beneficial owners to comply 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 other distributions to our company or otherwise adversely affect our business. Moreover,
failure to comply with the SAFE registration requirements could result in liability under PRC laws for evasion of foreign exchange
restrictions.
Foreign Exchange Registration of Employee Stock Incentive Plans
In February 2012, SAFE issued the Notices on Issues concerning the Foreign Exchange Administration for Stock Incentive Plan
of Overseas Publicly-Listed Company. Under these rules, a PRC entity’s directors, supervisors, senior management officers, other staff or
individuals who have an employment or labor relationship with a PRC entity and are granted stock options by an overseas publicly listed
company are required, through a qualified PRC domestic agent which could be a PRC subsidiary of such overseas publicly listed
company, to register with SAFE and complete certain other procedures. Such PRC resident participants must also retain an overseas
entrusted institution to handle matters in connection 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 to such stock incentive plan and obtain approval for an annual allowance with
respect to the purchase of foreign exchange in connection with the exercise or sale of stock options or stock such participants hold. In
addition, the PRC agent is required to amend the SAFE registration with respect to the stock incentive plan if there is any material
change to the stock incentive plan, the PRC agent or the overseas entrusted institution or other material aspects. Such participating PRC
residents’ foreign exchange income received from the sale of stock and dividends distributed by the overseas publicly-listed company
must be fully remitted into a PRC collective foreign currency account opened and managed by the PRC agent before distribution to such
participants. We and our PRC resident employees who have been granted stock options or other share-based incentives of our company
are subject to these rules. If we or our PRC resident participants fail to comply with these regulations in the future, we and/or our PRC
resident participants may be subject to fines and legal sanctions.
Regulations relating to Dividend Distributions
Under 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 to set aside at least 10% of its after-tax profit based on PRC accounting standards each year to its general
reserves until its cumulative total reserve funds reaches 50% of its registered capital. These reserve funds, however, may not be
distributed as cash dividends.
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C.
Organizational Structure
The following diagram illustrates our corporate structure, including our principal subsidiaries and variable interest entities as of
the date of this annual report:
Notes:
(1) Omnigold Holdings Ltd. is currently 84% owned by Branco Overseas Ltd., 10% owned by Lead Spriti Management Ltd and 6% owned by Cando Management
Limited. Lead Spriti Management Ltd is wholly owned by an independent third party. Cando Management Limited is wholly owned by an employee of our company.
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(2) Beijing Yisheng Leju Information Services Co., Ltd., or Beijing Leju, is a variable interest entity established in China in 2008 and is currently 80% owned by Mr.
Xudong Zhu and 20% owned by Mr. Yinyu He, and each of Shanghai Leju Hao Fang Information Service Co., Ltd., or Leju Hao Fang and Beijing Jiajujiu E-
Commerce Co., Ltd., or Beijing Jiajujiu is a variable interest entity established in China in 2011 and is currently 70% owned by Mr. Yinyu He and 30% owned by Mr.
Weijie Ma. Through a series of contractual arrangements, Beijing Leju, Leju Hao Fang and Beijing Jiajujiu are considered the primary beneficiary of these
companies, and we have consolidated the financial results of these companies in our consolidated financial statements under the U.S. GAAP for accounting purposes.
Neither Leju nor its investors has an equity ownership in, direct foreign investment in, or control through such ownership or investment of, the variable interest
entities, and the contractual arrangements are not equivalent to an equity ownership in the business of the variable interest entities. See more information below in this
section. The registered business scope of each of Shanghai Yi Yue, Leju IT, Shanghai SINA Leju, Shanghai Fangxin and Beijing Maiteng contains the business of
development of computer software, which falls in the encouraged category for foreign investment in the currently effective Foreign Investment Industrial Guidance
Catalogue. The registered business scope of the VIEs and their subsidiaries which are engaged in real estate agency and brokerage business contain the business of
real estate brokerage service, which was removed from the restricted category for foreign investment in the Foreign Investment Industrial Guidance Catalogue.
Therefore, the business of real estate brokerage service now fall in the permitted category for foreign investment under PRC law, along with the other businesses
listed in the registered business scope of each of Shanghai Yi Yue, Leju IT, Shanghai SINA Leju, Shanghai Fangxin, Beijing Maiteng, and all its subsidiaries, which
are not listed in the new Foreign Investment Industrial Guidance Catalogue. City Rehouse, Shanghai Leju Hao Fang, Beijing Leju and Beijing Jiajujiu, wholly owned
8, 3, 60 and 2 subsidiaries, respectively.
PRC laws and regulations currently prohibit foreign investors from holding more than 50% of a foreign-invested
telecommunications enterprise that provides commercial internet information services, which are one type of value-added
telecommunications services. Because of such restriction, our internet information services are conducted through consolidated variable
interest entities in China, namely Beijing Leju, Leju Hao Fang and Beijing Jiajujiu, or the variable interest entities.
We have entered into, through our PRC subsidiaries, 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. 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 subsidiaries and branches; (ii) receive substantially all of the economic benefits from the three
consolidated variable interest entities and their subsidiaries in consideration for the services provided by our PRC subsidiaries; and (iii)
have an exclusive option to purchase all or part of the equity interests in the variable interest entities, when and to the extent permitted by
PRC law, or request any existing shareholder of the variable interest entities to transfer all or part of the equity interest in the variable
interest entities to another PRC person or entity designated 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
PRC entities and account for them as variable interest entities, and consolidate the financial results of these entities into our financial
statements in accordance with U.S. GAAP. Substantially all of our revenues are derived from the variable interest entities and we rely on
dividends and service fees paid to us by our PRC subsidiaries and the variable interest entities in China. Entities apart from the variable
interest entities contributed in aggregate 0.1%, 0.0% and 0.0% of our total net revenues in 2021, 2022 and 2023, respectively. Our
operations not conducted through contractual arrangements with the variable interest entities primarily consist of outsourcing
arrangements business, support services for online advertising business and agency services included with our e-commerce business. In
2021, 2022 and 2023, the total amount of service fees that our PRC subsidiaries received from the variable interest entities under all the
service agreements between our PRC subsidiaries and consolidated variable interest entities was $17.5 million, $29.8 million and $10.3
million, respectively. As of December 31, 2023, the amount of service fees receivable from by the variable interest entities was $7.9
million.
In November 2020, the contractual arrangements with Beijing Leju, Leju Hao Fang and Beijing Jiajujiu were amended and
restated by new sets of VIE contractual arrangements, more details of which are summarized below.
The following is a summary of the currently effective contractual arrangements relating to the variable interest entities:
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Agreements that Provide Us with Effective Control over the variable interest entities
Exclusive Call Option Agreement. Our wholly owned indirect subsidiary, Shanghai SINA Leju, has entered into an exclusive
option agreement with the variable interest entity, Beijing Leju, and its shareholders. Our wholly owned indirect subsidiary, Shanghai Yi
Yue, has entered into an exclusive call option agreement with the variable interest entity, Leju Hao Fang, and its shareholders. Our PRC
subsidiary, Beijing Maiteng, has entered into an exclusive option agreement with the variable interest entity, Beijing Jiajujiu, and its
shareholders. In each case, under the exclusive call option agreement each PRC subsidiary of our Company has the rights to require
shareholders of the applicable variable interest entity to transfer any or all their equity interests in the applicable variable interest entity to
the respective PRC subsidiary of our Company and/or a third party designated by it, in whole or in part at any time and from time to
time, for considerations equivalent to the respectively outstanding loans owed 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
government authorities or the China laws request that another amount be used as the purchase price, in which case the purchase price
shall be the lowest amount under such request. Each exclusive call option agreement shall remain effective unless terminated in the event
that the entire equity interests held by shareholders in the applicable variable interest entity have been transferred to the 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 Leju granted an interest-free loan of RMB8.0 million to Mr. Xudong Zhu and RMB2.0 million to Mr. Yinyu He, respectively,
solely for their investment in Beijing Leju. Pursuant to a loan agreement among Shanghai Yi Yue, Mr. Yinyu He and Mr. Weijie Ma,
Shanghai Yi Yue granted an interest-free loan 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 a loan agreement among Beijing Maiteng, Mr. Yinyu He and Mr. Weijie Ma, Beijing
Maiteng granted an interest-free loan of RMB10.5 million to Yinyu 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 under the exclusive call option agreement, or when certain defined termination events occur, such as if the lender sends a written
notice demanding 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 variable 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. If the proceeds of such transfer is equal to or less than the principal of the loan under the loan agreement, the loan is
considered interest-free. If the proceeds of such transfer is higher than the principal of the loan under the loan agreement, any surplus is
considered interest for the loan under the loan agreement.
Powers of Attorney. Our wholly owned indirect subsidiary, Shanghai SINA Leju, has entered into a powers of attorney with the
variable interest entity, Beijing Leju, and its shareholders. Our wholly owned indirect subsidiary, Shanghai Yi Yue, has entered into a
powers of attorney with the variable interest entity, Leju Hao Fang, and its shareholders. Our PRC subsidiary, Beijing Maiteng, has
entered into a powers of attorney with the 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 of our Company and its designated persons (including directors and their successors and liquidators replacing the directors but
excluding those non-independent or who may give rise to conflict of interest) as their attorneys-in-fact to exercise on their behalf, and
agreed and undertook 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 in the applicable variable interest entity.
Each powers of attorney shall remain effective for so long as each shareholder holds equity interest in the applicable variable
interest entity.
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Equity Pledge Agreement. Our wholly owned indirect subsidiary, Shanghai SINA Leju, has entered into an equity pledge
agreement with the variable interest entity, Beijing Leju, and its shareholders. Our wholly owned indirect subsidiary, Shanghai Yi Yue,
has entered into an equity pledge agreement with the variable interest entity, Leju Hao Fang, and its shareholders. Our PRC subsidiary,
Beijing Maiteng, has entered into an equity pledge agreement with the 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 they own, including any interest or dividend paid for the shares, to the applicable
PRC subsidiary of our Company as a security interest to guarantee the performance of the contractual obligations and the payment of
outstanding debts. The pledge in respect of the applicable variable interest entity takes effect upon the completion of registration with the
administration for industry and commerce and shall remain valid until after all the contractual obligations of the applicable variable
interest entity and its shareholders under the contractual arrangements have been fully performed and all the outstanding debts of the
applicable variable interest entity and its shareholders under the contractual arrangements have been fully paid.
Upon the occurrence and during the continuance of an event of default (as defined in each equity pledge agreement), each PRC
subsidiary of our Company shall have the right to require the applicable variable interest entity’s shareholders to immediately pay any
amount payable by the applicable variable interest entity under the 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 the applicable equity pledge agreement, including without limitations, being paid in priority with the equity
interests based on the monetary valuation that such equity interests are converted into or from the proceeds from auction or sale of the
equity interest upon written notice to the shareholders of the applicable variable interest entity.
The registration of each equity pledge agreement as required by the laws and regulations will be completed in accordance with
the 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 claim any interests in the respective variable interest entity (together with any other interests therein) or exert influence on the
day-to-day management of the respective variable interest entity; and (ii) in the event of his death, incapacity, divorce or any other event
which causes his inability to exercise his rights as a shareholder of the respective variable interest entity, he will take necessary actions to
safeguard his interests in the respective variable interest entity (together with any other interests therein) and his successors (including his
spouse) will not claim any interests in the respective variable interest entity (together with any other interests therein) to the effect that
the shareholders’ interests in the respective variable interest 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) the respective shareholder’s interests in the respective variable interest entity (together with any other interests therein) do not fall
within the scope of communal properties, and (ii) she has no right to or control over such interests of the respective shareholder and will
not have any claim on such interests.
Agreements that Transfer Economic Benefits of the variable interest entities to Us
Exclusive Business Cooperation Agreement. Our wholly owned indirect subsidiary, Shanghai SINA Leju, has entered into an
exclusive business cooperation agreement with the variable interest entity, Beijing Leju. Our wholly owned indirect subsidiary, Shanghai
Yi Yue, has entered into an exclusive business cooperation agreement with the variable interest entity, Leju Hao Fang. Our PRC
subsidiary, Beijing Maiteng, has entered into an exclusive business cooperation agreement with the variable interest entity, Beijing
Jiajujiu.
Pursuant to each such exclusive business cooperation agreement the applicable PRC subsidiary of our Company provides the
applicable variable interest entity with a series of technical support, consultation and other services, the services fee shall consist of
100% of the total consolidated profit of the applicable variable interest entity after the deduction of any accumulated deficit of the
variable interest entities in respect of the preceding financial year(s), operating costs, expenses, taxes and other statutory contributions.
Notwithstanding the foregoing, 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 a monthly basis and issue a corresponding invoice to the applicable variable interest entity.
Notwithstanding the payment arrangements in each exclusive business cooperation agreements, the PRC subsidiary of our Company may
adjust the payment time and payment method, and the applicable variable interest entity will accept any such adjustment.
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In addition, absent the prior written consent of each PRC subsidiary of our Company, during the term of the applicable exclusive
business cooperation agreement, with respect to the services subject to the exclusive business cooperation agreement and other matters,
the applicable variable interest entity shall not directly or indirectly accept the same or any similar services provided by any third party
and shall not establish cooperation relationships similar to that formed by the applicable exclusive business cooperation agreement with
any third party. Each PRC subsidiary of our Company may appoint other parties, who may enter into certain agreements with the
applicable variable interest entity, to provide the 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
exclusive proprietary rights and interests in any and all intellectual property rights developed or created by the applicable variable
interest entity during the performance of the applicable exclusive business cooperation agreement.
Each exclusive business cooperation agreement shall remain effective unless terminated (a) in accordance with the provisions of
the applicable exclusive business cooperation agreement; (b) in writing by the applicable PRC subsidiary of our Company; or (c) renewal
of the expired business period of either the applicable PRC subsidiary of our Company or the applicable variable interest entity is denied
by the government authorities, at which time the applicable exclusive business cooperation agreement will terminate upon termination of
that business period.
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 laws and regulations; and
● Each of the contractual arrangements described above, in each case governed by PRC law, is valid and binding and
enforceable in accordance with their respective terms based on currently effective PRC laws and regulations, and do not
violate PRC laws or regulations currently in effect.
However, as advised by Fangda Partners, our PRC legal counsel, there are substantial uncertainties regarding the interpretation
and application of current or future PRC laws, rules and regulations, and accordingly, there can be no assurance that the PRC regulatory
authorities will not 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 PRC regulatory authorities determine that our contractual arrangements for operating our internet and advertising
business in China do not comply with PRC 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 for operating our advertising services business and real estate online business in
China do not comply with PRC governmental restrictions on foreign investment in the advertising industry or the internet information
service industry, we could be subject to severe penalties” and “—Our ability to enforce the equity pledge agreements between us and the
shareholders of Beijing Leju, Leju Hao Fang or Beijing Jiajujiu may be subject to limitations based on PRC laws and regulations.” In
addition, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business In China—Substantial uncertainties exist
with respect to the interpretation and implementation of the PRC Foreign Investment Law and how it may impact the viability of our
current corporate structure, corporate governance and business operations.”
D.
Property, Plants and Equipment
Our principal executive offices are located at S7-02 of Building 1 in Yard 22, Xidawang Road, with approximately 548 square
meters of office space. As of March 31, 2024, we leased properties with an aggregate gross floor area of approximately 10,100 square
meters for our 15 local offices across China and at our Hong Kong office. Our leased properties mainly consist of office premises, a
portion of which are leased from related parties. We believe our existing leased premises are adequate for our current business operations
and that additional space can be obtained on commercially reasonable terms to meet our future requirements.
ITEM 4B. UNRESOLVED STAFF COMMENT
Not applicable.
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ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with
our consolidated financial statements and the related notes included elsewhere in this annual report on Form 20-F. This discussion may
contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ
materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item
3. Key Information—D. Risk Factors” or in other parts of this annual report on Form 20-F.
A.
Operating Results
Overview
We are a leading O2O real estate services provider in China. We offer real estate e-commerce and online advertising services
through our online platform, which comprises local websites covering 405 cities, various mobile applications and Weixin mini programs.
We integrate our online platform with complementary offline services to facilitate residential property transactions.
E-Commerce. We offer e-commerce services primarily in connection with new residential property sales. Our O2O services for
new residential properties include (i) selling discount coupons and facilitating online property viewing, physical property visits and pre-
sale customer support, and (ii) issuing commission coupons and providing an information platform to individual brokers on which they
can refer potential individual property buyers to real estate developers with whom we work to earn commission for the successful
referrals. For discount coupons business, we earn revenue from the sale of discount coupons used for property purchases. For
commission coupons business, we earn the commission from the developer for the successful referrals. Our revenues from e-commerce
services in 2021, 2022 and 2023 were $411.1 million, $278.5 million and $266.1 million, respectively, representing 77.0%, 81.1% and
84.0%, respectively, of our total revenues for those periods. The e-commerce revenue of discount coupons was $411.1 million, $183.0
million and $28.4 million for the years ended December 31, 2021, 2022 and 2023, respectively. The revenue from commission coupons
business was nil, $95.5 million and $237.7 million for the years ended December 31, 2021, 2022 and 2023, respectively.
Online Advertising. We sell advertising on our contractor platform website and on various mobile applications. Historically, we
sold advertising primarily on the SINA new residential properties and home furnishing websites, which were operated by us up till April
2024. In addition, we were the exclusive advertising agent for the SINA home page and non-real estate websites with respect to
advertising sold to advertisers, including real estate developers and home furnishing suppliers. Our revenues from online advertising
services in 2021, 2022 and 2023 were $122.5 million, $64.7 million and $50.7 million, respectively, representing 22.9%, 18.9% and
16.0%, respectively, of our total revenues for those periods.
Historically, we offered fee-based online property listing services to real estate agents and free services to individual property
sellers. We operated the SINA real estate websites for listings of existing residential properties for sale or lease up till March 2024. Our
revenues from listing services in 2021, 2022 and 2023 were $0.5 million, $11,274 and nil, respectively.
We generated total revenues of $534.1 million, $343.2 million and $316.9 million in 2021, 2022 and 2023, respectively. We
incurred net loss of $149.9 million, $89.7 million and $55.8 million in 2021, 2022 and 2023, respectively.
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Significant Factors Affecting Our Results of Operations
The PRC real estate industry
Our results of operations have been, and are expected to continue to be, affected by the general performance of China’s real
estate industry. Conditions in China’s real estate industry have a significant impact on each of our business segments, and in particular on
our new home business, which relies significantly on the volume of new property launches by property developments and market
transaction volume.
● Economic growth, speed of urbanization and demand for residential and commercial properties in China. China’s
economic growth has been primarily concentrated in China’s urban areas, and economic growth, higher standards of living,
population growth and urbanization are primary drivers of demand for the purchase or rental of residential properties.
Because we focus on China’s urban areas, China’s economic growth and urbanization are important to our operations. The
PRC property industry is dependent on the overall economic growth 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 its policies and other economic measures. The PRC government regulates real estate purchases and
taxation associated with real estate transactions. For greater detail see “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 of operations” and “Item 3. Key Information—D. Risk Factors—Risks Related to Our
Business—Our business may be materially and adversely affected by government measures aimed at China’s real estate
industry.” The imposition of new policies, laws and regulations, or changes to current polices, laws and regulations, could
have a material impact on the real estate market in China, which would affect our business, financial condition 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 and the prices they can afford to pay. This impacts the number of properties that developers are able to market
and sell, which is a significant factor affecting our results of operations. The PRC government regulates the proportion of
the purchase price of a property that may be financed with credit and the price of credit is generally a function of
benchmark interest rates. To the extent that fluctuations in interest rates or regulatory changes impact the availability and
cost of financing for property purchases, conditions in the real estate industry, and our 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 residential real estate projects at affordable prices. Factors such as the overall economy, competition and government
land policies can affect the price and availability of new projects. The PRC government and the 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 of operations.
The PRC internet industry
We are an internet company and a majority of our revenue is generated from our e-commerce and online advertising services
provided on our websites. Therefore, our results of operations are heavily dependent on the continued development of China’s internet
industry. The internet has emerged 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 permissible business activities and foreign investment. Furthermore, the PRC government levies
business taxes, value-added taxes, surcharges and cultural construction 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 rate from the PRC tax authorities or under local governmental
policies. The imposition of new laws and regulations, or changes to current laws and regulations, could have a material impact on our
business, financial condition and results of operations.
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Our ability to innovate and market acceptance of our services
We operate in a competitive industry and the extent to which we are able to provide innovative e-commerce and advertising
services that are 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 early 2012, we introduced property price discount coupons as a means of generating buyers for our partner
developers in conjunction with online advertising and offline customer origination. In 2015 and 2016, we continually upgraded the site
visit experience of prospective property purchasers by launching new services including site visits through private car or virtual reality
technology. In December 2016 we launched new advertising 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 of big data-empowered advertising products became increasingly
popular among our developer clients, and our mobile marketing strategy has started to yield positive results. Our results of operations
will continue to be significantly affected by the extent to which our evolving e-commerce and advertising services, including any future
innovations that we may introduce, achieve success in the market.
Our ability to maintain and expand our online platform
Consumers are able to access our services through various websites and mobile applications, our telephone call center and at
property showrooms and other physical locations. Our internet presence includes local websites across China that we either operate
directly or outsource to local outsourcing partners. Since many of our customers in our new home business are one-time property buyers,
we depend on our online platform as a key driver for bringing in new business. The costs of maintaining and expanding our online
platform in order to continue to reach a broad base of customers have a significant effect on our results of operations.
Our ability to compete effectively
We face competition in each of our main business activities. We compete with other e-commerce providers for market share in
key markets, relationships with developers and for the acquisition of web traffic. We compete for talent with other online businesses and
to a lesser extent with traditional businesses. Our industry has become increasingly competitive, and such competition may continue to
intensify in future periods. As the barriers to entry for establishing internet-based businesses are typically low, it is possible for new
entrants to emerge and rapidly scale up their operations. We expect additional companies to enter the online real estate and home-related
internet service industry in China and a wider range of online services in this area to be introduced.
Our ability to expand into new geographic areas in China
A significant portion of our revenues is concentrated in China’s major urban centers. We expect them to continue to represent a
significant portion of our revenues in the near term. We also may expand into new geographic areas and sectors and increase our market
share in areas and sectors where we currently operate. As of December 31, 2023, we had established real estate-related content, search
services, marketing and listing coverage of 405 cities across China. Our ability to succeed in newly penetrated cities and cities where we
intend to increase our presence will have a substantial impact on our results of operations, and we may incur significant additional
operating expenses, including hiring new sales and other personnel, in order to expand our operations.
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Selected Statement of Operations Items
Revenues
E-commerce of discount coupons. We offer individual property buyers discount coupons that enable them to purchase specified
properties from real estate developers at discounts greater than the face value of the fees charged by us. Discount coupons are collected
initially upfront from the property buyers and are refundable at any time before they are used to purchase the specified properties. As
such, these fees are recorded as advance from customers in our consolidated balance sheets. In this context, we determine our customers
to be individual property buyers and have identified one single performance obligation to be the sale of discount coupons. We determine
the sale of discount coupons to be satisfied at a point in time only when confirmation letters are obtained from our customers or
developers that prove the use of the coupons. The transaction price is the discount coupon fees charged by us which is fixed in the
contract with individual property buyers. The e-commerce revenue of discount coupons was $411.1 million, $183.0 million and $28.4
million for the years ended December 31, 2021, 2022 and 2023, respectively.
E-commerce of commission coupons. We issue commission coupons and provide an information platform to individual brokers
on which they can provide information about potential individual property buyers to specific listings of real estate developers with whom
we work. As long as the potential buyers who were referred by individual brokers reach a specific deal with the real estate developer, the
individual brokers would redeem the commission coupons for the successful referrals, and we could earn the commission from the
developer for the successful referrals. In this case, we have identified our clients as real estate developers and have identified a single
performance obligation to provide the developer with successful referrals of the property purchases. We will recognize service revenue at
a certain point in time when the obligations were fulfilled which were confirmed by real estate developers. Any commissions and other
payments received in advance will be deferred until the obligations are fulfilled. The transaction price is the commission charged by us
and is fixed in the confirmation letter. We will pay commissions for the individual brokers’ successful referrals only after the redemption
of the commission coupons and the confirmation of the successful referrals of properties from real estate developers. We have the
discretion to determine the amount of commission paid for the individual brokers’ successful referrals. The revenue from commission
coupons business was nil, $95.5 million and $237.7 million for the years ended December 31, 2021, 2022 and 2023, respectively.
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.
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 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 entitled real estate brokers to post and make changes to information for properties in a particular area
on the website 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
recognized over time on a straight-line basis over the contract period of display and when collection is probable. The transaction price is
the fixed fee outlined in the contract. No rebates or discounts are given to the real estate brokers.
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Cost of revenues
Cost 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 equipment and fees paid to media outlets for advertising resources.
Selling, general and administrative expenses
Selling, general and administrative expenses comprise marketing expenses, compensation and benefits for personnel other than
editorial personnel, expenses of third-party professional services, rental payments relating to office and administrative functions and
depreciation of property and equipment used in our corporate offices and other administrative expenses. Our selling, general and
administrative expenses also include amortization of intangible assets that do not relate to internet content, including our license
agreement with SINA. Selling general and administrative expenses also include bad debt expenses. Bad debt can result from developer
customers not paying amounts owing to us for services rendered 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-
commerce projects and our own brand building, such as Leju property visit, sponsored marketing campaigns, online or print advertising,
public relations and sponsored events. We expense all marketing advertising costs as incurred and record these costs under the item of
selling, general and administrative expenses in the consolidated statements of operations when incurred. The nature of our direct
marketing activities is such that they are intended to attract subscribers for the online advertising and potential property buyers to
purchase the discount coupons.
Commissions under the commission coupons business are the fee paid for individual brokers’ successful referrals, upon the
redemption of the commission coupons and confirmation from the real estate developer. We expense all real estate agent commissions as
incurred and record these costs under the item of selling, general and administrative expenses in the consolidated statements of
operations when incurred. Any fee from the redemption of the commission coupons would be netted with the commissions for individual
brokers’ successful referrals on the consolidated statements of operations.
Share-based compensation expenses
In November 2013, we adopted a share incentive plan, or 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 and restricted share units. The maximum number of shares that may be issued pursuant to
all awards under the Leju Plan, or the Leju 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 Leju Award Pool was automatically increased by 7,553,422 ordinary shares. On
December 1, 2019, the Leju Award Pool was automatically increased by 7,833,224 ordinary shares. On December 1, 2022, the Leju
Award Pool was automatically increased by 8,020,119 ordinary shares. The Leju Plan expired on December 1, 2023. The size of the Leju
Award Pool was capped at 33,841,548 ordinary shares. Any share awards that are outstanding on the expiration date shall remain in force
according to the terms of the Leju Plan and the applicable award agreements. As of March 31, 2024, the aggregate number of our
ordinary shares underlying outstanding options granted under the Leju Plan is 9,507,804, and nil restricted shares granted under the Leju
Plan are outstanding.
In 2023, we recorded compensation expenses of $1.8 million for the options and restricted shares granted to our employees and
directors under the Leju Plan. As of December 31, 2023, we had $0.6 million of total unrecognized compensation expenses related to
unvested share options and restricted shares granted under the Leju Plan, which we expect to be recognize over a weighted-average
period of 0.31 year.
Other operating income
Our other operating income primarily relates to cash subsidies received by our subsidiaries in China from local governments to
encourage us to operate in certain local districts.
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In September 2023, we entered into an agreement with TM Home. Pursuant to this agreement, TM Home has entrusted the
operation of its online platform business to us starting from October 1, 2023. We agreed to reimburse TM Home for any loss incurred
from the operation and share any profit generated from the operation. The income or loss from the entrusted operation was recognized as
“other operating income (loss), net” in our consolidated financial statements and related notes. The agreement is subject to renewal upon
mutual agreement on December 31, 2024.
Interest income, net
We earn interest income primarily from bank deposits and interest income recognized relating to the financing component of the
transaction price of the services delivered, net of the interest expenses related to borrowings.
Other income, net
Other 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 the establishment 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 the Renminbi 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 taxes
We are incorporated in the Cayman Islands as an exempted company. The Cayman Islands currently levies no taxes on
corporations based upon profits, income, gains or appreciation. Payments of dividends and capital in respect of the shares will not be
subject to taxation in the Cayman Islands and no withholding will be required 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 to Cayman Islands income or corporation tax.
All dividends, interest, rents, royalties, compensation and other amounts paid by our subsidiaries incorporated in the British
Virgin Islands to persons who are not resident in the British Virgin Islands and any capital gains realized with respect to any shares, debt
obligations, or other securities of our company by persons who are not resident in the British Virgin Islands are exempt from all
provisions of the Income Tax Ordinance in the British Virgin Islands.
Our subsidiaries in Hong Kong are subject to a profit tax at the rate of 16.5% on assessable profit determined under the Hong
Kong tax regulations.
The Enterprise Income Tax Law applies a uniform 25% enterprise income tax rate to both foreign-invested enterprises and
domestic enterprises, except where a special preferential rate applies. In addition, the Enterprise Income Tax Law also provides a five-
year transitional period starting from its effective date for those enterprises that were established before March 16, 2007, the date of
promulgation of the Enterprise Income Tax Law, and that were entitled to preferential income tax rates under the then effective tax laws
or regulations.
Shanghai SINA Leju was granted the high and new technology enterprise status. 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 years for 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 technology enterprise”. We may have a tax benefit for periods for which we were profitable on a consolidated basis to the extent
our consolidated entities that incurred losses during the period were subject to income tax at a higher effective tax rate as compared with
consolidated entities that earned profits during the period.
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Under the Enterprise Income Tax Law, dividends payable to a non-PRC resident enterprise from our PRC subsidiaries are
subject to a withholding tax which may be as high as 20%, although under the detailed implementation rules of the Enterprise Income
Tax Law promulgated by the PRC authorities the effective withholding tax is currently 10%. Dividends of PRC subsidiaries that are
directly held by Hong Kong entities may benefit from a reduced withholding tax rate of 5% pursuant to the Arrangement between
Mainland China and Hong Kong for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on
Income, subject to the approval from the local branch of the State Administration of Taxation in accordance with the Administrative
Measures on Tax Treaty Treatment of Nonresidents (Trial) and other tax rules. Our Hong Kong subsidiaries have not sought approval for
such preferential withholding tax rate, given that no dividends have been paid by their respective PRC subsidiaries. Dividends from our
Hong Kong subsidiaries are exempt from withholding tax. Dividend payments are not subject to withholding tax in the British Virgin
Islands or the Cayman Islands.
Under the Enterprise Income Tax Law, enterprises that are established under the laws of foreign countries or regions and whose
“de facto management bodies” are located within the PRC territory are considered PRC resident enterprises, and will be subject to the
PRC enterprise income tax at the rate of 25% on their worldwide income. Under the implementation rules of the Enterprise Income Tax
Law, “de facto management bodies” are defined as the bodies that have material and overall management and control over the
manufacturing and business operations, personnel and human resources, finances and treasury, and acquisition and disposition of
properties and other assets of an enterprise. It remains unclear how the PRC tax authorities will interpret such a broad definition. We
cannot assure you that we will not be deemed to be a PRC resident enterprise under the Enterprise Income Tax Law and be subject to the
PRC enterprise income tax at the rate of 25% on our worldwide income. See “Item 3. Key Information—D. Risk Factor—Risks Related
to Doing Business in China—Dividends payable to us by our PRC subsidiaries may be subject to PRC withholding taxes or we may be
subject to PRC taxation on our worldwide income, and dividends distributed to our investors may be subject to PRC withholding taxes
under the Enterprise Income Tax 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 affiliates
Affiliate companies are entities over which we have significant influence but do not control. Investment in affiliates is
accounted for using the equity method of accounting. Under this method, our share of the post-acquisition profits or loss of affiliated
companies is recognized as income/(loss) from equity in affiliates in the income statement.
Net income (loss) attributable to non-controlling interests
Net income attributable to non-controlling interest relates to the minority interest in non-wholly-owned subsidiaries that we
consolidate.
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Results of Operations
The following table sets forth a summary of our consolidated results of operations for the periods indicated. This information
should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The
operating results in any period are not necessarily indicative of the results that may be expected for any future period.
Year Ended December 31,
2022
(in thousands of $, except share and per share data)
2021
2023
Revenues:
E-commerce
Online advertising
Listing
Total net revenues
Cost of revenues
Selling, general and administrative expenses
Other operating income (loss)
Loss from operations
Interest income, net
Other income (loss), net
Income (loss) before income taxes and loss from equity in affiliates
Income tax benefits
Loss before loss from equity in affiliates
Loss from equity in affiliates
Net loss
Less: Net income (loss) attributable to non-controlling interest
Net loss attributable to Leju Holdings Limited shareholders
Loss per ADS:
Basic
Diluted
Weighted average numbers of ADSs used in computation:
Basic
Diluted
411,097
122,522
498
534,117
(55,801)
(645,623)
560
(166,747)
3,130
209
(163,408)
13,498
(149,910)
(14)
(149,924)
1,010
(150,934)
278,464
64,707
11
343,182
(30,604)
(418,501)
298
(105,625)
2,335
1,496
(101,794)
12,120
(89,674)
(17)
(89,691)
(23)
(89,668)
266,134
50,720
—
316,854
(23,095)
(349,560)
(2,940)
(58,741)
1,261
(74)
(57,554)
1,781
(55,773)
—
(55,773)
161
(55,934)
(11.05)
(11.05)
(6.54)
(6.54)
(4.07)
(4.07)
13,665,216
13,665,216
13,704,238
13,704,238
13,754,135
13,754,135
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
Total revenues. China’s real estate industry experienced a steep downturn since the second half of 2021 and many real estate
developers faced severe operational challenges. The downturn had a direct and negative impact on our online advertising and e-
commerce businesses. Due to the continual decline of the real estate industry, the recoverable amount and time of some customers’
transaction consideration cannot be reasonably expected. Since January 1, 2022, Leju has not recognized the revenue from such
customers until the actual receipt of the transaction consideration. Total revenues decreased by 7.7% to $316.9 million in 2023 from
$343.2 million in 2022, primarily due to a decrease in revenues from e-commerce services and online advertising services. E-commerce
revenues decreased by 4.4% to $266.1 million in 2023 from $278.5 million in 2022, primarily due to a decrease in the e-commerce
revenue of discount coupons, partially offset by an increase in the e-commerce revenue of commission coupons. The e-commerce
revenue of discount coupons decreased by 84.5% to $28.4 million in 2023 from $183.0 million in 2022. The e-commerce revenue of
commission coupons increased by 148.9% to $237.7 million in 2023 from $95.5 million in 2022. Online advertising revenues decreased
by 21.6% to $50.7 million in 2023 from $64.7 million in 2022, primarily due to a decrease in property developers’ demand for online
advertising as China’s real estate industry experienced a steep downturn since the second half of 2022 and many real estate developers
faced severe operational challenges.
Cost of revenues. Cost of revenues decreased by 24.5% to $23.1 million in 2023 from $30.6 million in 2022, primarily due to
decreased cost of advertising resources purchased from media platforms related to our online advertising business.
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Selling, general and administrative expenses. Selling, general and administrative expenses decreased by 16.5% to $349.6
million in 2023 from $418.5 million in 2022, primarily due to the decreased marketing expenses related to the Company’s e-commerce
business.
Other operating income (loss). Other operating loss was $2.9 million in 2023, compared to other operating income of $0.3
million in 2022, primarily due to the reimbursement to TM Home of $3.1 million which was recognized as the other operating loss.
Loss from operations. As a result of the foregoing, we generated loss from operations of $58.7 million in 2023, compared to that
of $105.6 million in 2022.
Interest income, net. Interest income was $1.3 million in 2023 compared to $2.3 million in 2022, primarily due to the decreased
cash and cash equivalents.
Other income (loss), net. We had other net loss of $74.2 thousand in 2023 which was the foreign exchange loss, compared to
other net income of $1.5 million in 2022 which included foreign exchange gain of $1.2 million.
Income tax benefits. Income tax benefits were $1.8 million in 2023 compared to $12.1 million in 2022, due to the loss before
taxes and equity in affiliates for the two years.
Net loss. We generated net loss of $55.8 in 2023 compared to $89.7 million in 2022.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
Total revenues. China’s real estate industry experienced a steep downturn since the second half of 2021 and many real estate
developers faced severe operational challenges. The downturn had a direct and negative impact on our online advertising and e-
commerce businesses. Due to the continuous decline of the real estate industry, the recoverable amount and time of some customers’
transaction consideration cannot be reasonably expected. Since January 1, 2022, Leju has not recognized the revenue from such
customers until the actual receipt of the transaction consideration. Total revenues decreased by 36% to $343.2 million in 2022 from
$534.1 million in 2021, primarily due to a decrease in revenues from e-commerce services and online advertising services. E-commerce
revenues decreased by 32% to $278.5 million in 2022 from $411.1 million in 2021, primarily due to a decrease in revenue from discount
coupons, partially offset by the revenue from commission coupons business commenced from the second half of 2022. The e-commerce
revenue of discount coupons decreased by 55% to $183.0 million in 2022 from $411.1 million in 2021. The e-commerce revenue from
the commission coupons business from the real estate developers was $95.5 million in 2022. Online advertising revenues decreased by
47% to $64.7 million in 2022 from $122.5 million in 2021, primarily due to a decrease in property developers’ demand for online
advertising.
Cost of revenues. Cost of revenues decreased by 45% to $30.6 million in 2022 from $55.8 million in 2021, primarily due to
decreased cost of advertising resources purchased from media platforms, and decreased editorial personnel related costs.
Selling, general and administrative expenses. Selling, general and administrative expenses decreased by 35% to $418.5 million
in 2022 from $645.6 million in 2021, primarily due to the $97.5 million decrease in the bad debt provision, and decreased marketing
expenses related to our e-commerce business, partially offset by increased commission paid for the individual brokers’ successful
referrals in connection with the commission coupons business. The bad debt provision recorded in 2021 was mainly attributable to the
recognition of additional loss allowance on expected credit loss of the Company’s outstanding online advertising related receivables from
certain customers, whose credit quality worsened.
Other operating income. Other operating income was $0.3 million in 2022, compared to $0.6 million in 2021, due to decreased
cash subsidies received from local governments.
Loss from operations. As a result of the foregoing, we generated $105.6 million of loss from operation in 2022, compared to
$166.7 million of loss in 2021.
Interest income, net. Interest income was $2.3 million in 2022 compared to $3.1 million in 2021, mainly due to the increased
interest expense recognized relating to the short-term borrowings which was netted with the interest income.
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Other income, net. We had other net income of $1.5 million in 2022, compared to $0.2 million in 2021, mainly due to the
foreign exchange gain of $1.2 million in 2022.
Income tax benefits. Income tax benefits were $12.1 million and $13.5 million in 2022 and 2021, respectively, due to the loss
before taxes and equity in affiliates for the two years.
Net loss. We generated net loss of $89.7 in 2022 compared to $149.9 million in 2021.
Critical Accounting Estimates
We prepare our financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and
assumptions. We continually evaluate these estimates and assumptions based on the most recently available information, our own
historical experience and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates
is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our
estimates. The following descriptions of critical accounting judgments and estimates should be read in conjunction with our consolidated
financial statements and other disclosures included in this annual report.
Concentration of credit risk
Financial instruments that potentially expose us to concentrations of credit risk consist primarily of cash and cash equivalents,
accounts receivable 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
its customers in certain circumstances when accounts receivables’ aging is over one year. We establish an allowance for credit losses
primarily based upon factors surrounding the credit risk of specific customers, including creditworthiness of the clients, aging of the
receivables and other specific circumstances 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
Standard Codification Topic 326), since January 1, 2020, which requires measurement and recognition of current expected credit losses
for financial instruments held at amortized cost.
Our accounts receivable and contract assets, customer deposits, other receivables recorded in prepayments and other current
assets and amount due from related parties are within the scope of ASC Topic 326.
To estimate expected credit losses, we have identified the risk characteristics of its customers and these receivables are assessed
on an individual basis for customers with good credit rating (strategic type customers), with pledged credit risk (pledged type customers),
with high credit 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 and future development of environment as of the date when this report issued. This is assessed at each
quarter based on our specific facts and circumstances.
Balances of the allowance for credit losses for accounts receivable and contract assets by each risk category are as follows:
Balances of customers with pledged credit risk
Balances of customers with high credit risk
Balances of customers with normal risk
Total
98
As of December 31,
2022
2023
(in thousands of $)
2,354
105,189
4,306
111,849
2,120
99,692
2,166
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The carrying value of accounts receivable, contract assets, customer deposit, amount due from related parties and other
receivables recorded 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 accounts receivable
and contract assets are as follows:
Customer A
Accounts receivable, gross
Allowance for credit losses
Accounts receivable, net
Evaluation of long-lived assets
As of December 31,
2022
2023
(in thousands of $)
88,286
(88,286)
—
86,338
(86,338)
—
We evaluate its long-lived assets, such as fixed assets and purchased or acquired intangible assets with finite lives, for
impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in
accordance with ASC subtopic 360-10, Property, Plant and Equipment: Overall. When these events occur, we assess the recoverability of
the long-lived assets by comparing the carrying amount of the assets to future undiscounted net cash flow expected to result from the use
of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the
assets, we will recognize an impairment loss equal to the excess of the carrying amount over the fair value of the assets. Impairment of
long-lived assets were nil and nil as of December 31, 2022 and 2023, respectively.
Recent Accounting Pronouncements
See “Notes to Consolidated Financial Statements for the Years Ended December 31, 2021, 2022 and 2023—2. Summary of
Principal Accounting Policies—(ac) Recent issued accounting pronouncements not yet adopted.”
Impact of Foreign Currency Fluctuation
See “Item 3. Key Information-D. Risk Factors-Risks Related to Doing Business in China-Fluctuation in the value of the
Renminbi may have a material and adverse effect on your investment” and “Item 11. Quantitative and Qualitative Disclosures About
Market Risk-Foreign Exchange Risk.”
Impact of Governmental Policies
See “Item 3. Key Information-D. Risk Factors-Risks Related to Our Business-Our business may be materially and adversely
affected by government 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 Resources
Our principal sources of liquidity have been capital contributions from E-House, our initial public offering and concurrent
private placement to Tencent, and cash generated from operating activities. Our cash and cash equivalents consist of cash on hand and
deposits placed with banks, which are unrestricted as to withdrawal or use and have original maturities of three months or less.
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The following table sets forth a summary of our cash flows for the periods indicated:
2021
Net cash used in operating activities
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash, cash equivalents and restricted cash at the beginning of the year
Cash, cash equivalents and restricted cash at the end of the year
Year Ended December 31,
2022
(in thousands of $)
(107,976)
6
(52)
(124,747)
252,396
127,649
(39,889)
(318)
1,033
(33,311)
285,707
252,396
2023
(73,650)
2,581
(740)
(73,296)
127,649
54,353
In 2021, 2022 and 2023, we had a net loss of US$149.9 million, US$89.7 million and US$55.8 million, respectively. We had
negative cash flows from operations of US$39.9 million, US$108.0 million and US$73.6 million in 2021, 2022 and 2023, respectively.
As of December 31, 2023, our cash and cash equivalents was $48.2 million, restricted cash was $6.2 million and working capital was
negative 15.3 million. As a result, we have concerns about our ongoing operational capability for the next twelve months since the filing
date of this report.
These adverse conditions indicate that there is substantial doubt about our ability to continue as a going concern. The liquidity
of our company is dependent on our ability to enhance our operating cash flow, obtain capital financing from investors and borrowings
from commercial banks to fund our general operations. Our ability to continue as a going concern is dependent on our ability to
successfully execute our business plans. We plan to restructure our products which may generate better cash flows, such as commission
coupons business. We also plan to continue implementing our cost-control initiatives to improve cost and expense efficiency.
We may, however, need additional capital in the future. If we determine that our cash requirements exceed the amount of cash
and cash equivalents we have on hand at the time, we may seek to issue equity or debt securities or obtain credit facilities. The issuance
and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in
increased fixed obligations and could result in operating covenants that would restrict our operations.
However, there are material uncertainties relating to our successful implementation of our management’s business plans, which
lack sufficient historical data for evidence. Furthermore, there is no assurance that we will be able to obtain additional financings or
renew our current bank borrowings to fund our operations. These adverse conditions and events, as well as the material uncertainties
relating to our management’s plans, give rise to substantial doubt as to whether we will continue as a going concern. For a discussion of
these risks, see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business—We had incurred net loss and negative cash
flows from operating activities in the past, and we may not achieve or sustain profitability.”
Operating Activities
Net cash used in operating activities in 2023 was $73.7 million, primarily comprising net loss of $55.8 million adjusted for non-
cash transactions including depreciation and amortization of $12.0 million, allowance for credit losses of $8.3 million and a $29.5
million increase in amounts due from related parties.
Net cash used in operating activities in 2022 was $108.0 million, primarily comprising net loss of $89.7 million adjusted for
non-cash transactions including depreciation and amortization of $12.6 million, allowance for credit losses of $13.7 million and a $55.1
million decrease in other current liabilities and accrued expenses.
Net cash used in operating activities in 2021 was $39.9 million, primarily comprising net loss of $149.9 million adjusted for
non-cash transactions 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 contract assets.
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Investing Activities
Net cash provided by investing activities in 2023 was $2.6 million, primarily comprised of $2.6 million for the disposal of
property and equipment.
Net cash provided by investing activities in 2022 was $6,352.
Net cash used in investing activities in 2021 was $0.3 million, primarily comprised of $1.1 million for the purchase of property
and equipment as well as intangible assets, partially offset by $0.8 million for the proceeds from disposal of property and equipment.
Financing Activities
Net cash used in financing activities in 2023 was $0.7 million, primarily due to the repayment of short-term borrowings of $0.7
million.
Net cash used in financing activities in 2022 was $0.05 million, primarily comprising of $0.05 million for the interest expense
related to short-term borrowings.
Net cash provided by financing activities in 2021 was $1.0 million, mainly due to the proceeds from short-term borrowings of
$0.8 million.
Holding Company Structure
In the future, we may rely significantly on dividends and other distributions paid by our PRC subsidiaries for our cash and
financing requirements. There may be potential restrictions on the dividends and other distributions by our PRC subsidiaries. The PRC
tax authorities may require us to adjust our taxable income under the contractual arrangements that each of Shanghai SINA Leju,
Shanghai Yi Yue and Beijing Maiteng currently has in place with the relevant consolidated variable interest entity in a way that could
materially and adversely affect the ability of Shanghai SINA Leju, Shanghai Yi Yue and Beijing Maiteng to pay dividends and make
other distributions to us. In addition, under PRC laws and regulations, our PRC subsidiaries including Shanghai SINA Leju, Shanghai Yi
Yue and Beijing Maiteng, each as a wholly foreign-owned enterprise in China, may pay dividends only out of their accumulated profits
as determined in accordance with PRC accounting standards and regulations. 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 a statutory reserve fund, until the aggregate amount of such
fund reaches 50% of their respective registered capital. At their discretion, our PRC subsidiaries may allocate a portion of their after-tax
profits based on PRC accounting standards to staff welfare and bonus funds. These reserve funds and staff welfare and bonus funds are
not distributable as cash dividends. Furthermore, our investments made as registered capital and additional paid in capital of our PRC
subsidiaries, consolidated variable interest entities and consolidated variable interest entities’ subsidiaries are also 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 China are restricted in their ability to transfer their net assets to us in the form of cash dividends, loans or advances. As of December
31, 2023, the amount of the restricted net assets, which represents registered capital and additional paid-in capital cumulative
appropriations made to statutory reserves, was $36.0 million.
As an offshore holding company, Leju is permitted under PRC laws and regulations to provide funding from the proceeds of its
offshore fund raising activities to its PRC subsidiaries only through loans or capital contributions, and to the variable interest entities
only through loans, in each case subject to the satisfaction of the applicable government registration and approval requirements. As a
result, there is uncertainty with respect to Leju’s ability to provide prompt financial support to its PRC subsidiaries and consolidated
variable interest entities when needed. Notwithstanding the foregoing, Leju’s PRC subsidiaries may use their own retained earnings
(rather than Renminbi converted from foreign currency denominated capital) to provide financial support to the variable interest entities
either through entrustment loans from the PRC subsidiaries to the 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 eliminated in our consolidated financial statements against the variable interest entities’ share capital.
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Material cash requirements
Our material cash requirements as of December 31, 2023 and any subsequent interim period primarily include operating lease
commitments.
We intend to fund our existing and future material cash requirements with our existing cash balance and other financing
alternatives. We will continue to make cash commitments to support the growth of our business.
Capital expenditures. Our capital expenditures amounted to $1.1 million, $0.1 million and $46,280 in 2021, 2022 and 2023,
respectively. In the past, our capital expenditures consisted principally of purchases of property and equipment and intangible assets used
in our operations. 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
corporate offices. As of December 31, 2023, the amount of total future lease payments under operating leases, whose weighted average
remaining lease term is 4.1 years, was $12.3 million, of which $3.1 million is short-term.
Long-term debt obligations. As of December 31, 2023, there were no long-term debt obligations consisting of the principal
amount and cash interests.
We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third
parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity, or that are
not reflected in our consolidated financial statements. Furthermore, we do not have retained or contingent interests in assets transferred to
an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We have not entered into contractual
arrangements that support the credit, liquidity or market risk for transferred assets. We do not have obligations that arise or could arise
from variable interests held in an unconsolidated entity, or obligations related to derivative instruments that are both indexed to and
classified in our own equity, or not reflected in the statement of financial position.
Other than as discussed above, we did not have any significant capital and other commitments, long-term obligations or
guarantees as of December 31, 2023.
C.
Research and Development, Patents and Licenses, etc.
Research and Development
We believe that the continual development of our technology will be vital to maintaining our long-term competitiveness. As of
December 31, 2023, we employed 130 software developers and other technology-related personnel. We have developed a technology
infrastructure that is specifically used for our real estate and home related internet website services. In addition, we have also developed
our proprietary mobile applications including “Leju Home Purchase” (an upgraded version of “Pocket Leju”), “Leju Er Shou Fang”, “Lai
Ke” and “Leju Finance”.
Intellectual Property
Our copyrights, trademarks, trade secrets, domain names and other intellectual property are important to our business. We rely
on intellectual property laws and contractual arrangements with our key employees and certain of our customers, collaborators and others
to protect our intellectual property rights. Despite these measures, we cannot assure you that we will be able to prevent unauthorized use
of our intellectual property, which would adversely affect our business.
As of March 31, 2024, we owned 152 registered copyrights, owned or licensed 332 registered trademarks in China, had 28
trademark applications in various industry categories pending with the China Trademark Office, had one patent application in China and
owned or licensed 59 registered domain names.
We own the software copyrights of our mobile applications “Leju Home Purchase” (an upgraded version of “Pocket Leju”),
“Leju Er Shou Fang”, “Lai Ke” and “Leju Finance”. We have registered our software copyrights of substantially all of our mobile
applications.
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D.
Trend Information
China’s real estate industry experienced a steep downturn since the second half of 2021 and many real estate developers faced
severe operational challenges. This had a direct and negative impact on our online advertising and e-commerce businesses. Other than as
disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period
since January 1, 2024 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity
or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future results of operations or
financial conditions.
E.
Critical Accounting Estimates
We prepare our financial statements in conformity with U.S. GAAP, which requires us to make estimates and assumptions that
affect our reporting of, among other things, assets and liabilities, contingent assets and liabilities and total revenues and expenses. On an
on-going basis, we evaluate 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 other sources. Since our financial reporting process inherently relies on the use of estimates
and assumptions, our actual results could differ from what we expect.
We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters
that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to
occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material
impact on our financial condition or results of operations. Such critical estimates are discussed below. For further information on our
other significant accounting estimates, 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, customer deposits, other receivables recorded
in prepayments and other current assets and amounts due from related parties
We have estimated an allowance for current expected credit losses on accounts receivables, contract assets, customer deposits,
other receivables recorded in prepayments and other current asset, and amounts due from related parties based on the credit risk of the
respective receivables. Significant judgment is required in assessing the risk characteristics of our customers. The allowance amount has
been assessed on an individual basis for customers with good credit rating (strategic type customers), with pledged credit risk (pledged
type customers), with high credit 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 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 asset
Significant judgment is required in determining income tax expense based on tax laws in the various jurisdictions in which we
operate. In calculating our effective income tax rate, estimates are required regarding the timing and amount of taxable and deductible
items which will adjust the pre-tax income earned in various tax jurisdictions. Through our interpretation of local tax regulations,
adjustments to pretax income for income earned in various tax jurisdictions are reflected within various tax filings. Although we believe
that our estimates and judgments discussed herein are reasonable, actual results may be materially different than the estimated amounts.
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We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized.
Significant judgment is required in determining the valuation allowance. In assessing the need for a valuation allowance, we consider all
sources of taxable income, including projected future taxable income, reversing taxable temporary differences and ongoing tax planning
strategies. If it is determined that 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, we would adjust the valuation allowance in the period in which such a determination is made, with
a corresponding increase or decrease to earnings.
Safe Harbor
This annual report on Form 20-F contains forward-looking statements. These statements are made under the “safe harbor”
provisions of Section 21E of the Exchange Act. These forward-looking statements can be identified by terminology such as “will”,
“expects”, “anticipates”, “future”, “intends”, “plans”, “believes”, “estimates”, “may”, “intend”, “is currently reviewing”, “it is possible”,
“subject to” and similar statements. Among other things, the sections titled “Item 3. Key Information—D. Risk Factors”, “Item 4.
Information on the Company”, and “Item 5. Operating and Financial Review and Prospects” in this annual report on Form 20-F, as well
as our strategic and operational plans, contain forward-looking statements. We may also make written or oral forward-looking statements
in our filings with the SEC, in our annual report to shareholders, in press releases and other written materials and in oral statements made
by our officers, directors or employees to third parties. Statements that are not historical facts, including statements about our beliefs and
expectations, are forward-looking statements and are subject to change, and such change may be material and may have a material and
adverse effect on our financial condition and results of operations for one or more prior periods. Forward-looking statements involve
inherent risks and uncertainties A number of important factors could cause actual results to differ materially from those contained, either
expressly or impliedly, in any of the forward-looking statements in this annual report on Form 20-F. Potential risks and uncertainties
include 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 the real 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 failure to satisfy customer needs and/or other reasons,
our inability to successfully execute the strategy of expanding into new geographical markets in China or the business plans for strategic
alliances and other new business initiatives, our failure to manage growth, our loss of competitive advantage, 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 is as 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 under applicable law.
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A.
Directors and Senior Management
The following table sets forth information regarding our directors and executive officers as of the date of this annual report.
Directors and Executive Officers
Xin Zhou
Yinyu He
Canhao Huang
Minyi Zhang
Haiyan Gu
Qiong Zuo
Li Yuan
Age
56
49
66
47
49
44
43
Position/Title
Executive Chairman
Director and Chief Executive Officer
Director
Director
Director
Chief Operating Officer
Chief Financial Officer
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Xin Zhou has served as our Executive Chairman since our inception. Mr. Zhou currently is an executive director and chairman
of E-House Enterprise. 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 April 2012. 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 real estate industry. From 1997 to 2003, he served as director and
general manager of Shanghai Real Estate Exchange Co., Ltd., and as deputy general manager of Shanghai Jinfeng Investments Co., Ltd.,
a company listed on the Shanghai Stock Exchange. Mr. Zhou was named as the “Person of the Year of Chinese Economy” jointly by
SINA and People’s Daily in 2016, received the “China Business Leader Award” from the Eighth China Business Leader Forum in 2016,
received the “Outstanding Entrepreneur Award” from Enterprise Asia in 2010, awarded the “Special Contribution Award in China’s Real
Estate Services Industry” in 2005, and named one of the “ten most influential people in the real estate services industry in 2005” from
China City Property Exposition Commission. Mr. Zhou currently serves as vice chairman of China Real Estate Association, director of
The Nature Conservancy China, vice chairman of China Real Estate Developers and Investors Associations, and chairman of Real Estate
Service Committee of China Real Estate Association. He is also the rotating chairman of Shanghai Entrepreneur Association. Mr. Zhou
received his bachelor degree from Shanghai University in China.
Yinyu He has served as our director since May 2024 and chief executive officer since September 2011. He served as our vice-
president from January 2011 to August 2011 and director of strategic planning from August 2008 to December 2010. Prior to joining
Leju, Mr. He was the publisher and chief editor of UBM’s InformationWeek 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’s degree from Shanghai University.
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 to December 2009, and vice president from 2000 to 2007. Prior to joining E-House, Mr. Huang served as a
manager at Shanghai No. 1 Department Store 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 &
Operation Department of Tencent Marketing Solution and a director of Yiche Holding Limited. Mr. Zhang is in charge of the
department’s overall business strategy and development, and leads various teams including vertical sales, operations and marketing
insights service teams. He joined Tencent in 2009. Mr. Zhang received his bachelor’s degree in automation from Shanghai Jiao Tong
University and his MBA from China Europe International Business School (CEIBS).
Haiyan Gu has served as our director since May 2024. Ms. Gu currently serves as General Counsel of SINA Corporation and
Weibo Corporation (Nasdaq: WB and HKEX: 9898), the leading social media platform in China and a majority owned subsidiary of
SINA. Since joining SINA in 1999, Ms. Gu served as the Director for Legal Department from July 2001 to February 2013, and General
Counsel since February 2013. Prior to joining SINA, Ms. Gu served as a full-time lawyer of Beijing Mincheng Law Firm from February
1999 to June 2001. Ms. Gu received her master’s degree in International Law from University of International Business and Economics
in 2004 and her bachelor’s degree in International Economic Law from China University of Political Science and Law in 1997.
Qiong Zuo has served as our chief operating officer since March 2018. She previously was chief executive officer of the
Innovation and Research Center of E-House, an affiliate of our controlling shareholder E-House Enterprise, from January 2015. From
2012 to 2015, Ms. Zuo served as vice president 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 a bachelor’s degree in business administration from Hubei University of
Economics.
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Li Yuan has served as our chief financial officer since February 2023. Ms. Yuan had served as our deputy chief financial officer
since June 2017. Prior to that, she had been the head of investor relations of E-House, an affiliate of our controlling shareholder E-House
Enterprise, since November 2008. Ms. Yuan received her master’s degree in business administration from Johnson & Wales University.
B.
Compensation of Directors and Executive Officers
For the year ended December 31, 2023, we paid an aggregate of approximately $0.3 million in cash to our executive officers.
We paid an aggregate of approximately $0.1 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 the 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 Agreements
We have entered into employment agreements with each of our executive officers. Under these agreements, each of our
executive officers is employed for a specified time period. We may terminate employment for cause, at any time, without advance notice
or remuneration, for certain acts of the executive officer, such as conviction or plea of guilty to a felony or any crime involving moral
turpitude, gross negligence or dishonest acts to our detriment, or misconduct or a failure to perform agreed duties. We may also terminate
an executive officer’s employment without cause upon sixty days advance written notice. In such case of termination by us, we will
provide severance payments to the executive officer as set forth in the employment agreement. The executive officer may resign at any
time with a one-month advance written notice.
Each executive officer has agreed to hold, both during and after the termination or expiry of his or her employment agreement,
in strict confidence and not to use, except as required in the performance of his or her duties in connection with the employment or
pursuant to applicable law, any of our confidential information or trade secrets, any confidential information or trade secrets of our
clients or prospective clients, or the confidential or proprietary information of any third party received by us and for which we have
confidential obligations. The executive officers have also agreed to disclose in confidence to us all inventions, designs and trade secrets
which they conceive, develop or reduce to practice during the 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 or her employment and typically for one year following the last date of employment. Specifically, each executive officer has
agreed not to (i) solicit from any of our customers, business of the same or similar nature to our business; (ii) solicit from any known
potential customer, business which of the 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 proposal by 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 our business or accounts including 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 agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons
in connection with claims made by reason of their being a director or officer of our company.
Share Incentive Plan
In 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 and restricted share units. The maximum number of shares that may be issued pursuant to all awards under the Leju Plan
is 10,434,783 ordinary shares of 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 the third, sixth and ninth anniversaries of the effective date of the Leju Plan. The Leju Plan was
amended and replaced in July 2014 containing substantially the same terms as the original Leju Plan. On December 1, 2016, the award
pool under the Leju Plan was automatically increased by 7,553,422 ordinary shares. On December 1, 2019, the Leju Award Pool was
automatically increased by 7,833,224 ordinary shares. On December 1, 2022, the Leju Award Pool
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was automatically increased by 8,020,119 ordinary shares. The Leju Plan expired on December 1, 2023. The size of the Leju Award Pool
was capped at 33,841,548 ordinary shares. Any share awards that are outstanding on the expiration date shall remain in force according
to the terms of the Leju Plan and the applicable award agreements.
In 2023, we recorded compensation expenses of $1.8 million for the options and restricted shares granted to our employees and
directors under the Leju Plan. As of December 31, 2023, we had $0.6 million of total unrecognized compensation expenses related to
unvested share options and restricted shares granted under the Leju Plan, which we expect to be recognize over a weighted-average
period of 0.31 year.
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
committee or the full board of directors, as appropriate, will determine the provisions and terms and conditions of each option grant.
Award 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 lockup period following the effective date of a registration statement filed by us under the Securities Act, if so requested by us
or any representative of the underwriters in connection with any registration of the offering of any of our securities. The exercise price of
granted options may be amended or adjusted in the absolute discretion of our board of directors, or a committee designated by our board
of directors, without the approval of our shareholders 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 our subsidiaries 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 outstanding award will become fully vested and immediately exercisable, and the transfer restrictions on the awards will be
released and the repurchase or forfeiture rights will terminate immediately before the date of the change-of-control transaction provided
that the grantee’s continuous service with us 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 ten years 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
award agreement 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
and incentive share options may be exercised during the lifetime of the optionee only by the optionee.
Termination of the Plan. The plan terminated automatically on December 1, 2023. The termination will not impair the rights of
any award recipient unless agreed by the recipient.
As of March 31, 2024, the aggregate number of our ordinary shares underlying outstanding options granted under the Leju Plan
is 9,507,804, and nil restricted shares granted under the Leju Plan are outstanding.
The following table summarizes, as of March 31, 2024 the options and restricted shares granted under the plan to our executive
officers and directors and to other individuals as a group (including certain of our employees and E-House’s employees), excluding
awards that were forfeited or cancelled after their grant dates and without giving effect to the options that were exercised or restricted
shares that had vested, if any.
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Name
Xin Zhou
Yinyu He
Canhao Huang
Qiong Zuo
Li Yuan
Ordinary
Underlying
Options/Restricted
Shares
360,000 *(1)
100,000
60,000
60,000
30,000
120,000
100,000 *
120,000
250,000
150,000
150,000
150,000 *
500,000 *
400,000
15,000
30,000
30,000
60,000
150,000
120,000
100,000 *
300,000 *
200,000
15,000
60,000
60,000
60,000
Exercise
Price (2)
($/Share)
4.60
5.54
3.24
1.55
1.41
1.00
N/A
5.54
3.24
1.55
1.41
N/A
N/A
0.10
5.54
1.55
1.41
1.00
1.55
1.41
N/A
N/A
0.10
5.54
1.55
1.41
1.00
Date of Grant
Date of Expiration (2)
December 1, 2013
December 14, 2015
March 30, 2017
March 21, 2018
June 27, 2018
April 23, 2021
March 18, 2014
December 14, 2015
March 30, 2017
March 21, 2018
June 27, 2018
May 28, 2019
June 17, 2020
April 23, 2021
December 14, 2015
March 21, 2018
June 27, 2018
April 23, 2021
March 21, 2018
June 27, 2018
May 28, 2019
June 17, 2020
April 23, 2021
December 14, 2015
March 21, 2018
June 27, 2018
April 23, 2021
N/A
December 13, 2025
March 29, 2027
March 20, 2028
June 26, 2028
April 22, 2031
N/A
December 13, 2025
March 29, 2027
March 20, 2028
June 26, 2028
N/A
N/A
April 22, 2031
December 13, 2025
March 20, 2028
June 26, 2028
April 22, 2031
March 20, 2028
June 26, 2028
N/A
N/A
April 22, 2031
December 13, 2025
March 20, 2028
June 26, 2028
April 22, 2031
Other individuals as a group
10,082,633 ** 0.10 to 9.68 December 1, 2013 to April 23, 2021 April 27, 2025 to April 22, 2031 or N/A
Notes:
(1) These options were subsequently surrendered for cancellation in exchange for the same number of restricted shares having the same vesting schedule 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 shares vesting on each of the first,
second and third anniversary of the grant date.
* Represents restricted shares.
** Includes options and restricted shares.
C.
Board Practices
Our board of directors consists of five directors. A director is not required to hold any shares in our company by way of
qualification. A director who to his knowledge is in any way, whether directly or indirectly, interested in a contract or arrangement or
proposed contract or arrangement with our company must declare the nature of his interest at a meeting of the directors at which the
question of entering into the contract 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 he knows that he is or has become so interested. Subject to the disqualification by the chairman of the
board meeting, a director may vote in respect of any contract or arrangement or proposed contract or arrangement notwithstanding that
he may be interested therein and if he does so his vote shall be counted and he may be counted in the quorum at the board meeting at
which such contract or arrangement or proposed contract or arrangement is considered. The directors may exercise all the powers of the
company to borrow money, to mortgage or charge all or any part of its undertaking, property and assets (present and future) and uncalled
capital, and subject to the Companies Act of the Cayman Islands, to issue debentures, bonds or other securities, whether outright or as
collateral security for any debt, liability or obligation of our company or of any third party. None of our non-executive directors has a
service contract with us that provides for benefits upon termination of service.
In 2023, our board of directors held meetings or passed unanimous written resolution in lieu of meeting six times.
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Committees of the Board of Directors
As Leju is not currently listed on any stock exchange, Leju is not subject to any listing rules or listing standards. On May 6,
2024, Leju’s independent directors resigned from its board of directors and Leju’s board of directors resolved to dissolve the audit
committee, the compensation committee and the nominating and corporate governance committee. Leju’s board of directors has assumed
the functions and responsibilities of these committees since May 2024. There are no independent directors on Leju’s board of directors as
of the date of this annual report. For risks relating to Leju’s current corporate governance practice, see “Item 3. Key Information—D.
Risk Factors—Risks Related to Our ADSs—As Leju is an exempted company incorporated in the Cayman Islands and not listed on any
stock exchange, its corporate governance practices may differ significantly from those of companies incorporated in Delaware or other
states in the United States or those of companies listed on a stock exchange, and these practices may afford less protection to
shareholders.”
Duties of Directors
Under Cayman Islands law, our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly
and a duty 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 directors also owe to our company a duty to act with such care and diligence that a reasonably prudent person would
exercise in comparable circumstances and 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 a greater degree of skill than may reasonably be expected from a person of his
knowledge and experience. However, English and commonwealth courts have moved towards an objective standard with regard to the
required skill and care and these authorities are likely to be followed in the Cayman Islands. In fulfilling their duty of care to us, our
directors must ensure compliance with our memorandum and articles of association, as amended and restated from time to time, and the
class rights vested thereunder in the holders of the shares. Our company has the right to seek damages if a duty owed by the directors is
breached. A shareholder may in certain circumstances have rights to damages if a duty owed by the directors is breached.
Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs. The
functions and 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 Officers
Our 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 hold office until such time as they are removed from office by ordinary resolution of the shareholders or by the board or their
office is otherwise vacated. A director will cease to be a director if, among other things, the director (i) becomes bankrupt or has a
receiving order made against him or suspends any payment or compounds with his creditors; (ii) dies or becomes of unsound mind; (iii)
resigns his office by notice in writing to the company; (iv) without special leave of absence from our board of directors, is absent from
meetings of our board 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.
Employees
As of December 31, 2021, 2022 and 2023, we had 2,434, 1,326 and 871 employees, respectively. The decline in 2022 was
primarily due to the operational challenges from the real estate developers and the impact of the COVID-19 pandemic resurgence,
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which caused a decline in both real estate development and sales, largely impacting our online advertising and e-commerce businesses.
The decline in 2023 was primarily due to the operational challenges from other real estate developers and the overall downturn of
Chinese economy. The table sets forth the number of employees by area of business as of December 31, 2023:
Sales
Software Developers and Other Technology-related
Editorial
Customer Support
Corporate Offices
Total
Number of
Employees
Percentage of
Employees
240
130
137
241
123
871
27.6 %
14.9 %
15.7 %
27.7 %
14.1 %
100.0 %
We pay our sales staff a combination of salaries and sales commissions and pay salaries to all other employees. We believe that
we maintain 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
employees must undergo intensive training during their three-month probation period. We also invite outside experts, including experts
from the E-House Research and Training Institute, to provide ongoing classroom training to our employees. The human resources
department is responsible for implementing 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 sales and marketing skills of our sales staff. In addition to training for new hires, our sales staff participate in weekly
operating meetings that include additional training opportunities.
We conduct quarterly performance evaluations for all employees and use both performance-based bonuses and job promotions
as incentives to encourage strong performance. We strive to maintain a collaborative corporate culture and our mid-level and senior
employees are generally eligible to participate in our share incentive plan.
E.
Share Ownership
The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of March 31, 2024
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.
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As of March 31, 2024, we had 137,839,249 ordinary shares issued and outstanding, excluding the 3,180,170 ordinary shares
issued to our depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards granted
under our share incentive plan. Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In
computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares
that the person has the right to acquire within 60 days from March 31, 2024, including through the exercise of any option, warrant or
other right or the conversion of any other security. These shares, however, are not included in the computation of the percentage
ownership of any other person.
Directors and Executive Officers:
Xin Zhou
Yinyu He
Canhao Huang
Minyi Zhang(1)
Haiyan Gu(2)
Qiong Zuo
Li Yuan
All Directors and Executive Officers as a Group(†)
Principal Shareholders:
TM Home Limited(3)
SINA Corporation(4)
Tencent Holdings Limited(5)
Notes:
* Less than 1% of our total outstanding shares.
Shares Beneficially Owned
Number
%
*
*
*
—
—
*
*
1,843,353
76,401,247
16,642,623
21,231,220
*
*
*
—
—
*
*
1.3
55.4
12.1
15.4
(†) Except where otherwise disclosed in the footnotes below, the business address of each of our directors and executive officers is S7-02, Building 1, Yard 22, Xidawang
Road, Chaoyang District, Beijing 100022, People’s Republic of China.
(1) The business address of Mr. Minyi Zhang is Tengyun Building, No. 397 Tianlin Road, Xuhui District, Shanghai 200233, People’s Republic of China.
(2) The business address of Ms. Haiyan Gu is Sina Plaza, No.8, Court Yard 10 West, Xibeiwang E. Rd, Haidian District, Beijing 100193, People’s Republic of China.
(3) Based on Schedule 13D/A filed with SEC on November 24, 2021 by the reporting persons, represents 76,401,247 ordinary shares held by TM Home. TM Home is a
company incorporated in the Cayman Islands with limited liability and owned as to 70.23% and 29.77% by E-House Enterprise and Alibaba Investment, respectively.
TM Home purchased 76,401,247 of ordinary shares from E-House Enterprise by issuing to the E-House Enterprise 6,854,839 of its ordinary shares. E-House
Enterprise 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, Grand Cayman KY1-1104, Cayman Islands and principal
office in Hong Kong is at 40th Floor, Dah Sing Financial Centre, 248 Queen’s Roard East, Wanchai, Hong Kong.
In April 2023, E-House Enterprise announced a proposed restructuring of certain notes previously issued by E-House Enterprise, or the Proposed Restructuring,
which may potentially result in a change in the controlling beneficial owner of our company. As contemplated in the Proposed Restructuring, a result of a series of
steps to be taken by E-House Enterprise, a special purpose vehicle established for the holders of certain notes of E-House Enterprise, or the Creditor SPV, and Alibaba
Investment and its affiliate will hold approximately 54.207% and 10.793% of the shares of TM Home, respectively, which will result in E-House Enterprise ceasing to
be a controlling beneficial owner of Leju. The remaining 35% of the shares of TM Home will be held by E-House Enterprise and its affiliates, of which 15% will be
transferred to a special purpose vehicle held by the members of senior management of TM Home appointed by E-House Enterprise. E-House Enterprise will further
use reasonable endeavors to sell or procure the sale of the shares of TM Home held by the Creditor SPV and Alibaba Investment, which will cause further changes in
the beneficial ownership of Leju. The potential change in Leju’s controlling beneficial owners is subject to the consummation of the Proposed Restructuring. As of
the date of this annual report, E-House Enterprise has not consummated the Proposed Restructuring. In addition, E-House Enterprise has commenced discussions with
its advisers on formulating a new restructuring plan.
(4) 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.
(5) Represents 21,231,220 held by THL O Limited, a British Virgin Islands company and an indirect wholly owned subsidiary of Tencent Holdings Limited. or Tencent.
See “Item 7. Related Party Transactions—Transactions and Agreements with Tencent” for more information. Tencent Holding Limited is incorporated in
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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, 2024, 26,552,413 of our ordinary shares were held by four record holders in the United
States, representing approximately 19.3% of our total outstanding shares (including the 3,180,170 ordinary shares issued to our
depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards granted under our share
incentive plan). One of these holders is JPMorgan Chase Bank, N.A., the depositary of our ADS program, which held 25,925,078
ordinary shares on record, representing approximately 18.8% of our total outstanding shares on record as of March 31, 2024 (including
the 3,180,170 ordinary shares issued to it for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards
granted under our share incentive plan). The number of beneficial owners 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
Executive Officers”.
F.
Disclosure of Registrant’s Action to Recover Erroneously Awarded Compensation
Not applicable.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A.
Major Shareholders
Please refer to “Item 6. Directors, Senior Management and Employees—E. Share Ownership”.
B.
Related Party Transactions
Transactions and Agreements with E-House Enterprise and TM Home
Transactions 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, 2021, 2022 and 2023,
we derived revenues in the amount of $36,334, nil and nil from providing online advertising services to E-House Enterprise, respectively,
and we recognized expenses for marketing channel services provided by E-House Enterprise of $20.6 million, $7.7 million and $9.6
million, respectively. E-House Enterprise charged us a fee based on an estimate of the actual costs incurred to provide various corporate
support services, which amounted to $1.3 million and $0.6 million for 2022 and 2023, respectively.
Transactions and Agreement with TM Home. In September 2023, we entered into an agreement with TM Home. Pursuant to this
agreement, TM Home has entrusted the operation of its online platform business to us starting from October 1, 2023. We agreed to
reimburse TM Home for any loss incurred from the operation and share any profit generated from the operation. We recognized the
reimbursement to TM Home of $3.1 million which was recognized as the other operating loss for the year ended December 31, 2023. As
of December 31, 2022 and 2023, we had a payable balance of $3.3 million and a receivable balance of $30.8 million, respectively.
Transactions and Agreements with E-House
Agreements Related to Our Carve-out from E-House
We have entered into agreements with E-House with respect to various ongoing relationships between us. These include a
master transaction agreement, an offshore transitional services agreement, an onshore transitional services agreement, a non-competition
agreement and an onshore cooperation agreement. The following are summaries of these agreements.
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Master Transaction Agreement
The master transaction agreement contains provisions relating to our carve-out from E-House. The master transaction agreement
provides for cross-indemnities that generally will place the financial responsibility on us for all liabilities associated with the current and
historical real estate online services business and operations that have been conducted by or transferred to us, and generally will place on
E-House the financial responsibility for liabilities associated with all of E-House’s other current and historical businesses and operations,
in each case regardless of the time those liabilities arise. The master transaction agreement also contains indemnification provisions
under which we and E-House will indemnify each 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 from information we provide to E-House specifically for inclusion in E-House’s annual or quarterly reports following the completion
of our initial public offering, 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 the information 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
arising from events occurring on or before the initial filing date of the registration statement for our initial public offering, including in
connection with the activities to implement our initial public offering. The general release does not apply to liabilities allocated between
the parties under the master transaction 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
independent certified public accounting firm selected by E-House and to maintain the same fiscal year as E-House until the first E-House
fiscal year-end occurring after the earlier of (i) the first date when E-House Group (as defined therein) no longer owns at least 20% of the
voting power of our then outstanding securities and (ii) the first date when E-House Group ceases to be the largest beneficial owner of
our then outstanding voting securities (without considering holdings by certain institutional investors). We also have agreed to use our
reasonable best efforts to complete our audit and provide E-House with all financial and other information on a timely basis.
The master transaction agreement will automatically terminate five years after the first date upon which E-House Group ceases
to own in aggregate at least 20% of the voting power of our then outstanding securities. This agreement can be terminated early by
mutual written consent of the 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
various corporate 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
engage third parties to provide services covered by the offshore transitional service agreement.
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The offshore transitional service agreement provides that the performance of a service according to the agreement will not
subject the provider 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’s recipient performing the service itself or hiring a third party to perform the service. Under the offshore
transitional services agreement, the service provider of each service is indemnified by the recipient against all third-party claims relating
to provision of services or the recipient’s material breach 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 indirect costs of providing such services. Direct costs include compensation and travel expenses attributable to employees, temporary
workers, and contractors directly engaged in performing the services as well as materials and supplies consumed in performing the
services. Indirect costs include occupancy, information technology supervision and other overhead costs of the department incurring the
direct costs of providing the service.
The offshore transitional services agreement provides for a service period commencing on the date when the registration
statement on Form 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 at least 20% of the voting power of our then outstanding securities or ceases to be the largest beneficial owner of our
then outstanding voting securities, without considering holdings of institutional investors that have acquired our securities in the ordinary
course of their business and not with 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-day prior 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 not quantify 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 the last 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, to provide Beijing Leju, Beijing Jiajujiu, Leju Hao Fang, Shanghai SINA Leju, Beijing Maiteng, Shanghai Yi
Yue and City Rehouse, or the Leju PRC Entities, 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 the Leju PRC Entities with additional services that the Leju PRC Entities
and E-House Shanghai may identify from time to time in the future. E-House Shanghai 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 indirect costs of providing such services. Direct costs include compensation and travel expenses attributable to employees, temporary
workers, and contractors directly engaged in performing the services as well as materials and supplies consumed in performing the
services. Indirect costs include occupancy, information technology supervision and other overhead costs of the department incurring the
direct costs of providing the service.
The onshore transitional services agreement provides for a service period commencing on the date when the registration
statement on Form 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 when the Leju 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 notice to the other party. The agreement provides for an early termination fee in the case of early termination by the Leju PRC
Entities, but does not quantify the amount of or specify the calculation method, for such fee.
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E-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 $1.4 million, nil and nil for 2021, 2022 and 2023, respectively.
Non-competition Agreement
The 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 March 12, 2014, which is the date that the registration statement on Form F-1 for our initial
public offering is first publicly filed with the SEC. This agreement 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, online advertising and listing services, anywhere in the world. We have agreed not to compete with E-House during the non-
competition period in any business conducted by E-House as described in its periodic filings with the SEC, other than the businesses we
are engaged in as described in the prospectus 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 former employees of or individuals providing consulting services to the other party within six months of the termination of
their employment or consulting services, without the other party’s consent, except for solicitation activities through generalized non-
targeted advertisement not directed to such employees or individuals that do not result in a hiring within the non-competition period.
Onshore Cooperation Agreement
Under this onshore cooperation agreement, E-House Shanghai, Beijing Leju, Beijing Jiajujiu and Leju Hao Fang agree that they
will cooperate with each other in sharing information about potential demands for products and/or services and developing clients. If any
party is aware that its customers, suppliers or other business partners may have demands for the products and/or services of the primary
business of any other party, it will share such information with such other party, to the extent not in violation of any applicable law and
its confidentiality obligations or other terms under any contract binding on such party. Furthermore, the parties agree to cooperate with
each other, to the extent commercially reasonable and in the manner deemed to be appropriate, in referring the principal products and/or
services of any other party, joint pitching for and negotiating with clients, and entering into agreements with clients. In the event that the
parties jointly enter into an agreement with a client, they shall determine their respective rights and obligations in writing through
amicable negotiations, and based on the principle of fairness and the fair market values of the products and/or services offered by the
parties. The parties agree not to charge any fees for their cooperation and assistance provided 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 Group (as defined therein) ceases to 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 then outstanding voting securities, without considering holdings of institutional investors that
have acquired our securities in the ordinary course of their business and not with a purpose nor with the effect of changing or influencing
our control. The onshore cooperation agreement does not provide any early termination right.
Other Transactions and Agreements with E-House
For the years ended December 31, 2021, 2022 and 2023, we derived revenues in the amount of $0.5 million, nil and nil from
providing online advertising services to E-House. For the years ended December 31, 2021, 2022 and 2023, we recognized expenses for
services provided by E-House of $0.9 million, $0.7 million and $0.1 million, respectively.
As of December 31, 2022 and 2023, we had a receivable balance from E-house of $0.1 million and $26,493, respectively.
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Transactions and Agreements with SINA
In 2008, SINA reorganized its real estate and home furnishing websites and online real estate advertising business into a
separate unit with its own legal entities, management team, advertising operations, systems and physical facilities. Pursuant to the
reorganization, SINA and E-House formed a joint venture, China Online Housing, which subsequently became our wholly owned
subsidiary in December 2013 as part of a corporate reorganization 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 the E-House real estate information database and operate the SINA real
estate and home furnishing websites, including licenses to use SINA’s trademark, 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 name and content license agreement, a restated trademark license agreement and a software license and support services
agreement. In March 2014, we and SINA entered into an advertising inventory agency agreement, an amended and restated domain name
and content license agreement, an amended and restated trademark license agreement and an amended and restated software license and
support services agreement. The principal effect of the agreements entered into in March 2014 is to extend the term of our agreements
with SINA through 2024. As of the date of the annual report, we have yet to renew the agreement with SINA and are in the process of
negotiating potential cooperation in the future.
Advertising Inventory Agency Agreement
Under the advertising inventory agency agreement, we had the exclusive right to sell advertising to real estate, home furnishing
and construction materials advertisers on all SINA non-real estate websites. We were required to pay SINA fees of approximately 15% of
the revenues generated from sales of advertising on SINA non-real estate websites, subject to certain limitations on the amount of
advertising that we may sell and fees payable by us to SINA based on the amount of advertising sold. In addition, we authorized SINA as
our exclusive agent to sell non-real estate-related advertising on our directly operated websites. We were entitled to receive
approximately 85% of the revenues generated from these sales. The initial term of the amended and restated advertising inventory
agency agreement was ten years, expiring in March 2024.
Domain Name and Content License Agreement
Under the amended and restated domain name and content license agreement, an affiliate of SINA, or licensor, granted to us an
exclusive license to use its five domain names, namely, house.sina.com.cn, jiaju.sina.com.cn, construction.sina.com.cn,
dichan.sina.com.cn, and esf.sina.com.cn in connection with our real estate internet operations in China. In addition, the licensor also
granted to us an exclusive license to use all contents, whose copyrights are owned by the licensor or owned by a third-party provider but
is sub-licensable by the licensor without requiring payment of any additional fees and without violating the terms of any agreement with
such third party provider, in connection with websites associated with the domain names licensed to us. For other operating contents, we
may enter into an agreement with the owner independently and will be responsible for the costs associated with procuring the contents.
The licenses were for an initial term of ten years expiring in March 2024.
Amended and Restated Trademark License Agreement
Under the amended and restated trademark license agreement, an affiliate of SINA granted to us a nonexclusive license to use
three SINA trademarks and an exclusive license to use four SINA related trademarks in connection with our real estate online operations
in China through websites 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 and esf.sina.com.cn. The licenses were for an initial term of ten years expiring in March 2024.
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Amended and Restated Software License and Support Services Agreement
Under 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, sales management, procurement reimbursement, financial management flow, statistics, monitoring and censoring; (ii) certain
current software products and interfaces necessary to facilitate our use of such current software products; (iii) the databases; (iv) certain
improvements to the licensed software; and (v) related documentation and hardware, in each case to the extent such items (other than
licensor improvements) exist and have been delivered to us under the software license and support service agreement executed in 2009.
The licensor also provided to us infrastructure necessary to operate our websites and facilitate our use of the licensed software. In
addition, the licensor also provided support services, including routine maintenance, technical support and hardware support. The
licenses were for an initial term of ten years expiring in March 2024 and free of any fees (subject to certain exceptions). However, to the
extent that there are any reasonable, incremental costs for use of the licensed software or the infrastructure, or provision of the support
services, due to a change in the business needs, we were required to reimburse the licensor for all such costs.
Registration Rights Agreement
In connection with SINA becoming a principal shareholder of ours, on March 21, 2017, we entered into a registration rights
agreement with SINA, which grants SINA the same registration rights with respect to our ordinary shares as those granted to E-House
and Tencent under the investor 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 SINA
As of December 31, 2022 and 2023, we had a payable balance of $1.4 million and $1.3 million, respectively, to SINA,
representing online advertising resources fee payable to SINA. The total cost recognized for the advertising resources purchased from
SINA was $10.1 million, $0.1 million and $35,259 million for the years ended December 31, 2021, 2022 and 2023, respectively.
Transactions and Agreements with Tencent
Strategic Cooperation
In January 2019, we entered into a series of exclusive advertising agency agreements with Tencent. Pursuant to the exclusive
advertising agency agreements, we are the exclusive real property advertising agent of Tencent for selling advertising to real estate
advertisers in certain areas of China, including, Tianjin and Sichuan, Anhui, Shanxi, Guangxi and Fujian provinces. In March 2019, we
entered into an advertising agency agreement 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 Tencent in 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 advertising agency agreements with Tencent, and the
cooperative areas remain the same as those in 2020.
Investor Rights Agreement
On March 31, 2014, being the closing date of the sale of shares to Tencent by E-House under the share purchase and
subscription agreement, 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
certain restrictions 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.
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Other Transactions with Tencent
As of December 31, 2022 and 2023, we had a receivable balance of $1.9 million and $0.8 million, respectively, from Tencent,
representing online advertising resources fee prepaid to Tencent. The total cost recognized for the advertising resources purchased from
Tencent was $18.7 million, $14.8 million and $13.7 million for the years ended December 31, 2021, 2022 and 2023, respectively. In
addition, fee paid to Tencent for advertising resources on behalf of customers as we acted as agent were $2.5 million, $1.8 million and
$1.7 million for the years ended December 31, 2021, 2022 and 2023, respectively.
Restrictions 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 us and Tencent, controlling us, (ii) the issuance, by way of a privately negotiated transaction, of equity securities
representing more than 10% of our issued and outstanding share capital to certain specified entities, or (iii) the transfer or other
disposition, by way of a privately negotiated transaction, of equity securities representing more than 10% of our issued and outstanding
share capital by E-House to certain specified entities, in each case, subject to certain exceptions. Tencent will not, without our prior
written consent, transfer or otherwise dispose, by way of a privately negotiated transaction, of our equity securities held by Tencent to
certain specified entities, subject to certain exceptions.
Registration Rights Granted to E-House, Tencent and SINA
On March 31, 2014, 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. On March 21, 2017, we
entered into a registration rights agreement with SINA, which grants SINA the same registration rights with respect to our ordinary
shares as those granted to E-House and Tencent under 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 sale of their ordinary shares. E-House, Tencent and SINA are each entitled to an aggregate of three such registrations. We,
however, are not required to prepare and file (i) more than two demand registration statements in any 12-month period, or (ii) any
demand registration statement within 120 days following the date of effectiveness of any other registration statement. If the demand
registration relates to an underwritten public offering and the managing underwriter advises in its reasonable opinion that the number of
securities requested to be included in the demand registration exceeds the largest number which reasonably can be sold in such offering
without having a material adverse effect on such offering, we will include in such demand registration, up to the maximum offering size,
following the order of priority: (i) the registrable securities that the requesting parties propose to register; and (ii) any securities we
propose to register and any securities with respect to which any other security holder has requested registration. If the managing
underwriter determines that less than all of the registrable securities proposed to be sold can be included in such offering, then the
registrable securities that are included in such offering shall be allocated pro rata among the respective requesting 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
Securities Act, 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 a
transaction of the type referred to in Rule 145 under the Securities Act or to our employees pursuant to any employee benefit plan, then
we must offer E-House, Tencent and SINA an opportunity to include in the registration all or any part of their registrable securities. If the
piggyback registration relates to an underwritten public offering and the managing underwriter advises in its reasonable opinion that the
number of securities requested to be included in the piggyback registration together with the securities being registered by us or any other
security holder exceeds the largest number which reasonably can be sold in such offering without having a material adverse effect on
such offering, then (i) if we initiate the piggyback registration, we will include in such registration the securities we propose to register
first, and allocate the remaining part of the maximum offering size to all other selling security holders on a pro rata basis; (ii) if any
holder of our securities initiated the piggyback registration, we will include, up to the maximum offering size, first the securities such
initiating security holder proposes to register, then the securities of any other selling security holders on a pro rata basis, and lastly the
securities we propose to register.
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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 reasonable likelihood that such disclosure, or any other action to be taken in connection with the prospectus, would materially
and adversely affect or interfere with any significant financing, acquisition, merger, disposition of assets, corporate reorganization or
other material transaction of negotiations involving us.
Expenses of registration. We will pay all expenses relating to any demand or piggyback registration, except that E-House,
Tencent and SINA 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 Suppliers
Transactions with Yunnan Huixiangju Information & Consultant Ltd., or Huixiangju. Huixiangju is one of our investment
affiliates. We own 51% equity interest in it and has significant influence. Huixiangju was dissolved in February 2024. As of December
31, 2022 and 2023, we had a payable balance of $0.1 million and $0.2 million, respectively, which represents the platform service fee
advance from Huixiangju. The total revenue generated for the platform services to Huixiangju was $0.5 million, $0.1 million and nil for
the years ended December 31, 2021, 2022 and 2023, respectively.
Transactions with Shanghai Tianji Haofang Network Services Ltd. (formerly known as Shanghai Yunchuang Information &
Technology Ltd.), or Tianji Network. Tianji Network had been under control of Mr. Xin Zhou, our executive chairman, until May 2021
and became a subsidiary of E-house Enterprise since then. We purchased technical services of $69.8 thousandfor the first five months of
2021. The transaction and balance with Tianji Network from June 2021 were included in the transactions with E-house Enterprise.
Transactions with Jupai Holdings Ltd., or Jupai. Mr. Xin Zhou, our executive chairman, is a director of Jupai. We purchased
services of nil, $24,372 and nil from Jupai in 2021, 2022 and 2023, respectively. As of December 31, 2022 and 2023, we had no
receivable balance from or payable balance to Jupai.
Transactions with Alibaba Investment Limited, or Alibaba Investment. Alibaba Investment is a shareholder with significant
influence on TM Home, our controlling shareholder, since November 4, 2021. We purchased services of $0.9 million, $0.9 million and
$0.1 million in 2021, 2022 and 2023, respectively. As of December 31, 2022 and 2023, we had a receivable balance of $0.5 million and
$0.2 million, respectively, which represents prepaid fees for online advertising resources and technical service.
Transactions with Management
See “Item 6. Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers.”
Contractual Arrangements with Beijing Leju, Leju Hao Fang and Beijing Jiajujiu (the variable interest entities)
See “Item 4. Information on the Company—C. Organizational Structure.”
Share Options and Restricted Shares
See “Item 6. Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers—Share
Incentive Plan.”
C.
Interests of Experts and Counsel
Not applicable.
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ITEM 8.
FINANCIAL INFORMATION
A.
Consolidated Statements and Other Financial Information
We have appended consolidated financial statements filed as part of this annual report.
Legal Proceedings
We are currently not involved in any material legal or arbitration proceedings. From time to time, we may be subject to claims
and legal actions arising in the ordinary course of business, such as intellectual property infringement claims against us for use of others’
articles or photographs 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 Policy
Subject to our memorandum and articles of association and the laws of the Cayman Islands, namely that our company may only
pay dividends out of profits or share premium, and provided always that in no circumstances may a dividend be paid if this would result
in our company being unable to pay its debts as they fall due in the ordinary course of business, our board of directors has complete
discretion on whether to distribute dividends. Our shareholders may by ordinary resolution declare a dividend, but not exceeding the
amount recommended by our board of directors. Our board of directors intends on paying dividends only to the extent cash is available in
the offshore entities. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our
future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors
that the board of directors may deem relevant. If we pay any dividends, 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 entities is 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
shares issued 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 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.
Leju is a holding company incorporated in the Cayman Islands. It relies principally on dividends from its subsidiaries in China
for its cash requirements, including any payment of dividends to its shareholders. PRC regulations may restrict the ability of Leju’s PRC
subsidiaries to pay dividends to Leju. See “Item 4. Information on the Company—B. Business Overview—Regulation—Regulations
relating to Dividend Distributions.”
B.
Significant Changes
Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our
audited consolidated financial statements included in this annual report.
ITEM 9.
TILE OFFER AND LISTING
A.
Offering and Listing Details
Our ADSs were listed on the NYSE since April 17, 2014 under the symbol “LEJU”. Prior to May 20, 2022, each of our ADSs
represented one ordinary share. On May 20, 2022, we effected a change in the ratio of our ADSs to ordinary shares from one ADS
representing one ordinary share to one ADS representing ten ordinary shares.
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On April 29, 2024, the NYSE filed a Form 25 with the SEC to strike our ADSs from listing, which became effective 10 days
after the filing. Our ADSs have been quoted on the OTC Pink under the symbol “LEJUY” after the NYSE suspended the trading of our
ADSs on April 11, 2024.
B.
Plan of Distribution
Not applicable.
C.
Markets
Our ADSs, each representing ten of our ordinary shares, have been quoted on the OTC Pink under the symbol “LEJUY” after
the NYSE suspended the trading of our ADSs on April 11, 2024.
D.
Selling Shareholders
Not applicable.
E.
Dilution
Not applicable.
F.
Expenses of the Issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
A.
Share Capital
Not applicable.
B.
Memorandum and Articles of Association
We are a Cayman Islands exempted company with limited liability and our affairs are governed by our memorandum and
articles of association, as amended and restated from time to time, the Companies Act (As Revised) of the Cayman Islands, which is
referred to as the Companies 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 was adopted by a special resolution passed on March 10, 2014 and became effective immediately upon the completion of
our initial public offering of ordinary shares represented by ADSs in April 2014, insofar as they relate to the material terms of our
ordinary shares.
Registered Office and Objects
Our 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 which our company is established are unrestricted and we have full power and authority to carry out any object
not prohibited by the Companies Act, as amended from time to time, or any other law of the Cayman Islands.
Board of Directors
See “Item 6. Directors, Senior Management and Employees—C. Board Practices.”
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Ordinary Shares
General. All of our issued and outstanding ordinary shares are fully paid and non-assessable. Our ordinary shares are issued in
registered form, and are issued when registered in our register of members. Our shareholders who are non-residents of the Cayman
Islands may freely hold and vote their ordinary shares. Our company may 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
shall confirm (i) the amount paid or agreed to be considered as paid, on the shares of each member, (ii) the number and
category of shares held by each member, and (iii) whether each relevant category of shares held by a member carries voting
rights under the articles of association 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 register of members will raise a presumption of fact on the matters referred to above unless rebutted) and a member registered in the
register of members is deemed 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 delay in 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 member of 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 Court may 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, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our
directors. Under Cayman Islands law, dividends may be declared and paid only out of funds legally available therefor, namely out of
either profit or our share premium 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 the ordinary 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 name on 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 of hands 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 such meeting 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 paid up 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
those shareholders entitled to vote who are present in person or by proxy at a general meeting, while a special resolution requires the
affirmative vote of no 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. Both ordinary 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 matters such 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 consent of 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 of transfer in the usual or common form or any other form approved by our board of directors.
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However, our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share which is
not fully paid 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 other evidence 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 was lodged, 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 the
shareholders 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 shall be carried out as between the shareholders or different classes of shareholders. The liquidator may, with the like
sanction, vest the whole or any part of 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 no shareholder shall be compelled to accept any shares or other securities whereon there is any
liability. We are an exempted company with “limited liability” incorporated under the Companies Act, and under the Companies Act, the
liability of our members is limited to the amount, if any, unpaid on 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
shareholders for 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, at our 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 our board of directors. Our company may also repurchase any of our shares (including any redeemable shares)
provided that the manner and terms of such purchase have been approved by ordinary resolution of our shareholders, or are otherwise
authorized by our memorandum and articles of association. Under the Companies Act, the redemption or repurchase of any share may be
paid out of our company’s profits or out of the proceeds of a fresh issue of shares made for the purpose of such redemption or repurchase,
or out of capital (including share premium account and capital redemption reserve) if our company can, immediately following such
payment, pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Act no such share may be
redeemed or repurchased (i) unless it is fully paid up; (ii) if such redemption or repurchase would result in there being no shares issued
and outstanding; or (iii) if the company has commenced liquidation. In addition, our company may accept the surrender of any fully paid
share for no consideration.
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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
special rights 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 varied with 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 passed at 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 series issued with preferred or other rights will not, unless otherwise expressly provided by 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 with such existing
class of shares.
General Meetings of Shareholders and Shareholder Proposals. As a Cayman Islands exempted company, we are not obligated
by the Companies Act to call shareholders’ annual general meetings. Our memorandum and articles of association provide that we may
(but are not obligated 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 notices calling 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 of directors. Advance notice of at least seven calendar days is required for the convening of our annual general meeting and
any other general meeting of our shareholders. A quorum required for a general meeting of shareholders consists of shareholders present
in person or by proxy, representing not 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
shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles
of association. Our memorandum and articles of association allow our shareholders holding shares representing in aggregate not less than
one-third of the share capital of our company in issue entitled to vote at general meetings, to requisition an extraordinary general meeting
of the shareholders, in which case our directors are obligated to call such meeting and to put the resolutions so requisitioned to a vote at
such meeting; however, our memorandum and articles of association do not provide our shareholders with any right to put any proposals
before annual general meetings or extraordinary general meetings not called by such shareholders.
Election and Removal of Directors. Unless otherwise determined by our company in general meeting, our articles of association
provide that 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
the existing 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 or suspends payment or compounds with his creditors, (ii) dies or becomes of unsound mind, (iii) resigns his office by notice in
writing to the Company; (iv) without special leave of absence from our board of directors, is absent from meetings of our board 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.
Proceedings of Board of Directors. Our memorandum and articles of association provide that our business is to be managed and
conducted by 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 a majority 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 our company to raise or borrow money, to mortgage or charge all or any part of the undertaking, property and assets (present and
future) and uncalled capital 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.
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Inspection of Books and Records. Holders of our ordinary shares have no general right under Cayman Islands law to inspect or
obtain copies of our list of shareholders or our corporate records (other than our memorandum and articles of association, our register of
mortgages and charges and special resolutions of our shareholders). However, we intend to provide our shareholders with annual audited
financial statements.
Changes 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
proportion between 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 from which 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 and diminish 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 our company 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 a change in control of our company or management that shareholders may consider favorable, including provisions that authorize
our board of directors to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and
restrictions of such preferred shares 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 and articles 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 best interests of our company.
Exempted Company. We are an exempted company with limited liability under the Companies Act. The Companies Act in the
Cayman Islands distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the
Cayman Islands but conducts business mainly outside the Cayman Islands may apply to be registered as an exempted company. The
requirements for an exempted company 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 shares;
● an exempted company may obtain an undertaking against the imposition of any future taxation (such undertakings are
usually given for 30 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
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● 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’s shares of the company (except in exceptional circumstances, such as involving fraud, the establishment of an agency
relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate
veil).
C.
Material Contracts
We 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 this annual report on Form 20-F.
D.
Exchange Controls
See “Item 4. Information on the Company—B. Business Overview—Regulation—Foreign Exchange Registration of Offshore
Investments by PRC Residents.”
E.
Taxation
Cayman Islands Taxation
The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation
and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to holders of our
ADSs or ordinary shares levied by the government of the Cayman Islands except for stamp duties which may be applicable on
instruments executed in, or brought within the jurisdiction of the Cayman Islands, or produced before a court of the Cayman Islands. The
Cayman Islands is not party to any double tax treaties that are applicable to any payments 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 be required 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 to Cayman Islands income or corporation tax.
People’s Republic of China Taxation
Under the Enterprise Income Tax Law, and its implementation rules, an enterprise established outside China with “de facto
management body” within China is considered a resident enterprise. The implementation rules of the Enterprise Income Tax Law define
the term “de facto management body” as the body that exercises full and substantial control and overall management over the business,
productions, personnel, accounts and properties of an enterprise. In April 2009, the State Administration of Taxation issued the SAT
Circular 82, which was most recently amended on December 29, 2017 and provides certain specific criteria for determining whether the
“de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. Although this circular only
applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or
foreigners, the criteria set forth in the circular may reflect the State Administration of Taxation’s general position on how the “de facto
management body” text should be applied in determining the tax resident status of all offshore enterprises including Leju Holdings
Limited. According to the SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group
will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China only if all of the following
conditions are met: (i) the primary location of the day-to-day operational management is in China; (ii) decisions relating to the
enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in China; (iii) the
enterprise’s primary assets, accounting books and records, company seals, board and shareholder resolutions are located or maintained in
China; and (iv) at least 50% of voting board members or senior executives habitually reside in China.
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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 are uncertainties as to the interpretation of the PRC regulations including the SAT Circular 82 and 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 is subject to
determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management
body”.
If the PRC tax authorities determine that Leju Holdings Limited is a PRC resident enterprise for enterprise income tax purposes,
we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises,
including the holders of our ADSs. In addition, non-resident enterprise shareholders (including our ADS holders) may be subject to a
10% PRC tax on gains realized on the sale or other disposition of ADSs or ordinary shares, if such income is treated as sourced from
within China. It is unclear whether our non-PRC individual shareholders (including our ADS holders) would be subject to any PRC tax
on dividends or gains obtained by such non-PRC individual shareholders 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 would generally apply at a rate of 20% unless a reduced rate is available
under an applicable tax treaty. However, it is also unclear whether non-PRC shareholders of Leju Holdings Limited would be able to
claim the benefits of any tax treaties between their country of tax residence and China in the event that Leju Holdings Limited is treated
as a PRC resident enterprise.
The State Administration of Taxation promulgated the SAT Bulletin 7 in February 2015. Under the SAT Bulletin 7, an “indirect
transfer” of assets of a PRC resident enterprise, including equity interests in a PRC resident enterprise, by non-PRC resident enterprises
may be re-characterized and treated as a direct transfer of PRC taxable properties, if such transaction arrangement lacks a reasonable
commercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived
from such indirect transfer may be subject to PRC enterprise income tax. According to the SAT Bulletin 7, “PRC taxable assets” include
assets attributed to an establishment in China, immovable properties located in China, and equity interests in PRC resident enterprises. In
respect of an indirect transfer of assets of a PRC establishment, the resulting gain is to be included with the enterprise income tax filing
of the PRC establishment being transferred, and would consequently be subject to PRC enterprise income tax at a rate of 25%. If the
underlying transfer relates to the immovable properties located in China or to equity interests in a PRC resident enterprise, which is not
related to a PRC establishment or place of business of a non-resident enterprise, a PRC enterprise income tax at 10% would apply,
subject to preferential tax treatment under applicable tax treaties or similar arrangements, and the party who is obligated to make
payments for the transfer has a withholding obligation. Although it appears that the SAT Bulletin 7 does not apply to share transfers of
publicly traded companies, there is uncertainty 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 or withholding obligations under the SAT Bulletin 7 and we may be required to expend
valuable resources to comply with the SAT Bulletin 7 or to establish that we should not be taxed under the SAT Bulletin 7.
U.S. Federal Income Tax Considerations
The following discussion is a summary of U.S. federal income tax considerations relating to the ownership and disposition of
our ADSs or ordinary shares by a U.S. holder (as defined below) that holds our ADSs or ordinary shares as “capital assets” (generally,
property held for investment) under the U.S. Internal Revenue Code of 1986, as amended. This discussion is based upon existing U.S.
federal income tax law, which is subject to differing interpretations or change, possibly with retroactive effect. There can be no assurance
that the Internal Revenue Service or a court will not take a contrary position. This discussion does not discuss all aspects of U.S. federal
income taxation that may be important to particular investors in light of their individual circumstances, including investors subject to
special tax rules that differ significantly from those summarized below (for example, certain financial institutions, insurance companies,
broker-dealers, traders in securities that have elected the mark-to-market method of accounting for their securities, partnerships and their
partners, regulated investment companies, real estate investment 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 any employee 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 the U.S. dollar). In addition, this discussion does not
address U.S. federal estate, gift, Medicare, and minimum tax considerations, or any non-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.
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General
For 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 tax purposes, (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) an estate 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) the administration 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 to control 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
or ordinary shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities
of the partnership. Partnerships holding our ADSs or ordinary shares and partners in such partnerships are urged to consult their tax
advisors as to the particular 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 owner of 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 this manner. Accordingly, deposits or withdrawals of ordinary shares for ADSs will generally not be subject to
U.S. federal income tax.
Passive Foreign Investment Company Considerations
A 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 any particular 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 of the value of its 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 of passive income. For this purpose, cash and assets readily convertible into cash are
categorized as a passive asset and the company’s goodwill and other unbooked intangibles associated with active business activities may
generally be classified as active assets. 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 in which we own, directly or indirectly, 25% or more (by value) of the stock.
Although the law in this regard is unclear, we treat the variable interest entities as being owned by us for U.S. federal income
tax purposes, not only because we exercise effective control over the operation of such entities but also because we are entitled to
substantially all of their economic benefits, and, as a result, we consolidate their 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, 2023,
and we will likely be a 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 other passive assets we hold in assets that produce or are held for the production of active income. If we are
classified as a PFIC for any year during which a U.S. holder holds our ADSs or ordinary shares, the PFIC rules discussed below under
“Passive Foreign Company Investment Company Rules” generally will apply to such U.S. holder for such taxable year, and unless the
U.S. holder makes certain elections, will apply in future years even if we cease to be a PFIC. However, if we cease to be a PFIC,
provided that you have not made a mark-to-market election, as described below, you may avoid some of the adverse effects of the PFIC
regime by making a “deemed sale” election with respect to the ADSs or ordinary shares, as applicable. If such election is made, you will
be deemed to have sold our ADSs or ordinary shares you hold at their fair market value and any gain from such deemed sale would be
subject to the rules described below under “Passive Foreign Investment Company Rules.” After the deemed sale election, so long as we
do not become a PFIC in a subsequent taxable year, your ADSs or ordinary shares with respect to which such election was made will not
be treated as shares in a PFIC and you will generally not be subject to the rules described below with respect to any “excess distribution”
you receive from us or any gain from an actual sale or other disposition of the ADSs or ordinary shares. The rules dealing with deemed
sale elections are very complex. Each U.S. holder should consult its tax advisors regarding the possibility and considerations of making a
deemed sale election.
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”.
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Dividends
Subject to the discussion below under “Passive Foreign Investment Company Rules,” any cash distributions (including the
amount of any tax withheld) paid on our ADSs or ordinary shares out of our current or accumulated earnings and profits, as determined
under U.S. federal income tax principles, will generally be includible in the gross income of a U.S. holder as dividend income on the day
actually or constructively received by 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 earnings and profits on the basis of U.S. federal income tax principles, any distribution paid will
generally be reported as a “dividend” for U.S. federal income tax purposes. Dividends received on our ADSs or ordinary shares will not
be eligible for the dividends received deduction allowed to corporations in respect of dividends received from U.S. corporations.
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
the preceding taxable year) will generally be considered to be a qualified foreign corporation (i) if it is eligible for the benefits of a
comprehensive tax treaty with the United States which the Secretary of Treasury of the United States determines is satisfactory for
purposes of this provision and which includes an exchange of information program; or (ii) with respect to any dividend it pays on stock
(or ADSs in respect of such stock) which is readily tradable on an established securities market in the United States. Our ADSs were
traded on the NYSE from April 17, 2014 to April 11, 2024. Our ADSs were delisted from the New York Stock Exchange and have
subsequently been quoted on the OTC Pink, which is not considered an established securities market in the United States for these
purposes. If our ADSs remain delisted from the New York Stock Exchange and are not otherwise readily tradable on an established
securities market in the United States, dividends received on our ADSs would generally not be eligible to be taxed as dividend income
from a qualified foreign corporation. Moreover, as discussed above, we believe we were a PFIC for the taxable year ended December 31,
2023. You should consult your tax advisor regarding the availability of the lower rate for dividends paid with respect to our ADSs or
ordinary shares.
In the event that we are deemed to be a PRC “resident enterprise” under the Enterprise Income Tax Law (see “-People’s
Republic of China Taxation”), we may be eligible for the benefits of the U.S.-PRC income tax treaty (which the Secretary of Treasury of
the United States has determined is satisfactory 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 any dividends 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
constitute passive category income. In the event that we are deemed to be a PRC resident enterprise under the Enterprise Income Tax
Law, a U.S. holder may be subject to PRC withholding taxes on dividends paid on our ADSs or ordinary shares. A U.S. holder may be
eligible, subject to a number of complex limitations, to claim a foreign tax credit in respect of any foreign withholding taxes imposed on
dividends received on ADSs or ordinary shares. A U.S. holder who 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, in respect 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 rules governing the foreign tax credit are complex. Each U.S.
holder is advised to consult its tax advisors regarding the availability of the foreign tax credit under their particular circumstances.
As mentioned above, we believe that we were a PFIC for the taxable year ended December 31, 2023, and we will likely be
classified as a PFIC for our current taxable year. U.S. holders are urged to consult their tax advisors regarding the availability of the
reduced tax rate on dividends with respect to the ADSs or ordinary shares in their particular circumstances.
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Sale or Other Disposition of ADSs or Ordinary Shares
Subject to the discussion below under “Passive Foreign Investment Company Rules.” a U.S. holder will generally recognize
capital gain or loss upon the sale or other disposition of ADSs or ordinary shares in an amount equal to the difference between the
amount realized upon the disposition 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 the ADSs 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 Enterprise Income Tax Law and gain 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 tax credit purposes under the U.S.-PRC income tax
treaty. Pursuant to Treasury Regulations, however, if a U.S. Holder is not 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 arising from any PRC tax imposed on the disposition of the
ADSs or ordinary shares. U.S. holders are advised to consult their tax advisors regarding the tax consequences if a foreign tax is imposed
on a disposition of our ADSs or ordinary shares, including the availability of the foreign tax credit or deduction under their particular
circumstances, their eligibility for benefits under the treaty and the potential impact of Treasury Regulations.
As mentioned above, we believe that we were a PFIC for the taxable year ended December 31, 2023, and we will likely be
classified as a PFIC for our current taxable year. U.S. holders are urged to consult their tax advisors regarding the tax considerations of
the sale or other disposition of the ADSs or ordinary shares in their particular circumstances.
Passive Foreign Investment Company Rules
As mentioned above, we believe that we were a PFIC for the taxable year ended December 31, 2023, and we will likely be
classified as a PFIC 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 be subject 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 the U.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 annual distributions 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) any gain 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
taxable year 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
effect applicable 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 to each 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.
subsidiaries is 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 of the 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 our subsidiaries.
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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 respect to our ADSs. The mark-to-market election is available only for stock that is regularly traded on a national securities
exchange that is registered with the SEC, or on a foreign exchange or represents a legitimate and sound fair market value. 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 the taxable 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 ADSs over 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 income as 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 loss resulting 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 gain recognized 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 to the extent of the net
amount previously included in income as a result of the mark-to-market election. Our ADSs were traded on the New York Stock
Exchange from April 17, 2014 to April 11, 2024. Our ADSs were delisted from the NYSE and have subsequently been quoted on the
OTC Pink. The mark-to-market election is available only for “marketable stock,” which is stock that is traded (in other than de minimis
quantities) on at least fifteen (15) days during each calendar quarter on a qualifying exchange or other market, as defined in applicable
United States Treasury Regulations. Consequently, if our ADSs remain delisted from the NYSE and are not otherwise listed on a
qualified exchange or other market, as described above, our ADSs would not be treated as “marketable stock” for these purposes and a
U.S. holder would not be eligible to make a mark-to-market election with respect to our ADSs.
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
be classified 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 period that 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 a mark-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 indirect interest 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, would result in tax treatment different from the general tax treatment for PFICs described above.
In addition, if a U.S. holder owns our ADSs or ordinary shares during any taxable year that we are a PFIC, such holder is
generally required 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 its tax advisors regarding the potential tax consequences to such holder if we are or become classified as a PFIC,
including the possibility of making a mark-to-market election.
F.
Dividends and Paying Agents
Not applicable.
G.
Statement by Experts
Not applicable.
H.
Documents on Display
We previously filed with the SEC our registration statement on Form F-1 (Registration No. 333-194505), as amended, including
the prospectus 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.
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We are subject to the periodic reporting and other informational requirements of the Exchange Act. Under the Exchange Act, we
are required to file reports and other information with the SEC. Specifically, we are required to file annually a Form 20-F no later than
four months after 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 website at 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
of operations and annual audited consolidated financial statements prepared in conformity with U.S. GAAP, and all notices of
shareholders’ meetings and other reports and communications that are made generally available to our shareholders. The depositary will
make such notices, reports and communications available to holders of ADSs and, upon our request, will mail to all record holders of
ADSs the information contained in any notice 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
quarterly reports and proxy statements, and officers, directors and principal shareholders are exempt from the reporting and short-swing
profit recovery provisions 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 on our website as soon as reasonably practicable following the electronic filing of each report with the SEC. In addition, we
provide electronic or paper copies of our annual reports free of charge to our shareholders and ADS holders upon request. The
information contained on our website is not part of this or any other report filed with or furnished to the SEC.
I.
J.
Subsidiary Information
For a listing of our subsidiaries, see “Item 4. Information on the Company—C. Organizational Structure.”
Annual Report to Security Holders
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
Our exposure to interest rate risk primarily relates to the interest income generated by bank deposits with original maturities of
three months or less and interest expenses incurred for our one year borrowing from bank. In September 2021, we entered into a one-year
RMB5.0 million facility agreement with Shanghai Pudong Development Bank. The interest rate was priced at 65 basis points over Loan
Prime Rate. The bank borrowing was unguaranteed and unsecured. We have repaid the RMB5.0 million borrowing in September 2022.
In March 2022, we entered into a one-year RMB5.0 million facility agreement with Shanghai Pudong Development Bank. The interest
rate was priced at 80 basis points over Loan Prime Rate. The bank borrowing was unguaranteed and unsecured. We have repaid the bank
borrowing of RMB5.0 million in March 2023. We have not used any derivative financial instruments to manage our interest risk
exposure. Interest-earning instruments carry a degree of interest rate risk. We have not been exposed to material risks due to changes in
interest rates. However, our future interest income may be lower than expected due to changes in market interest rates.
Foreign Exchange Risk
Substantially all of our revenues and most of our expenses are denominated in Renminbi. We do not believe that we currently
have any significant direct foreign exchange risk and we have not used any forward contracts, currency borrowings or derivative
instruments to hedge exposure to such risk. Although our exposure to foreign exchange risks should be limited in general, the value of
your investment in our ADSs will be affected by the exchange rate between U.S. dollar and Renminbi because the value of our business
is effectively denominated in RMB, while our ADSs will be traded in U.S. dollars.
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The conversion of Renminbi into foreign currencies, including U.S. dollars, is based on rates set by the People’s Bank of China.
The Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. The value of Renminbi against other
currencies including U.S. dollars is affected by changes in China’s political and economic conditions and by China’s foreign exchange
policies, among other things. 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. dollar would have an adverse effect on the RMB amount we receive from the conversion. Conversely, if we decide to convert
Renminbi into U.S. dollars for the purpose of making payments for dividends on our ordinary shares or ADSs or for other business
purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amounts available to us.
As of December 31, 2023, we had Renminbi- or Hong Kong dollar- denominated cash balances of $53.9 million and U.S. dollar-
denominated cash balances of $0.5 million. Assuming we had converted the U.S. dollar-denominated cash balance of $0.5 million as of
December 31, 2023 into Renminbi at the exchange rate of $1.00 for RMB7.0827 as of December 31, 2023, this cash balance would have
been RMB3.41 million. Assuming a further 1% appreciation of the Renminbi against the U.S. dollar, this cash balance would have
decreased to RMB3.37 million as of December 31, 2023. Assuming a 1% depreciation of the Renminbi against the U.S. dollar, this cash
balance would have increased to RMB3.44 million as of December 31, 2023.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A.
Debt Securities
Not applicable.
B.
Warrants and Rights
Not applicable.
C.
Other Securities
Not applicable.
D.
American Depositary Shares
Fees and Charges Our ADS Holders May Have to Pay
The 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 or issuances pursuant to a merger, exchange of securities or any other transaction or event affecting the ADSs or deposited
securities, and each person surrendering 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.
The following additional charges shall be incurred by the ADR holders, by any party depositing or withdrawing shares or by
any party surrendering ADSs or to whom ADSs are issued (including, without limitation, issuance pursuant to a stock dividend or stock
split declared by us or 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;
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● a fee of up to $0.05 per ADS per calendar year (or portion thereof) for services performed by the depositary in
administering the ADRs (which fee may be charged on a periodic basis during each calendar year and shall be assessed
against holders of ADRs as of the record date or record dates set by the depositary during each calendar year and shall be
payable in the manner described in the next 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 exchange control regulations or any law or regulation relating to foreign investment) in connection with the
servicing of the shares or other deposited securities, the sale of securities (including, without limitation, deposited
securities), the delivery of deposited securities or otherwise in connection with the depositary’s or its custodian’s
compliance with applicable law, rule or regulation (which fees and charges shall be assessed on a proportionate basis
against holders as of the record date or dates set by the depositary and shall be payable at the sole discretion of the
depositary by billing such holders or by deducting such charge from one or more cash dividends or 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 to the $0.05 per ADS issuance fee for the execution and delivery of ADSs which would have
been charged as a result of the deposit of such securities (treating all such securities as if they were shares) but which
securities or the net cash proceeds from the sale thereof are 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 of shares;
● transfer or registration fees for the registration of transfer of deposited securities on any applicable register in connection
with the deposit 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 foreign currency the fees, expenses and other charges charged by it and/or its agent (which may be a division, branch
or affiliate) so appointed 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/or private 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
agreements from time to time between us and the depositary. The charges described above may be amended from time to time by
agreement between us and the depositary.
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Fees and Other Payments Made by the Depositary to Us
Our depositary has agreed to reimburse us for certain expenses we incur that are related to establishment and maintenance of the
ADR program upon such terms and conditions as we and the depositary may agree from time to time. The depositary may make
available to us a set amount or a portion of the depositary fees charged in respect of the ADR program or otherwise upon such terms and
conditions as we and the depositary may agree from time to time. The depositary collects its fees for issuance and cancellation of ADSs
directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them.
The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a
portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash
distributions, or by directly billing investors, or by charging the book-entry system accounts of participants acting for them. The
depositary will generally set off the amounts owing from distributions made to holders of ADSs. If, however, no distribution exists and
payment owing is not timely received by the depositary, the depositary may refuse to provide any further services to holders that have not
paid those fees and expenses owing until such fees and expenses have been paid. At the discretion of the depositary, all fees and charges
owing under the deposit agreement are due in advance and/or when declared owing by the depositary.
For the year ended December 31, 2023, we received nil of reimbursement from the depositary for our expenses incurred in
connection with the establishment and maintenance of the ADS program.
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ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
PART II
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
None.
ITEM 15. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As of the end of the period covered by this annual report, our management, with the participation of our chief executive officer
and chief financial 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 this annual report, our existing disclosure controls and procedures were effective to provide reasonable assurance
that the information required to be disclosed by us in the reports that we file and furnish under the Exchange Act was recorded,
processed, summarized and reported, within the time periods 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 the Exchange Act is accumulated and communicated to our management,
including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in
Rules 13a-15(f) under the Exchange Act). Our internal control system was designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation and fair presentation of its published consolidated financial statements. All internal
control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective may
not prevent or detect misstatements and can provide only reasonable assurance with respect to financial statement preparation and
presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As required by Section 404 of the Sarbanes-Oxley Act of 2002 and related rules promulgated by the Securities and Exchange
Commission, our management conducted an assessment of the effectiveness of our internal control over financial reporting as of
December 31, 2023. In making this assessment, it used the criteria established within the Internal Control—Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on this assessment, our management has concluded that, as of December 31, 2023, our internal control over financial
reporting was effective. This annual report does not include an attestation report on internal control over financial reporting from our
company’s registered public accounting firm, because we, as a “non-accelerated filer” as defined under Rule 12b-2 of the Exchange Act,
are not required to have an attestation report 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
ended December 31, 2019. We took advantage of certain exemptions from requirements applicable to other public companies that are not
emerging growth companies including, most significantly, not being required to comply with the auditor attestation requirements of
Section 404. Although we ceased to be an “emerging growth company”, as a “non-accelerated filer” as defined under Rule 12b-2 of the
Exchange Act, we are still not required to have an attestation report on internal control over financial reporting from our external
auditors.
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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,
such accountant might have identified material weaknesses and deficiencies or might issue a qualified report if it is not satisfied with our
internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the requirements
differently from us.
Changes in Internal Control over Financial Reporting
Other than described above, there were no changes in our internal control over financial reporting during 2023 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 16.
[RESERVED]
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Leju’s board of directors has determined that Leju does not have an audit committee financial expert as of the date of this annual
report.
Leju’s board of directors assumes the functions and responsibilities of audit committee. We believe that retaining an
independent director who would qualify as an audit committee financial expert would be overly costly and burdensome considering the
current scale of Leju.
ITEM 16B. CODE OF ETHICS
Our board of directors has adopted a code of business conduct and ethics that applies to our directors, officers and employees.
We have filed 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 also available on our official website under the investor relations section at ir.leju.com.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth the aggregate fees by categories specified below in connection with certain professional services
rendered by Yu CPA, our principal external auditors, for the periods indicated. We did not pay any other fees to our auditors during the
periods indicated below.
Audit fees(1)-Yu CPA
Notes:
For the Years Ended December 31,
2022
560,000
2023
580,000
(1)
“Audit fees” means the aggregate fees billed for professional services rendered by our principal auditors for the audit of our annual financial statements 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 audit committee prior to the completion of the audit.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
None.
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ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
On November 14, 2023, we announced a share repurchase program, pursuant to which we were authorized to repurchase our
own ordinary shares, in the form of ADSs, with an aggregate value of up to US$2 million during the 12-month period thereafter through
November 13, 2024. As of March 31, 2024, we had purchased an aggregate of 52,334 ADSs for US$62.0 thousand on the open market
under this program, at a weighted average price of US$1.18 per ADS, including repurchase commissions.
The following table sets forth some information about our repurchases during the periods presented.
Period
November 1 – November 30, 2023
December 1 – December 31, 2023
Total
(c) Total
Number of
ADSs
Purchased as
Part of Publicly
Announced
Plans or
Programs
(a) Total
Number of
ADSs
(b) Average
Price Paid
Purchased per ADS (US$)
41,934
10,400
52,334
1.15
1.34
N/A
41,934
10,400
52,334
(d) Maximum
Dollar Value of
ADSs that May
Yet be
Purchased
Under the Plans
or Programs
1,951,981.37
1,938,015.21
N/A
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 16G. CORPORATE GOVERNANCE
Not applicable.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not applicable.
ITEM 16J. INSIDER TRADING POLICIES
Not applicable.
ITEM 16K. CYBERSECURITY
Risk Management and Strategy
We have implemented robust processes for assessing, identifying and managing material risks from cybersecurity threats and
monitoring the prevention, detection, mitigation and remediation of material cybersecurity incident. We have also integrated
cybersecurity risk management into our overall enterprise risk management system.
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We have established a dynamic and multi-layered cybersecurity defense system to effectively mitigate both internal and external
cyber threats. This comprehensive system spans multiple security domains, including network, host, and application layers. It integrates a
range of security capabilities such as threat defense, continuous monitoring, in-depth analysis, rapid response, as well as strategic
deception and countermeasures. Our approach to managing cybersecurity risks and safeguarding sensitive data is multi-faceted,
involving technological safeguards, procedural protocols, a rigorous program of surveillance on our corporate network, ongoing internal
and external evaluations of our security measures, a solid incident response framework, and regular cybersecurity training sessions for
our employees. Our IT department is actively engaged in continuous monitoring of our applications, platforms and infrastructure to
ensure prompt identification and response to potential issues, including emerging cybersecurity threats.
As of the date of this annual report, we have not experienced any material cybersecurity incidents or identified any material
cybersecurity threats that have affected or are reasonably likely to materially affect us, our business strategy, results of operations or
financial condition.
Governance
Our board of directors is responsible for overseeing our cybersecurity risk management. Our board of directors shall (i) maintain
oversight of the disclosure related to cybersecurity matters in current reports or periodic reports of our company, (ii) review updates to
the status of any material cybersecurity incidents or material risks from cybersecurity threats to our company, and the relevant disclosure
issues, if any, presented by our chief executive officer, chief financial officer and cybersecurity officer, or Cybersecurity Risk
Management Officers, on a quarterly basis, and (iii) review disclosure concerning cybersecurity matters in our annual report on Form 20-
F presented by our Cybersecurity Risk Management Officers.
At management level, our Cybersecurity Risk Management Officers are responsible for assessing, identifying and managing
material risks from cybersecurity threats to our company and monitoring the prevention, detection, mitigation and remediation of
material cybersecurity incident. Our Cybersecurity Risk Management Officers report to our board of directors (i) on a quarterly basis on
updates to the status of any material cybersecurity incidents or material risks from cybersecurity threats to our company, and the relevant
disclosure issues, if any, and (ii) on disclosure concerning cybersecurity matters in our annual report on Form 20-F.
If a cybersecurity incident occurs, our Cybersecurity Risk Management Officers will promptly organize relevant personnel for
internal assessment and if it is determined that the incident could potentially be a material cybersecurity event, our Cybersecurity Risk
Management Officers will promptly report the incident and assessment results to our disclosure committee, our board of directors, and
other members of senior management and external legal counsel, to the extent appropriate. Our Cybersecurity Risk Management Officers
shall prepare disclosure material on the cybersecurity incident for review and approval by the disclosure committee and board of
directors, and other members of senior management (if necessary), before it is disseminated to the public.
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PART III
ITEM 17.
FINANCIAL STATEMENTS
We have elected to provide financial statements pursuant to Item 18.
ITEM 18.
FINANCIAL STATEMENTS
The consolidated financial statements of Leju Holdings Limited and its subsidiaries are included at the end of this annual report.
ITEM 19. EXHIBITS
Exhibit Number
1.1
Description of Document
Amended and Restated Memorandum and Articles of Association (incorporated herein by reference to Exhibit 3.2
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)
2.1
2.2
2.3
2.4
2.5
4.1
4.2
4.3
4.4
4.5
Registrant’s Specimen American Depositary Receipt (included in Exhibit 2.3)
Registrant’s Specimen Certificate for Ordinary Shares (incorporated herein by reference to Exhibit 4.2 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)
Deposit Agreement. among the Registrant. the depositary and holder of the American Depositary Receipts
(incorporated herein by reference to Exhibit 4.3 to the registration statement on Form S-8 (File No. 333-197609),
as amended, initially filed with the Securities and Exchange Commission on June 27, 2014)
Form of Amendment No. 1 to Deposit Agreement between the Registrant, the depositary and holders and
beneficial owners of the American Depositary Receipts issued thereunder (incorporated by reference to Exhibit (a)
(2) of post-effective amendment No. 1 to the registration statement on Form F-6 (File No. 333-253812), filed with
the Commission on May 10, 2022)
Description 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)
2013 Share Incentive Plan (incorporated herein by reference to Exhibit 10.1 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)
Form of Indemnification Agreement between the Registrant and its directors and executive officers (incorporated
herein by reference to Exhibit 10.2 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)
Form of Employment Agreement between the Registrant and its executive officers (incorporated herein by
reference to Exhibit 10.3 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)
English translation of Exclusive Call Option Agreement, dated November 4, 2020, between Shanghai SINA Leju
Information Technology Co. Ltd., Beijing Yisheng Leju Information Services Co., Ltd. and Yinyu He
(incorporated herein by reference to Exhibit 4.4 to our annual report on Form 20-F (File No. 001-36396) filed with
the Securities and Exchange Commission on April 15, 2021)
English translation of Exclusive Call Option Agreement, dated November 4, 2020, between Shanghai SINA Leju
Information Technology Co., Ltd., Beijing Yisheng Leju Information Services Co., Ltd. and Xudong Zhu
(incorporated herein by reference to Exhibit 4.5 to our annual report on Form 20-F (File No. 001-36396) filed with
the Securities and Exchange Commission on April 15, 2021)
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Exhibit Number
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
4.17
4.18
Description of Document
English translation of Loan Agreement, dated November 4, 2020, between Shanghai SINA Leju Information
Technology Co., 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)
English translation of Loan Agreement, dated November 4, 2020, between Shanghai SINA Leju Information
Technology Co., 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)
English translation of Powers of Attorney, dated November 4, 2020, issued by Yinyu He to Shanghai SINA Leju
Information Technology Co., Ltd. (incorporated herein by reference to Exhibit 4.8 to our annual report on Form
20-F (File No. 001-36396) filed with the Securities and Exchange Commission on April 15, 2021)
English translation of Powers of Attorney, dated November 4, 2020, issued by Xudong Zhu to Shanghai SINA
Leju Information Technology Co., Ltd. (incorporated herein by reference to Exhibit 4.9 to our annual report on
Form 20-F (File No. 001-36396) filed with the Securities and Exchange Commission on April 15, 2021)
English translation of Equity Pledge Agreement, dated November 4, 2020, between Shanghai SINA Leju
Information Technology Co., Ltd., Beijing Yisheng Leju Information Services Co., Ltd. and Ymyu He
(incorporated herein by reference to Exhibit 4.10 to our annual report on Form 20-F (File No. 001-36396) filed
with the Securities and Exchange Commission on April 15, 2021)
English translation of Equity Pledge Agreement, dated November 4, 2020, between Shanghai SINA Leju
Information Technology Co., Ltd., Beijing Yisheng Leju Information Services Co., Ltd. and Xudong Zhu
(incorporated herein by reference to Exhibit 4.11 to our annual report on Form 20-F (File No. 001-36396) filed
with the Securities and Exchange Commission on April 15, 2021)
English translation of Exclusive Business Cooperation Agreement dated November 4, 2020 between Shanghai
SINA Leju Information Technology Co., Ltd. and Beijing Yisheng Leju Information Services Co., Ltd.
(incorporated herein by reference to Exhibit 4.12 to our annual report on Form 20-F (File No. 001-36396) filed
with the Securities and Exchange Commission on April 15, 2021)
English translation of Exclusive Call Option Agreement, dated November 4, 2020 between Shanghai Yi Yue
Information Technology Co. Ltd. Leju Hao Fang E-Commerce Co., Ltd. and Yinyu He (incorporated herein by
reference to Exhibit 4.13 to our annual report on Form 20-F (File No. 00136396) filed with the Securities and
Exchange Commission on April 15, 2021)
English translation of Exclusive Call Option Agreement, dated November 4, 2020, between Shanghai Yi Yue
Information Technology Co. Ltd., Leju Hao Fang E-Commerce Co., Ltd. and Weijie Ma (incorporated herein by
reference to Exhibit 4.14 to our annual report on Form 20-F (File No. 00136396) filed with the Securities and
Exchange Commission on April 15, 2021)
English 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)
English 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)
English translation of Powers of Attorney, dated November 4, 2020, issued by Yinyu He to Shanghai Yi Yue
Information Technology 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)
English translation of Powers of Attorney, dated November 4, 2020, issued by Weijie Ma to Shanghai Yi Yue
Information Technology 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)
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Exhibit Number
4.19
4.20
4.21
4.22
4.23
4.24
4.25
4.26
4.27
4.28
4.29
4.30
Description of Document
English translation of Equity Pledge Agreement, dated November 4, 2020, between Shanghai Yi Yue Information
Technology Co. Ltd., Leju Hao Fang E-Commerce Co., Ltd. and Yinyu He (incorporated herein by reference to
Exhibit 4.19 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities and Exchange
Commission on April 15, 2021)
English translation of Equity Pledge Agreement, dated November 4, 2020, between Shanghai Yi Yue Information
Technology Co. Ltd., Leju Hao Fang E-Commerce Co., Ltd. and Weijie Ma (incorporated herein by reference to
Exhibit 4.20 to our annual report on Form 20-F (File No. 00136396) filed with the Securities and Exchange
Commission on April 15, 2021)
English translation of Exclusive Business Cooperation Agreement, dated November 4, 2020, between Shanghai Yi
Yue Information Technology Co. Ltd. and Leju Hao Fang E-Commerce Co., Ltd. (incorporated herein by reference
to Exhibit 4.21 to our annual report on Form 20-F (File No. 001-36396) filed with the Securities and Exchange
Commission on April 15, 2021)
English translation of Exclusive Call Option Agreement, dated November 4, 2020, between Beijing Maiteng
Fengshun Science and Technology Co. Ltd., Beijing Jiajujiu E-Commerce Co. Ltd. and Ymyu He (incorporated
herein by reference to Exhibit 4.22 to our annual report on Form 20-F (File No. 001-36396) filed with the
Securities and Exchange Commission on April 15, 2021)
English translation of Exclusive Call Option Agreement, dated November 4, 2020, between Beijing Maiteng
Fengshun Science and Technology Co. Ltd., Beijing Jiajujiu E-Commerce Co. Ltd. and Weijie Ma (incorporated
herein by reference to Exhibit 4.23 to our annual report on Form 20-F (File No. 001-36396) filed with the
Securities and Exchange Commission on April 15, 2021)
English translation of Loan Agreement, dated November 4, 2020, between Beijing Maiteng Fengshun Science and
Technology 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)
English translation of Loan Agreement, dated November 4, 2020, between Beijing Maiteng Fengshun Science and
Technology 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)
English translation of Powers of Attorney, dated November 4, 2020, issued by Yinyu He to Beijing Maiteng
Fengshun Science and Technology Co., Ltd. (incorporated herein by reference to Exhibit 4.26 to our annual report
on Form 20-F (File No. 001-36396) filed with the Securities and Exchange Commission on April 15, 2021)
English translation of Powers of Attorney, dated November 4, 2020, issued by Weijie Ma to Beijing Maiteng
Fengshun Science and Technology Co., Ltd. (incorporated herein by reference to Exhibit 4.27 to our annual report
on Form 20-F (File No. 001-36396) filed with the Securities and Exchange Commission on April 15, 2021)
English translation of Equity Pledge Agreement, dated November 4, 2020, between Beijing Maiteng Fengshun
Science and Technology Co., Ltd., Beijing Jiajujiu E-Commerce Co., Ltd. and Yinyu He (incorporated herein by
reference to Exhibit 4.28 to our annual report on Form 20-F (File No. 00136396) filed with the Securities and
Exchange Commission on April 15, 2021)
English translation of Equity Pledge Agreement, dated November 4, 2020, between Beijing Maiteng Fengshun
Science and Technology Co., Ltd. Beijing Jiajujiu E-Commerce Co., Ltd. and Weijie Ma (incorporated herein by
reference to Exhibit 4.29 to our annual report on Form 20-F (File No. 00136396) filed with the Securities and
Exchange Commission on April 15, 2021)
English translation of Exclusive Business Cooperation Agreement, dated November 4, 2020, between Beijing
Maiteng Fengshun Science and Technology Co., Ltd. and Beijing Jiajujiu E-Commerce Co., Ltd. (incorporated
herein by reference to Exhibit 4.30 to our annual report on Form 20-F (File No. 001-36396) filed with the
Securities and Exchange Commission on April 15, 2021)
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Exhibit Number
4.31
4.32
4.33
4.34
4.35
4.36
4.37
4.38
4.39
4.40
4.41
4.42
English translation of Advertising Inventory Sale Agency Agreement, dated March 7, 2014, between SINA
Corporation and 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)
Description of Document
Amended and Restated Domain Name and Content License Agreement, dated March 7, 2014, between Beijing
SINA Internet Information Service Co., Ltd. and Beijing Yisheng Leju Information Services Co., Ltd.
(incorporated herein by reference to Exhibit 10.26 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)
Amended and Restated Trademark License Agreement, dated March 7, 2014, between Beijing SINA Internet
Information Service Co., Ltd. and Beijing Yisheng Leju Information Services Co., Ltd. (incorporated herein by
reference to Exhibit 10.27 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)
Amended and Restated Software License and Support Services Agreement, dated March 7, 2014, between
SINA.com Technology (China) Co. Ltd. and Shanghai SINA Leju Information Technology Co., Ltd. (incorporated
herein by reference to Exhibit 10.28 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)
Master 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), as amended, initially filed with the Securities and Exchange Commission on March 12, 2014)
Offshore Transitional Services Agreement, dated March 2014, between the Registrant and E-House (China)
Holdings Limited. (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)
Amendment 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)
Non-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), as amended, initially filed with the Securities and Exchange Commission on March 12, 2014)
English 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 the registration statement on Form F-1 (File No. 333194505), as amended, initially filed with the
Securities and Exchange Commission on March 12, 2014)
English 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 of the 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)
English 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 Beijing Jiajujiu 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)
Strategic Cooperation Agreement, dated March 10, 2014, between Shanghai Yi Yue Information Technology
Co., Ltd. and Shenzhen Tencent Computer Systems Company Limited (incorporated herein by reference to
Exhibit 10.37 to the registration statement on Form F-1 (File No. 333194505), as amended, initially filed with the
Securities and Exchange Commission on March 24, 2014)
143
Table of Contents
Exhibit Number
4.43
4.44
4.45*
8.1*
11.1
12.1*
12.2*
13.1**
13.2**
15.1*
15.2*
16.1
97.1*
101.INS*
101.SCH*
101.CAL*
101.DEF*
101.LAB*
101.PRE*
104*
Description of Document
Investor Rights Agreement, dated March 31, 2014, between E-House (China) Holdings Limited, THL O Limited
and the Registrant (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)
Registration Rights Agreement, dated March 21, 2017, between the Registrant and SINA Corporation
(incorporated herein by reference to Exhibit 4.42 to our annual report on Form 20-F(File No.001-36396), filed with
the Securities and Exchange Commission on April 21, 2017)
English translation of Agreement, dated September 13, 2023, between Shanghai TM Home E-Commerce Limited
and Shanghai SINA Leju Information Technology Co., Ltd.
Principal Subsidiaries and Consolidated Variable Interest Entities of the Registrant
Code of Business Conduct and Ethics of the Registrant (incorporated herein by reference to Exhibit 99.1 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)
CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Consent of Yu Certified Public Accountant, P.C.
Consent of Fangda Partners
Letter 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 Exchange Commission on July 15, 2020)
Clawback Policy
Inline XBRL Instance Document
Inline XBRL Taxonomy Extension Scheme Document
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Inline XBRL Taxonomy Extension Definition Linkbase Document
Inline XBRL Taxonomy Extension Label Linkbase Document
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File (embedded within the Inline XBRL document)
*
Filed herewith
** Furnished herewith
144
Table of Contents
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and
authorized the undersigned to sign this annual report on its behalf.
SIGNATURES
Date: May 14, 2024
LEJU HOLDINGS LIMITED
By:
/s/ Yinyu He
Name:Yinyu He
Title: Director and Chief Executive Officer
145
Table of Contents
LEJU HOLDINGS LIMITED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023
Report of Independent Registered Public Accounting Firm (PCAOB ID: 5910)
Consolidated Balance Sheets as of December 31, 2022 and 2023
Consolidated Statements of Operations for the Years Ended December 31, 2021, 2022 and 2023
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2021, 2022 and 2023
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2021, 2022 and 2023
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2022 and 2023
Notes to Consolidated Financial Statements for the Years Ended December 31, 2021, 2022 and 2023
Page
F-2
F-5
F-6
F-7
F-8
F-9
F-10
F-1
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of
Leju Holdings Limited
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Leju Holdings Limited (the “Company”), its subsidiaries and its
variable interest entities (collectively the “Group”) as of December 31, 2023, and 2022, the related consolidated statements of operations,
comprehensive income (loss), changes in equity, and cash flows, for each of the three years ended December 31, 2023, 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 financial positions of the Group as of December 31, 2023, and 2022, and the results of its operations
and its cash flows for each of the three years ended December 31, 2023, in conformity with generally accepted accounting principles in
the United States of America.
Emphasis of Matter - Going Concern
The accompanying consolidated financial statements have been prepared assuming the Group will continue as a going concern. As
discussed in Note 2(b) to the consolidated financial statements, the Group has accumulated significant losses from operations, and has
not yet to generate favorable working capital and operating cash flows. These conditions raise substantial doubt about its ability to
continue as a going concern. Management’s plan regarding these matters is also described in Note 2(b). The consolidated financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on
the Group’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Group in accordance
with the U.S. federal securities 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
obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error
or fraud. The Group is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As
part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of
expressing an opinion on the effectiveness of 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 to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is the matter, arising from the current audit of the consolidated financial statements, which
was communicated or required to be communicated to the audit committee, and that (i) related to accounts or disclosures which are
material to the consolidated financial statements, and (ii) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter, in any way, our opinion on the consolidated financial statements, taken as a whole,
and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matters or on the
accounts or disclosures to which they relate.
F-2
Table of Contents
Allowance for current expected credit losses (“CECL”) on accounts receivables and contract assets, deposits, other receivables and
amounts due from related parties.
As described in Notes 2 (y) in the consolidated financial statements, the Group adopted Accounting Standard Update (ASU) 2016-13,
Financial Instruments-Credit Losses (codified as Accounting Standard Codification Topic 326), since January 1st, 2020, which requires
measurement and recognition of current expected credit losses for financial instruments held at amortized cost. The management of the
Group have estimated an allowance for CECL of $120.54 million as of December 31, 2023 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 for customers with pledged credit risk (pledged type customers), with high credit risk (high risk type
customers) and the remaining (normal risk type customers) is collectively assessed by using provision matrix. The allowance amount has
been measured as the difference of the asset’s carrying amount and the estimates of present value of future cash flows based on historical
settlement pattern, past default experience of the debtor, overall economic environment in which 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.
We 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 judgments and management 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
the consolidated financial statements. Our audit procedures to respond the risk of error in the allowance for CECL included (i) obtaining
an understanding and assessing management’s method for developing the allowance for credit losses; (ii) evaluating the appropriateness
of the valuation models; (iii) testing the accuracy of management’s basic inputs in calculating CECL including aging report, historical
write-offs and recoveries, financial information of the borrowers, on a sample basis.; (iv) evaluating the reasonableness of significant
assumptions and judgments made by management to estimate the allowance for credit losses, including the Group’s provision matrix by
grouping individually assessed customers (pledged type customers, high risk type customers) and the normal risk type customers into
different categories, the basis of estimated loss rates applied in each category in the provision matrix (with reference to historical default
rates) and specific individually significant borrowers, and forward-looking information and; (v) evaluating the competence, capabilities
and objectivity of the specialists engaged by the Group.
F-3
Table of Contents
Going Concern Assessment
The consolidated financial statements of the Group are prepared on the going concern basis of accounting as described in note 2(b) to the
consolidated financial statements. The Group has discussed in the notes to its financial statements that material uncertainty exists about
its ability to continue as a going concern. There is a key judgement as to whether there is substantial doubt regarding the Group’s ability
to continue as a going concern.
The Group has prepared future cash flow forecasts which involves significant judgements and estimates of key variables such as future
market conditions, revenue and cash flows-generating capabilities under future economic conditions, ongoing and planned staff
downsizing, and etc.
Auditing the Group’s going concern assessment described above is complex and involves a high degree of auditor judgment to assess the
reasonableness of the cash flow forecasts, potential financing activities and other assumptions used in the Group’s going concern
analysis. The Group’s ability to execute the balanced cash flow managements and potential financing transactions are especially
judgmental, provided the global financial markets and economic conditions have been, and continue to be, volatile as results of the
macroeconomics, geopolitical tensions and a series of unpredictable events.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on
the consolidated financial statements. Our audit procedures included, among others, (i) evaluating management’s assumptions and
methodology used in the model to estimate the future cash flows for the next 12 months from the date of our opinion, by comparing
assumptions used by management against historical performance, economic and industry indicators, and the publicly available
information; (ii) assessing the key assumptions, including those pertaining to revenue and the timing of significant payments in the cash
flow forecast by comparing them to available revenue data in the subsequent period, existing expenditure payment level, and publicly
available market data; (iii) comparing the assumptions to those used in impairment assessments, such as for long-lived assets; (iv)
performing sensitivity analysis on key assumptions to determine their impact on the projections of future cash flows; and (v) evaluating
the sufficiency of the Group’s disclosures with respect to going concern assessment.
/s/ Yu Certified Public Accountant, P.C.
We have served as the Group’s auditor since 2020.
New York, New York
May 14, 2024
F-4
Table of Contents
LEJU HOLDINGS LIMITED
CONSOLIDATED BALANCE SHEETS
(In U.S. dollar except for share data)
ASSETS
Current assets:
Cash and cash equivalents
Restricted cash
Accounts receivable, net of allowance of $111,848,582 and $103,977,555 as of December 31, 2022 and 2023, respectively
Customer deposits, net of allowance of $3,878,996 and $3,206,238 as of December 31, 2022 and 2023, respectively
Prepaid expenses and other current assets, net of allowance of $555,963 and $363,880 as of December 31, 2022 and 2023, respectively
Amounts due from related parties, net of allowance of $743 and $12,995,675 as of December 31, 2022 and 2023, respectively
Total current assets
Property and equipment, net
Intangible assets, net
Right-of-use assets
Deferred tax assets, net
Other non-current assets, net of allowance of $120,130 and $106,660 as of December 31, 2022 and 2023, respectively
TOTAL ASSETS
LIABILITIES AND EQUITY
Current liabilities:
Short‑term borrowings (including short-term borrowings of the consolidated VIEs without recourse to Leju of nil and nil as of December 31,
2022 and 2023 respectively)
Accounts payable (including accounts payable of the consolidated VIEs without recourse to Leju of $653,700 and $36,210 as of December 31,
2022 and 2023, respectively)
Accrued payroll and welfare expenses (including accrued payroll and welfare expenses of the consolidated VIEs without recourse to Leju of
$10,717,186 and $5,244,295 as of December 31, 2022 and 2023, respectively)
Income tax payable (including income tax payable of the consolidated VIEs without recourse to Leju of nil and nil as of December 31, 2022
and 2023, respectively)
Other tax payable (including other tax payable of the consolidated VIEs without recourse to Leju of $8,684,712 and $6,654,473 as of
December 31, 2022 and 2023, respectively)
Amounts due to related parties (including amounts due to related parties of the consolidated VIEs without recourse to Leju of $668,153 and
$1,496,517 as of December 31, 2022 and 2023, respectively)
Advances from customers (including advance from customers of the consolidated VIEs without recourse to Leju of $43,096,996 and
$39,858,256 as of December 31, 2022 and 2023, respectively)
Lease liabilities, current (including lease liabilities, current of the consolidated VIEs without recourse to Leju of $5,013,721 and $3,026,771 as
of December 31, 2022 and 2023, respectively)
Accrued marketing and advertising expenses (including accrued marketing and advertising expenses of the consolidated VIEs without
recourse to Leju of $29,533,704 and $27,027,664 as of December 31, 2022 and 2023, respectively)
Other current liabilities (including other current liabilities of the consolidated VIEs without recourse to Leju of $10,317,192 and $6,955,252 as
of December 31, 2022 and 2023, respectively)
Total current liabilities
Deferred tax liabilities (including deferred tax liabilities of the consolidated VIEs without recourse to Leju of $435,848 and $383,124 as of
December 31, 2022 and 2023, respectively)
Lease liabilities, non-current (including lease liabilities, non-current of the consolidated VIEs without recourse to Leju of $15,400,328 and
$7,979,349 as of December 31, 2022 and 2023, respectively)
Total liabilities
Commitments and contingencies (Note 14)
Shareholders’ Equity (Deficit):
Ordinary shares ($0.001 par value): 1,000,000,000 shares authorized, 137,172,601 and 137,839,249 shares issued and outstanding, as of
December 31, 2022 and 2023, respectively
Additional paid-in capital
Treasury stock: nil and 52,334 shares as of December 31, 2022 and 2023, respectively
Accumulated deficit
Accumulated other comprehensive loss
Total Leju Holdings Limited Shareholders’ Equity (Deficit)
Non-controlling interests
Total equity (deficit)
TOTAL LIABILITIES AND EQUITY (DEFICIT)
December 31,
2022
2023
123,378,034
4,270,695
3,407,877
3,860,127
6,110,770
2,475,800
143,503,303
14,204,363
12,458,175
18,943,473
25,457,487
1,544,658
216,111,459
717,915
653,700
12,728,091
25,202,771
9,695,893
4,804,591
48,204,096
6,149,118
1,717,150
60,075
4,411,773
18,880,597
79,422,809
9,931,956
1,790,070
9,943,411
—
1,102,985
102,191,231
—
36,210
6,875,651
—
7,129,280
1,496,517
43,100,136
39,924,941
5,037,796
3,026,771
29,988,108
27,437,583
12,264,895
144,193,896
8,756,053
94,683,006
3,517,837
824,771
15,439,595
163,151,328
7,979,349
103,487,126
137,173
803,300,763
—
(738,602,296)
(11,601,054)
53,234,586
(274,455)
52,960,131
216,111,459
137,839
805,105,876
(60,930)
(794,536,455)
(11,819,819)
(1,173,489)
(122,406)
(1,295,895)
102,191,231
The accompanying notes are an integral part of these consolidated financial statements.
F-5
Table of Contents
LEJU HOLDINGS LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In U.S. dollar except for share data)
Revenues
E-commerce
Online advertising
Listing
Total net revenues
Cost of revenues
Selling, general and administrative expenses
Other operating income (loss), net
Loss from operations
Interest income, net
Other income (loss), net
Loss before taxes and loss from equity in affiliates
Income tax benefits
Loss before loss from equity in affiliates
Loss from equity in affiliates, net of tax of nil
Net loss
Less: Net income (loss) attributable to non-controlling interests
Net loss attributable to Leju Holdings Limited shareholders
Loss per ADS1:
Basic
Diluted
Shares used in computation of loss per ADS
Basic
Diluted
2021
Year Ended December 31,
2022
2023
411,097,123
122,522,232
497,615
534,116,970
(55,800,726)
(645,623,660)
560,394
(166,747,022)
3,130,211
208,875
(163,407,936)
13,497,784
(149,910,152)
(13,871)
(149,924,023)
1,009,512
(150,933,535)
278,463,695
64,707,215
11,274
343,182,184
(30,603,426)
(418,501,176)
297,663
(105,624,755)
2,334,540
1,496,392
(101,793,823)
12,120,235
(89,673,588)
(17,089)
(89,690,677)
(22,483)
(89,668,194)
266,134,068
50,720,362
—
316,854,430
(23,094,753)
(349,560,513)
(2,940,023)
(58,740,859)
1,260,896
(74,190)
(57,554,153)
1,781,581
(55,772,572)
—
(55,772,572)
161,587
(55,934,159)
(11.05)
(11.05)
(6.54)
(6.54)
(4.07)
(4.07)
13,665,216
13,665,216
13,704,238
13,704,238
13,754,135
13,754,135
The accompanying notes are an integral part of these consolidated financial statements.
1 On May 10, 2022, Leju announced that it would change its American depositary share (“ADS”) to ordinary share (“Share”) ratio from
one (1) ADS representing one (1) Share to one (1) ADS representing ten (10) Shares. The change in the ADS ratio was effective on May
20, 2022. For Leju’s ADS holders, the change in the ADS ratio had the same effect as a one-for-ten reverse ADS split. The ADS ratio
change has no impact on Leju’s underlying Shares. Loss per ADS for 2021 had been retrospectively adjusted accordingly.
F-6
Table of Contents
LEJU HOLDINGS LIMITED
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In U.S. dollar)
Net loss
Other comprehensive income (loss), net of tax of nil:
Foreign currency translation adjustments
2021
Year Ended December 31,
2022
2023
(149,924,023)
(89,690,677)
(55,772,572)
4,282,498
(10,232,583)
(228,303)
Comprehensive loss
Less: Comprehensive income (loss) attributable to non-controlling interests
(145,641,525)
1,021,108
(99,923,260)
(78,314)
(56,000,875)
152,049
Comprehensive loss attributable to Leju Holdings Limited shareholders
(146,662,633)
(99,844,946)
(56,152,924)
The accompanying notes are an integral part of these consolidated financial statements.
F-7
Table of Contents
LEJU HOLDINGS LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)
(In U.S. dollar except for share data)
Ordinary Shares
$
Number
Treasury Stock
$
Number
Balance at January 1, 2021
Net income (loss)
Share-based compensation
Vesting of restricted shares
Exercise of share options
Disposal of non-controlling interest
Foreign currency translation adjustments
Balance at December 31, 2021
Net loss
Share-based compensation
Vesting of restricted shares
Foreign currency translation adjustments
Balance at December 31, 2022
Net income (loss)
Share-based compensation
Treasury Stock
Vesting of restricted shares
Exercise of share options
Foreign currency translation adjustments
Balance at December 31, 2023
136,326,020
—
—
349,999
146,582
—
—
136,822,601
—
—
350,000
—
137,172,601
—
—
—
266,668
399,980
—
137,839,249
136,326
—
—
350
147
—
—
136,823
—
—
350
—
137,173
—
—
—
266
400
—
137,839
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(52,334)
—
—
—
(52,334)
Additional
Paid-in
Capital
Accumulated
Other
Accumulated Comprehensive
Subscription
Income (loss) Receivable
$
799,536,607
1,657,278
(350)
207,878
75,333
—
—
—
—
—
—
—
—
— 801,476,746
—
—
1,824,367
—
(350)
—
—
—
— 803,300,763
—
—
1,765,781
—
—
(60,930)
—
(266)
39,598
—
—
—
805,105,876
(60,930)
Deficit
$
(498,000,567)
— (150,933,535)
—
—
—
—
—
(648,934,102)
(89,668,194)
—
—
—
(738,602,296)
(55,934,159)
—
—
—
—
—
(794,536,455)
$
(5,695,204)
—
—
—
—
—
4,270,902
(1,424,302)
—
—
—
(10,176,752)
(11,601,054)
—
—
—
—
—
(218,765)
(11,819,819)
$
(50,286)
—
—
—
50,286
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Total Leju
Holdings
Limited
Shareholders’
Equity
(Deficit)
$
295,926,876
(150,933,535)
1,657,278
—
258,311
75,333
4,270,902
151,255,165
(89,668,194)
1,824,367
—
(10,176,752)
53,234,586
(55,934,159)
1,765,781
(60,930)
—
39,998
(218,765)
(1,173,489)
Non-
controlling
Interests
$
(1,141,916)
1,009,512
—
—
—
(75,333)
11,596
(196,141)
(22,483)
—
—
(55,831)
(274,455)
161,587
—
—
—
—
(9,538)
(122,406)
Total Equity
(Deficit)
$
294,784,960
(149,924,023)
1,657,278
—
258,311
—
4,282,498
151,059,024
(89,690,677)
1,824,367
—
(10,232,583)
52,960,131
(55,772,572)
1,765,781
(60,930)
—
39,998
(228,303)
(1,295,895)
The accompanying notes are an integral part of these consolidated financial statements.
F-8
Table of Contents
LEJU HOLDINGS LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. dollar)
Operating activities:
Net loss
Adjustments to reconcile net income (loss) to net cash provided by/(used in) operating activities:
2021
Year Ended December 31,
2022
2023
(149,924,023)
(89,690,677)
(55,772,572)
Depreciation and amortization
Loss from equity in affiliates
Allowance for credit losses
Share-based compensation
Unrealized loss (gain) on marketable securities
Non-cash lease expenses
Interest expenses
Loss (income) on disposal of property, plant and equipment
Others
Changes in operating assets and liabilities:
Accounts receivable
Contract assets
Customer deposits
Amounts due from related parties
Marketable securities
Right-of-use assets
Prepaid expenses and other current assets
Other non-current assets
Accounts payable
Accrued payroll and welfare expenses
Income tax payable
Other tax payable
Amounts due to related parties
Lease liabilities, current
Other current liabilities and accrued expenses
Deferred tax assets
Deferred tax liabilities
Lease liabilities, non-current
Net cash used in operating activities
Investing activities:
Deposits for and purchases of property and equipment and intangible assets
Proceeds from disposal of property and equipment
Net cash provided by/(used in) investing activities
Financing activities:
Proceeds from exercise of options
Proceeds from short-term borrowings
Repayment for short-term borrowings
Payment for interests of short-term borrowings
Repurchase of shares
Net cash provided by/(used in) financing activities
Effect of exchange rate changes on cash, cash equivalents and restricted cash
Net decrease in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at the beginning of the year
Cash, cash equivalents and restricted cash at the end of the year
Supplemental disclosure of cash flow information:
Income taxes paid
Interest expenses paid
Non-cash information on lease liabilities arising from obtaining right-of-use assets
Non-cash investing and financing activities:
Additional paid in capital increased/(decreased) in connection with business disposal
Non-controlling interest recognized in connection with business disposal
Reconciliation to amounts on consolidated balance sheets:
Cash and cash equivalents
Restricted cash
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows
13,369,416
13,871
111,267,396
1,657,278
1,722,700
4,860,980
9,147
(98,699)
167,579
61,918,496
458,775
469,505
5,165,007
1,369,581
(2,604,610)
(17,241,261)
64,497
(1,228,688)
(7,872,273)
(2,134,475)
(3,271,899)
526,038
120,414
(44,291,642)
(9,569,781)
(2,522,902)
(2,289,230)
(39,888,803)
(1,115,482)
797,174
(318,308)
258,311
784,230
—
(9,147)
—
1,033,394
5,862,923
(33,310,794)
285,706,696
252,395,902
1,358,100
9,147
2,064,279
75,333
(75,333)
250,313,799
2,082,103
252,395,902
12,582,314
17,089
13,743,558
1,824,367
—
4,519,231
51,972
29,844
—
24,213,386
1,603,704
(6,614,821)
1,437,931
1,185,893
(53,555)
19,816,231
(258,462)
(909,353)
(8,174,397)
(33,249,906)
(7,783,636)
(2,827,332)
(543,852)
(55,071,737)
22,666,371
(2,491,596)
(3,998,292)
(107,975,725)
(139,795)
146,147
6,352
—
746,990
(746,990)
(51,972)
—
(51,972)
(16,725,828)
(124,747,173)
252,395,902
127,648,729
141,144
51,972
2,783,430
—
—
123,378,034
4,270,695
127,648,729
12,030,029
—
8,318,386
1,765,781
—
3,024,351
1,534
1,309,239
(87,842)
5,294,754
—
4,548,075
(29,509,912)
—
5,975,711
1,550,761
460,160
(598,631)
(5,673,703)
(24,433,064)
(2,615,300)
(3,308,074)
(2,011,025)
(9,017,232)
25,245,257
(2,686,149)
(7,460,246)
(73,649,712)
(46,280)
2,627,334
2,581,054
39,998
—
(717,915)
(1,534)
(60,930)
(740,381)
(1,486,476)
(73,295,515)
127,648,729
54,353,214
454,376
1,534
601,633
—
—
48,204,096
6,149,118
54,353,214
The accompanying notes are an integral part of these consolidated financial statements.
F-9
Table of Contents
LEJU HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023
(In U.S. dollar)
1. Organization and Principal Activities
Leju Holdings Limited (the “Company” or “Leju”) was incorporated on November 20, 2013 in the Cayman Islands as an exempted
company with limited 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 furnishing industries 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-House Holdings repurchased all its ordinary shares held by SINA Corporation (“SINA”) for a total consideration consisting of
40,651,187 ordinary shares of 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 as the largest shareholder and SINA became a principal shareholder of Leju from December 30,
2016. E-House Holdings was ultimately controlled by Mr. Xin Zhou.
On November 4, 2020, E-House (China) Enterprise Holdings Limited (“E-House Enterprise”) purchased (i) 51,925,996 ordinary shares
of Leju from Mr. Xin Zhou and certain of his affiliated entities (the “Zhou Parties”) and (ii) 24,475,251 ordinary shares of Leju from the
SINA. Upon completion of these transactions, E-House Enterprise acquired the beneficial ownership of 76,401,247 ordinary shares of
Leju, and Leju became a subsidiary 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 to 70.23% and 29.77% by E-House Enterprise and Alibaba Investment Limited, respectively, completed the acquisition of the
76,401,247 ordinary shares of Leju from E-House Enterprise. Upon completion of these transactions, Leju has become a subsidiary of
TM Home, which was also controlled by E-house Enterprise since then. SINA remained to be a principal shareholder of Leju. On 15
August 2023, E-House Enterprise subscribed for certain shares of TM Home from Alibaba Investment Limited. As a result, TM Home
was owned by E-House Enterprise and Alibaba Investment Limited as to approximately 89.207% and 10.793% from then.
The following table lists major subsidiaries and the consolidated VIEs of the Company as of December 31, 2023:
Shanghai SINA Leju Information Technology Co., Ltd (“Shanghai SINA Leju”)
E-House City Re-House Real Estate Agency (Shanghai) Co., Ltd (“City Re-House”)
Shanghai Yi Yue Information Technology Co., Ltd (“Shanghai Yi Yue”)
Beijing Maiteng Fengshun Science and Technology Co., Ltd (“Beijing Maiteng”)
Beijing Yisheng Leju Information Services Co., Ltd. (“Beijing Leju”)
Shanghai Leju Hao Fang Information Service Co., Ltd. (“Leju Hao Fang”) (formerly
known as Shanghai Yi Xin E-Commerce Co., Ltd.)
Beijing Jiajujiu E-Commerce Co., Ltd. (“Beijing Jiajujiu”)
2. Summary of Principal Accounting Policies
(a) Basis of presentation
Date of
Place of
Percentage of
Incorporation Incorporation Ownership
PRC
PRC
PRC
PRC
PRC
08-May-08
04-Mar-10
16-Sep-11
04-Jan-12
13-Feb-08
100 %
100 %
100 %
84 %
VIE
05-Dec-11
22-Mar-12
PRC
PRC
VIE
VIE
The consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the
United States of America (“US GAAP”).
F-10
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(b ) Liquidity and going concern
The Group’s consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets
and liquidation of liabilities during the normal course of operations. As of December 31, 2023, the Group had cash and cash equivalents
of $48.20 million and restricted cash of $6.15 million and working capital was negative 15.26 million. The Group also generated a loss
from operations of $58.74 million and had operating cash outflows $73.65 million for the year then ended. the Group’s cash level as of
December 31, 2023 may not be sufficient for operations for the next twelve months from the date of issuance of these consolidated
financial statements. Starting from the period affected by the epidemic, there was a significant reduction in real estate transaction
volumes as many of the Group’s developer clients had to close their project sales centers and showrooms for an extended period. This
adversely affected the Group’s e-commerce services, and many real estate developers also scaled back online advertising expenditures.
Although China began to modify the zero COVID-19 policy at the end of 2022, the economic environment and the real estate market in
2023 have not yet recovered. Customers still need time to recover from the economic effects of the pandemic, bringing significant
uncertainty to the group’s future revenue.
These factors raise substantial doubt about the Group’s ability to continue as a going concern for the next twelve months from the date of
issuance of these consolidated financial statements. Management’s plan to alleviate the substantial doubt about the Group’s ability to
continue as a going concern includes attempting to improve its business profitability, its ability to generate sufficient cash flow from its
operations to meet its operating needs on a timely basis. The management plan cannot alleviate the substantial doubt of the Group’s
ability to continue as a going concern. There can be no assurance that the Group will be successful in achieving its strategic plans, that
the Group’s future capital raises will be sufficient to support its ongoing operations, or that any additional financing will be available in a
timely manner or with acceptable terms, if at all. If the Group is unable to raise sufficient financing or events or circumstances occur
such that the Group does not meet its strategic plans, it would have a material adverse effect on the Group’s financial position, results of
operations, cash flows, and ability to achieve its intended business objectives. The consolidated financial statements have been prepared
assuming that the Group will continue as a going concern and, accordingly, do not include any adjustments that might result from the
outcome of this uncertainty.
(c) Basis of consolidation
The consolidated financial statements include the financial statements of Leju, its majority owned subsidiaries and its VIEs, Beijing Leju,
Leju Hao Fang 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 the primary beneficiary of such VIE. In determining whether the Group is the primary beneficiary, the Group considers if the
Group (1) has power to direct the activities that most significantly affects the economic performance of the VIE, and (2) receives the
economic benefits of the VIE that could be significant to the VIE. If deemed the primary beneficiary, the Group consolidates the VIE.
VIE arrangements
PRC regulations currently prohibit or restrict foreign ownership of companies that provide internet content and advertising services. To
comply with these regulations, the Group provides such activities through its VIEs and their subsidiaries. To provide the Group effective
control over and the ability to receive substantially all of the economic benefits of its VIEs and their subsidiaries, certain of the
Company’s subsidiaries, Shanghai SINA Leju, Shanghai Yi Yue and Beijing Maiteng (collectively, the “Foreign Owned Subsidiaries”)
entered into a series of contractual arrangements with Beijing Leju, Leju Hao Fang and Beijing Jiajujiu (collectively the “VIEs”) and
their respective shareholders, respectively, as summarized below:
Name of Foreign
Owned
Subsidiaries
Shanghai SINA Leju
Shanghai Yi Yue
Beijing Maiteng
Foreign Owned
Subsidiaries’
Economic Ownership
of VIES
Name of VIEs
100 % Beijing Leju
100 % Leju Hao Fang Operate the e-commerce business
100 % Beijing Jiajujiu Operate the online home furnishing business
Operate the online advertising and listing business
Activities of VIEs
F-11
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The VIEs hold the requisite licenses and permits necessary to conduct internet content and advertising services activities from which
foreign ownership of companies are prohibited or restricted. In addition, the VIEs hold leases and other assets necessary to operate such
business and generate a majority of the Group’s revenues.
Agreements that Transfer Economic Benefits of the VIEs to the Group
Exclusive Consulting and Technical Support Agreement. Pursuant to an exclusive consulting and technical support agreement between
the Foreign Owned Subsidiaries and the respective VIEs, the Foreign Owned Subsidiaries provide the respective VIEs with a series of
consulting and technical support services and are entitled to receive related fees. The term of this exclusive technical support agreement
will expire upon dissolution of the VIEs. Unless expressly provided by this agreement, without prior written consent of the Foreign
Owned Subsidiaries, the VIEs may not engage any third party to provide the services offered by the Foreign Owned Subsidiaries under
this agreement.
Agreements that Provide Effective Control over VIEs
Exclusive Call Option Agreement. Each of the shareholders of the VIEs has entered into an exclusive call option agreement with the
respective Foreign Owned Subsidiaries. Pursuant to these agreements, each of the shareholders of the VIEs has granted an irrevocable
and unconditional option to the respective Foreign Owned Subsidiaries or their designees to acquire all or part of such shareholder’s
equity interests in VIEs at its sole discretion, to the extent as permitted by PRC laws and regulations then in effect. The consideration for
such acquisition of all equity interests in the VIEs will be equal to the registered capital of the VIEs, and if PRC law requires the
consideration to be greater than the registered capital, the consideration will be the minimum amount as permitted by PRC law. In
addition, the VIEs irrevocably and unconditionally granted the respective Foreign Owned Subsidiaries an exclusive option to purchase,
to the extent permitted under the PRC law, all or part of the assets of the VIEs. The exercise 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 greater than the book value, the price will be the
minimum amount as permitted by PRC law. The call option may be exercised by the respective Foreign Owned Subsidiaries or their
designees.
Loan Agreement. Under the loan agreement among shareholders of the VIEs and the respective Foreign Owned Subsidiaries, each of
the respective Foreign Owned Subsidiaries has granted an interest-free loan to the shareholders of the VIEs, solely for their purchase of
the equity interest of the VIEs, investing or operating activities conducted in the VIEs. Each loan agreement will be due upon the earlier
of twenty years from the 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
the respective 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 to provision of this agreement. The term of the agreement will be automatically extended for one year upon the expiration, if the
Foreign Owned Subsidiary gives the other parties written notice requiring the extension at least 30 days prior to expiration and the same
mechanism will apply subsequently 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
Foreign Owned Subsidiaries. Pursuant to which these shareholders pledged their respective equity interest in the VIEs to guarantee the
performance of the obligations of the VIEs. The Foreign Owned Subsidiaries, as pledgee, will be entitled to certain rights, including the
right to sell the pledged equity interests. Pursuant to the equity pledge agreement, each shareholder of the VIEs cannot transfer, sell,
pledge, dispose of or otherwise create any new 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 their respective obligations under the above agreements. The equity pledges of the
VIEs have been registered with the relevant local branch of the State Administration for Industry and Commerce, or SAIC.
F-12
Table of Contents
Risks in relation to the VIE structure
The Company believes that the Foreign Owned Subsidiaries’ contractual arrangements with the VIEs are in compliance with PRC law
and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce these
contractual arrangements and the interests of the shareholders of the VIEs may diverge from that of the Company and that may
potentially increase the risk that they would seek 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
matters requiring shareholder approval in the VIEs. As noted above, the Company believes this power of attorney is legally enforceable
but may not be as effective 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,
the Company may be subject to fines or other actions. The Company does not believe such actions would result in the liquidation or
dissolution of the Company, 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 most significantly affect the entity’s economic performance and (2) the right to receive benefits from the VIEs. Accordingly, the
Company is the primary beneficiary of the VIEs and has consolidated the financial results of the VIEs.
F-13
Table of Contents
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,
Cash and cash equivalents
Restricted cash
Accounts receivable, net
Customer deposits, net
Amounts due from related parties, net
Other current assets, net
Total current assets
Total non-current assets
Total assets
Accounts payable
Accrued payroll and welfare expenses
Other tax payable
Amounts due to related parties
Advances from customers
Lease liabilities, current
Accrued marketing and advertising expenses
Other current liabilities
Total current liabilities
Deferred tax liabilities
Lease liabilities, non-current
Total liabilities
Total revenues
Cost of revenues
Net loss
Net cash used in operating activities
Net cash provided by/ (used in) investing activities
Net cash provided by/ (used in) financing activities
2022
$
90,795,643
4,270,695
2,627,814
3,860,127
2,289,594
4,007,633
107,851,506
47,690,614
155,542,120
653,700
10,717,186
8,684,712
668,153
43,096,996
5,013,721
29,533,704
10,317,192
108,685,364
435,848
15,400,328
124,521,540
2023
$
22,838,932
6,098,009
1,009,192
60,075
18,750,385
2,792,808
51,549,401
18,002,672
69,552,073
36,210
5,244,295
6,654,473
1,496,517
39,858,256
3,026,771
27,027,664
6,955,252
90,299,438
383,124
7,979,349
98,661,911
2021
$
533,619,355
(47,730,331)
(81,530,172)
(41,427,975)
431,057
—
Year Ended December 31,
2022
$
343,170,910
(24,394,266)
(10,882,414)
(93,191,543)
(73,872)
—
2023
$
316,854,430
(16,773,390)
(35,447,389)
(65,797,108)
705,572
—
There are no consolidated VIEs’ assets that are collateral for the VIEs’ obligations or are restricted solely to settle the VIEs’ obligations.
The Company has not provided any financial support that it was not previously contractually required to provide to the VIEs.
(d) Use of estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that
affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from such estimates.
Significant accounting estimates reflected in the Group’s financial statements include (i) revenue recognition, (ii) provision for credit
losses of accounts receivable and contract assets, customer deposits, other receivables recorded in prepayments and other current assets
and amounts due from related parties, (iii) assessment for impairment of long-lived assets, intangible assets and goodwill, (iv) fair value
of financial instruments, (v) valuation and recognition of share-based compensation expenses, (vi) useful lives of property and equipment
and intangible assets, (vii) and provision for income tax and valuation allowance for deferred tax assets.
F-14
Table of Contents
(e) Fair value of financial instruments
The Group records its financial assets and liabilities at fair value on a recurring basis. Fair value reflects the price that would be received
from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When
determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers
the principal or most advantageous 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
unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the
lowest level of input that is 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 or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities
in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant
inputs are observable or can be 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
measurement of 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 2021, 2022 and 2023.
For cash and cash equivalents, restricted cash, accounts receivable, customer deposits, other receivables, accounts payable, other
payables, and amounts due from/to related parties, the carrying value approximates its fair value due to its short-term nature.
(f) Business combinations
Business combinations are recorded using the purchase method of accounting and, accordingly, the acquired assets and liabilities are
recorded at their fair market value at the date of acquisition. Any excess of acquisition cost over the fair value of the acquired assets and
liabilities, including identifiable intangible assets, is recorded as goodwill.
(g) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and demand deposits, which are unrestricted as to withdrawal and use, and which have
original maturities of three months or less.
(h) Restricted cash
Any cash that is legally restricted from use is classified as restricted cash. As of December 31, 2022 and 2023, the restricted cash
balances represent (i) $130,745 and nil, which related to collection and payment as a service for real estate developers. The withdrawal
of the cash in bank is required to be pre-approved by real estate developers. (ii) $4,139,950 and $6,149,118, which was the full dispute
amount and estimated maximum damages of certain law suits, was frozen by the courts for law suits related and accounted for as
restricted bank balances.
F-15
Table of Contents
(i) Marketable securities
Marketable securities include securities that are classified as trading securities. Trading securities represent equity securities that are
bought and held principally for the purpose of selling them in the near term, and they are reported at fair value, with both unrealized and
realized gains and losses reported as other income (loss). The fair value of marketable securities is based upon the quoted price in an
active market for identical instruments (Level 1).
(j) Customer deposits
The Group provides online real estate e-commerce services for its developer customers. Some real estate developers require the Group to
pay an upfront and refundable deposit to obtain the exclusive right to provide e-commerce services for a real estate development project.
These deposits are refunded to the Group subject to certain pre-determined criteria specified in the deposit agreement. Customer deposits
are recorded as either current or non-current assets based on the Group’s estimate of the date of refund. As of December 31, 2022 and
2023, the Group recognized $3,878,996 and $3,206,238 for expected credit loss against customer deposits which is mainly attributable to
overdue customer deposits of $3,158,826 and $3,195,718.
(k) Investment in affiliates
Affiliated companies are entities over which the Group has significant influence, but which it does not control. The Group generally
considers an ownership 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 profits or losses of affiliated companies is recognized in the income statement and its share of post-acquisition movements in
other comprehensive income is recognized in other comprehensive income. Unrealized gains on transactions between the Group and its
affiliated companies are eliminated to the extent of the Group’s interest in the affiliated companies; unrealized losses are also eliminated
unless the transaction provides evidence of an impairment of the asset transferred. When the Group’s share of losses in an affiliated
company equals or exceeds its interest in the affiliated company, the Group does not recognize further losses, unless the Group has
incurred obligations or made payments on behalf of the affiliated company.
The Group is required to perform an impairment assessment of its investments whenever events or changes in business circumstances
indicate that the carrying value of the investment may not be fully recoverable. An impairment loss is recorded when there has been a
loss in value of the investment that is other than temporary. As of December 31, 2022 and 2023, the Group determined that no such
events were presented. The Group did not record any impairment losses in any of the periods reported.
(l) Leases
On January 1, 2019, the Group adopted ASU No. 2016-02, Leases (Topic 842), as amended, which supersedes the lease accounting
guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-
of-use assets on the balance sheet 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 of adoption 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 not separate non-lease components from lease components, and to not reassess lease classification, treatment of initial
direct costs, or whether an existing 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 are recognized at lease commencement date based on the present value of remaining lease
payments over the lease terms. The Group considers only payments that are fixed and determinable at the time of lease commencement.
F-16
Table of Contents
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
readily determined, its incremental borrowing rate. As most of the Group’s leases do not provide an implicit rate, the Group uses its
incremental borrowing rate as the discount rate for the lease. The Group’s incremental borrowing rate is estimated to approximate the
interest rate on a collateralized basis with similar terms and payments. The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any
initial direct costs incurred less any lease incentives received. The Group’s lease terms may include options to extend or terminate the
lease. Renewal options are considered within the right-of-use assets 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, net
Property and equipment is recorded at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the
following estimated useful lives:
Leasehold improvements
Buildings
Furniture, fixtures and equipment
Motor vehicles
Over the shorter of the lease term or their estimated useful lives
30 years
3-5 years
5 years
Gains and losses from the disposal of property and equipment are included in income (loss) from operations.
(n) Intangible assets, net
Acquired intangible assets mainly consist of the advertising agency agreement and license agreements with SINA, customer
relationships, and database license are recorded at fair value on the acquisition date. All intangible assets, with the exception of customer
relationships, are amortized ratably over the contract period. Intangible assets resulting out of acquired customer relationships are
amortized based on the timing of the revenue expected to be derived from the respective customer.
(o) Impairment of long-lived assets
The Group evaluates its long-lived assets, such as fixed assets and purchased or acquired intangible assets with finite lives, for
impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in
accordance with ASC subtopic 360-10, Property, Plant and Equipment: Overall (“ASC 360-10”). When these events occur, the Group
assesses the recoverability of the long-lived assets by comparing the carrying amount of the assets to future undiscounted net cash flow
expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than
the carrying amount of the assets, the Group will recognize an impairment loss equal to the excess of the carrying amount over the fair
value of the assets. Impairment of long-lived assets were nil and nil as of December 31, 2022 and 2023, respectively.
(p) Income taxes
Deferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities, and their reported amounts
in the financial statements, net operating loss carry-forwards and credits by applying enacted statutory tax rates applicable to future years
when the reported 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 some portion or all of the deferred
tax assets will not be realized. 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
upon examination. For such positions, the amount of tax benefit that the Group recognizes is the largest amount of tax benefit that is
more than fifty percent likely of being sustained upon the ultimate settlement of such uncertain position. The Group records interest and
penalties as a component of income tax expense.
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(q) Share-based compensation
Share-based compensation expense is measured on the grant date of the share award, based on the fair value of the award, and
recognized as an expense over the requisite service period. Management has made an estimate of expected forfeitures and recognizes
compensation cost only for those equity awards expected to vest.
(r) Treasury stock
The Group accounted for those shares repurchased as treasury stock at cost of purchase, treasury stock, and is shown separately in the
shareholders’ equity as the Group has not yet decided on the ultimate disposition of those shares acquired. When the Group decides to
cancel the treasury stock, the difference between the original issuance price and the repurchase price is recognized as additional paid - in
capital.
(s) Revenue recognition
The Group generates real estate online revenues principally from e-commerce, online advertising, and listing services and enters into
separate contracts with its customers under each revenue stream. Revenues are recorded, after considering reductions by estimates for
refund allowances and 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 on January 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 an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
To achieve that core principle, 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 obligation
China’s real estate industry experienced a steep downturn since the second half of 2021 and many real estate developers faced severe
operational challenges. This had a direct and negative impact on the Group’s online advertising and e-commerce businesses. Due to the
continuous decline of the real estate industry, the recoverable amount and time of some customers’ transaction consideration cannot be
reasonably expected. Since January 1, 2022, the Group has not recognized the revenue from such customers until the actual receipt of the
transaction consideration.
E-commerce of discount coupons
The Group offers individual property buyers discount coupons that enable them to purchase specified properties from real estate
developers at discounts greater than the face value of the fees charged by the Group. Discount coupons are collected initially upfront
from the property buyers and are refundable at any time before they are used to purchase the specified properties. As such, these fees are
recorded as advance from customers in the Group’s consolidated balance sheets. In this context, the Group determines its customers to be
individual property buyers and has identified one single performance obligation to be the sale of discount coupons. The Group
determines the sale of discount coupons to be satisfied at a point in time only when confirmation letters are obtained from its customers
or developers that prove the use of the coupons. The transaction price is the discount coupon fees charged by the Group which is fixed in
the contract with individual property buyers.
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E-commerce of commission coupons
The Group issues commission coupons and provides an information platform to individual brokers on which they can provide
information about potential individual property buyers to specific listings of real estate developers with whom the Group works. As long
as the potential buyers who were referred by individual brokers reach a specific sale with the real estate developer, the individual brokers
would redeem the commission coupons for the successful referrals, the group could earn the commission from the developer for the
successful referrals. In this case, the Group has identified its clients as real estate developers and has identified a single performance
obligation to provide the developer with successful referrals of the property purchases. The Group will recognize service revenue at a
certain point in time when the obligations were fulfilled which were confirmed by real estate developers. Any commissions and other
payments received in advance will be deferred until the obligations are fulfilled. The transaction price is the commission charged by the
Group and is fixed in the confirmation letter. The Group will pay commissions for the individual brokers’ successful referrals only after
the redemption of the commission coupons and the confirmation of the successful referrals of properties from real estate developers. The
Group has the discretion to determine the amount of commission paid for the individual brokers’ successful referrals.
Set out below is the disaggregation of the Group’s revenue from E-commerce:
E-commerce of discount coupons
E-commerce of commission coupons
Total revenue from E-commerce
Online advertising
2021
$
411,097,123
Year Ended December 31,
2022
$
182,940,792
— 95,522,903
2023
$
28,385,689
237,748,379
411,097,123
278,463,695
266,134,068
In 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 other independent outlets.
Management considers the Group acts as principal in this arrangement when the Group is a contracting party to its advertisers and is
primarily responsible for delivering the specified service to the advertisers. The Group controls the specified service before that service is
transferred to an advertiser, because (i) the Group has the discretion to decide which media outlets to use and what type of the
advertisements to be placed; (ii) the Group 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 of methodology, including viewership (CPM) or click (CPC) or others, cannot be compensated
by the total consideration obtained from the advertisers; and (iii) the Group has the discretion to determine the fee charged to the
advertisers, which affects the Group’s margin as the costs incurred might vary. Therefore the Group reports revenue earned from the
advertisers and costs paid to media outlets related to these transactions on 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 media outlets and 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. In some circumstances, the
Group 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 the Group recognizes 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 the website for a
specified period 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
recognized over time on a straight-line basis over the contract period of display and when collection is probable. The transaction price is
the fixed fee outlined in the contract. No rebates are given to the real estate brokers.
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Contract balances
The Group does not have unconditional right to the consideration for advertising or listing services until all promises have been fulfilled
and therefore initially records a contract asset when recognizing revenue. Upon fulfillment of all advertising or listing services, contract
assets will be reclassified as a receivable. No contract assets, net, were recognized as of December 31, 2022 and 2023 respectively.
Disaggregation of revenue
In accordance with ASC 606-10-50, the Group believes the disaggregation of revenue from contracts with customers by e-commerce,
online advertising and listing to sufficiently achieve the disclosure objective of depicting how the nature, amount, timing, and uncertainty
of revenue and cash flows are affected by economic factors.
Practical Expedients and Exemptions
For the Group’s contracts that have an original duration of one year or less, the Group uses the practical expedient applicable to such
contracts and has not disclosed the transaction prices for the remaining performance obligations as of the end of the reporting period or
when the Group expects to recognize this revenue.
(t) Cost of revenue
Cost 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 equipment and fees paid to media outlets for advertising resources.
(u) Marketing and advertising expenses
Marketing and advertising expenses consist primarily of targeted online and offline marketing costs for promoting the Group’s e-
commerce projects and the Group’s own brand building, such as Leju property visit, sponsored marketing campaigns, online or print
advertising, public relations and sponsored events. The Group expenses all marketing advertising costs as incurred and record these costs
within “Selling, general and administrative expenses” in the consolidated statements of operations when incurred. The nature of the
Group’s direct marketing activities is such that they are intended to attract subscribers for the online advertising and potential property
buyers to purchase the discount coupons. The Group incurred marketing and advertising expenses amounting to $442,975,679,
$237,268,507 and $51,548,015 for the years ended December 31, 2021, 2022 and 2023, respectively.
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(v) Commissions under commission coupons business
Commissions under commission coupons business are the fee paid for individual brokers’ successful referrals, upon the redemption of
the commission coupons and confirmation from the real estate developer. The Group expenses all real estate agent commissions as
incurred and records these costs within “Selling, general and administrative expenses” in the consolidated statements of operations when
incurred. The Group incurred commissions amounting to nil, $91,338,490 and $233,941,608 for the years ended December 31, 2021,
2022 and 2023, respectively. Any fee from the redemption of the commission coupons would be netted with the commissions for
individual brokers’ successful referrals on the consolidated statements of operations.
(w) Foreign currency translation and transaction.
The functional currency of the Company is the United States dollar (“U.S. dollar”) and is used as the reporting currency of the Group.
Monetary assets and liabilities denominated in currencies other than the U.S. dollar are translated into U.S. dollar at the rates of exchange
ruling at the balance sheet date. Equity accounts are translated at historical exchange rates and revenues, expenses, gains and losses are
translated using the average rate for the year. Translation adjustments are reported as foreign currency translation adjustment and are
shown as a separate component of other 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 of exchange prevailing when the transactions occur. Transaction gains and losses are recognized in the consolidated
statements of operations.
The Group recorded exchange losses of $431,686 , exchange gain of $1,217,262 and exchange losses of $74,190 for the years ended
December 31, 2021, 2022 and 2023, respectively, as a component of other income (loss), net, in the consolidated statements of
operations.
(x) Government subsidies
Government subsidies include cash subsidies received by the Company’s subsidiaries and VIEs in the PRC from local governments.
These subsidies are generally provided as incentives for conducting business in certain local districts and are typically granted based on
the amount of value-added tax, and income tax generated by the Group in certain local districts. Such subsidies allow the Group full
discretion in utilizing the funds 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 $560,394, $297,663 and $147,773 were included in other operating income for the
years ended December 31, 2021, 2022 and 2023, respectively. Subsidies are recognized when cash is received and when all the
conditions for their receipt have been satisfied.
(y) Concentration of credit risk
Financial instruments that potentially expose the Group to concentrations of credit risk consist primarily of cash and cash equivalents,
accounts receivable 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
its customers in certain circumstances when accounts receivables’ aging is over one year. The Group establishes an allowance for credit
losses primarily based upon factors surrounding the credit risk of specific customers, including creditworthiness of the clients, aging of
the receivables and other specific circumstances related to the accounts. Accounts receivable balances are written off after all collection
efforts have been exhausted.
The Group adopted Accounting Standard Update (ASU) 2016-13, Financial Instruments-Credit Losses (codified as Accounting Standard
Codification Topic 326), since January 1, 2020, which requires measurement and recognition of current expected credit losses for
financial instruments held at amortized cost.
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The Group’s accounts receivable and contract assets, customer deposits, other receivables recorded in prepayments and other current
assets and amounts 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 on an individual basis for customers with good credit rating (strategic type customers), with pledged credit risk (pledged type
customers), with high credit risk (high risk type customers) and the remaining (normal risk type customers). For each customer, the
Group considers historical settlement pattern, past default experience of the debtor, overall economic environment in which the debtors
operate, and also the assessment of both current and future development of environment as of the date when this report issued. This is
assessed at each quarter based on the Group’s specific facts and circumstances.
Balances of the allowance for credit losses for accounts receivable and contract assets by each risk category are as follows:
Balances of customers with pledged credit risk
Balances of customers with high credit risk
Balances of customers with normal risk
Movement of the allowance for credit losses for accounts receivable and contract assets is as follows:
As of December 31,
2022
$
2023
$
2,354,182
105,189,074
4,305,326
111,848,582
2,119,799
99,692,281
2,165,475
103,977,555
Balance as of January 1
Provisions/(reversal)
Write-offs
Changes due to foreign exchange
Balance as of December 31
Movement of the allowance for customer deposits, is as follows:
Balance as of January 1
Provisions/(reversal)
Write-offs
Changes due to foreign exchange
Balance as of December 31
2021
$
12,683,779
101,172,959
(600,847)
2,118,740
115,374,631
Year Ended December 31,
2022
$
115,374,631
9,148,173
(2,665,754)
(10,008,468)
111,848,582
2023
$
111,848,582
(3,977,566)
(2,079,499)
(1,813,962)
103,977,555
2021
$
3,480
10,286,671
(30,956)
10,259,195
Year Ended December 31,
2022
$
10,259,195
4,035,869
— (10,216,240)
(199,828)
3,878,996
2023
$
3,878,996
(613,238)
—
(59,520)
3,206,238
Movement of the allowance for other receivables in prepaid expenses and other current assets, is as follows:
Balance as of January 1
Provisions/(reversal)
Write-offs
Changes due to foreign exchange
Balance as of December 31
F-22
Year Ended December 31,
2022
$
2023
$
2021
$
335,386
(190,200)
—
5,584
150,770
150,770
434,867
—
(29,674)
555,963
555,963
(184,361)
—
(7,722)
363,880
Table of Contents
Movement of the allowance for amount due from related parties, is as follows:
Balance as of January 1
Provisions/(reversal)(1)
Write-offs
Changes due to foreign exchange
Balance as of December 31
(1) The addition of Provisions in 2023 is mainly influenced by E-House Enterprise. Refer to Note 13 for details.
Year Ended December 31,
2022
$
1,175
(346)
—
(86)
743
2021
$
3,188
(2,034)
—
21
1,175
2023
$
743
13,105,115
—
(110,183)
12,995,675
Movement of the allowance for other non-current assets, is as follows:
Balance as of January 1
Provisions/(reversal)
Write-offs
Changes due to foreign exchange
Balance as of December 31
As of December 31,
2022
$
—
124,995
—
(4,865)
120,130
2023
$
120,130
(11,564)
—
(1,906)
106,660
Details of the accounts receivable and contract assets from customers accounting for 10% or more of total accounts receivable and
contract assets are as follows:
Customer A
Accounts receivable, gross
Allowance for credit losses
Accounts receivable, net
(z) Income (Loss) per ADS
As of December 31,
2022
$
88,285,716
(88,285,716)
—
2023
$
86,338,094
(86,338,094)
—
Basic income (loss) per ADS is computed by dividing income (loss) attributable to holders of ADS by the weighted average number of
ADS outstanding during the period.
Diluted income (loss) per ADS reflects the potential dilution that could occur if securities or other contracts to issue ADS were exercised
or converted into ADS.
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The following table sets forth the computation of basic and diluted income (loss) per ADS for the periods indicated:
Net loss attributable to Leju ordinary shareholders—basic and diluted
$
(150,933,535)
$
(89,668,194)
$
(55,934,159)
2021
Year Ended December 31,
2022
2023
Weighted average number of ADS outstanding—basic
13,665,216
13,704,238
13,754,135
Stock options and restricted shares
Weighted average number of ADS outstanding-diluted
—
13,665,216
—
13,704,238
—
13,754,135
Basic loss per ADS
Diluted loss per ADS
$
$
(11.05)
(11.05)
$
$
(6.54)
(6.54)
$
$
(4.07)
(4.07)
Diluted income (loss) per ADS reflects the potential dilution that could occur if securities or other contracts to issue ADS were exercised
or converted into ADS. Diluted income (loss) per ADS does not include the following instruments as their inclusion would have been
anti-dilutive:
Share options and restricted shares
(aa) Non-controlling interest
2021
15,617,986
Year Ended December 31,
2022
15,156,318
2023
972,201
Non-controlling interest classified as a separate line item in the equity section and disclosures in the Company’s consolidated financial
statements have distinguished the interest of Leju from the interest of non-controlling interest holders.
(ab) Comprehensive income (loss)
Comprehensive income (loss) includes all changes in equity except those resulting from investments by owners and distributions to
owners. For the years presented, total comprehensive income (loss) includes net income (loss) and foreign currency translation
adjustments.
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Table of Contents
(ac) Impact of newly adopted accounting pronouncement
In June 2022, the FASB issued ASU 2022 - 03, “Fair Value Measurement (Topic 820) - Fair Value Measurement of Equity Securities
Subject to Contractual Sale Restrictions”, which clarifies that a contractual restriction on the sale of an equity security is not considered
part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify
that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. This guidance also requires
certain disclosures for equity securities subject to contractual sale restrictions. The new guidance is required to be applied prospectively
with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. This guidance
is effective for the Group for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early
adoption is permitted. The Company adopted this guidance on December 15, 2023 with no material impact on its audited consolidated
financial statements.
(ac) Recent issued accounting pronouncements not yet adopted
On March 29, 2023, the FASB issued Accounting Standards Update (ASU) 2023 - 02, Investments - Equity Method and Joint Ventures
(Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. ASU 2023 - 02 allows
reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the
program giving rise to the related income tax credits. Previously, this method of accounting was only available for qualifying equity
investments in low - income housing tax credit (LIHTC) structures. in addition to expanding the scope of the proportional amortization
method, the amendments also impact the accounting for existing equity investments in LIHTC structures that were not previously
accounted for using the proportional amortization method. The amendments also require entities using the proportional amortization
method for qualifying investments to apply the delayed equity contribution guidance in ASC 323 - 740 - 25 - 3, which requires that a
liability be recognized for delayed equity contributions that are either (1) unconditional and legally binding, or (2) contingent upon a
future event once that contingent event becomes probable. If the proportional amortization method is not applied, entities are no longer
permitted to use the guidance on delayed equity contributions, which impacts investors in LIHTC structures who may have applied the
delayed equity contributions guidance without electing the proportional amortization method before adopting the new amendments. The
amendments further require an entity to disclose information about all investments that generate income tax credits and other income tax
benefits from a tax credit program accounted for using the proportional amortization method in accordance with ASC 323 - 740,
including investments within that elected program that do not meet the conditions to apply the proportional amortization method. For
public business entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods
within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2024,
including interim periods within those fiscal years. Early adoption is permitted for all entities in any interim period.The ASU is currently
not expected to have a material impact on the Company’s consolidated financial statements.
In March 2023, the Financial Accounting Standards Board (FASB) issued its first Accounting Standards Update (ASU) of 2023, ASU
No. 2023 - 01 - Leases (Topic 842): Common Control Arrangements, which addresses two distinct issues resulting from Accounting
Standards Codification Topic (ASC) 842 - Leases: (1) terms and conditions to be considered in common control arrangements and (2)
accounting for leasehold improvements in common control arrangements. ASU No. 2023 - 01 provides a practical expedient for private
companies and not - for - profit entities that are not conduit bond obligors to use the written terms and conditions of a common control
arrangement. The written terms and conditions may be used to determine: (1) whether a lease exists and, if so (2) the classification of and
accounting for that lease. If no written terms and conditions exist, the practical expedient is prohibited from being applied and the entity
must use the arrangement’s legally enforceable terms and conditions. This practical expedient may be applied on an arrangement - by -
arrangement basis. Under ASU No. 2023 - 01, lessees will amortize leasehold improvements over the useful life of the improvements to
the common control group, regardless of the lease term, as long as the lessee controls the use of the underlying asset through a lease. If
the lessor obtained the right to control the use of the underlying asset through a lease with another entity not within the same common
control group, the amortization period may not exceed the amortization period of the common control group. ASU No. 2023 - 01 also
requires an entity to account for any remaining leasehold improvements as a transfer between entities under common control through an
adjustment to equity (or net assets for not - for - profit entities) if, and when, the lessee no longer controls the use of the underlying asset.
The leasehold improvements portion of this ASU is applicable to all entities, including public business entities. Effective for fiscal years
beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted for both interim and
annual financial statements that have not yet been made available for issuance. If an entity adopts the amendments in an interim period, it
must adopt them as of the beginning of the fiscal year that includes that interim period. The ASU is currently not expected to have a
material impact on the Company’s consolidated financial statements.
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3. Leases
The Group leases office under non-cancelable operating lease agreements, which expire at various dates from 2024 to 2028. As of
December 31, 2022 and 2023, the Group’s operating leases had a weighted average remaining lease term of 4.9 and 4.1 years and a
weighted average discount rate of 5.61% and 5.62%, respectively. Future lease payments under operating leases as of December 31, 2023
were as follows:
2024
2025
2026
2027
2028
Then thereafter
Total future lease payments
Impact of discounting remaining lease payments
Total lease liabilities
Lease liabilities, current
Lease liabilities, non-current
As of December 31,
2023
$
3,107,892
2,915,730
2,698,043
2,854,051
713,513
—
12,289,229
(1,283,109)
11,006,120
3,026,771
7,979,349
Operating lease expenses for the years ended December 31, 2021, 2022 and 2023 were $6,331,194, $5,746,967 and $3,239,121,
respectively, which did not include short-term lease cost. Short-term lease costs for the years ended December 31, 2021, 2022 and 2023
were $2,302,019, $1,233,347 and $1,228,558, respectively.
Cash paid for amounts included in the measurement of operating lease liabilities was $6,287,094, $5,698,668 and $3,789,504 for the
years ended December 31, 2021, 2022 and 2023, respectively. Non-cash transaction amounts of lease liabilities arising from obtaining
right-of-use assets were $2,064,279, $2,783,430 and $601,633 for the years ended December 31, 2021, 2022 and 2023, respectively.
4. Property and Equipment, Net
Property and equipment, net consists of the following:
Furniture, fixtures and equipment
Leasehold improvements
Buildings
Motor vehicles
Total
Accumulated depreciation
Property and equipment, net
As of December 31,
2022
$
9,160,115
4,238,863
11,742,004
806,712
2023
$
6,570,915
2,907,169
8,783,340
699,823
25,947,694
(11,743,331)
18,961,247
(9,029,291)
14,204,363
9,931,956
Depreciation expenses were $2,374,493, $1,743,030 and $1,364,324 for the years ended December 31, 2021, 2022 and 2023,
respectively.
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Table of Contents
5. Intangible Assets, Net
Intangible assets subject to amortization are comprised of the following:
Advertising agency agreement with SINA
License agreements with SINA
Computer software licenses
Total intangible assets, gross
Less: Accumulated amortization
Advertising agency agreement with SINA
License agreements with SINA
Computer software licenses
Total accumulated amortization
Total intangible assets, net
Weighted Average
Remaining
Amortization
Period in Years
0.25
0.25
0.94
0.26
As of December 31,
2022
$
2023
$
106,790,000
80,660,000
1,841,885
106,790,000
80,660,000
139,394
189,291,885
187,589,394
99,725,921
75,405,899
1,701,890
105,780,844
79,909,416
109,064
176,833,710
185,799,324
12,458,175
1,790,070
The advertising agency agreement and license agreements with SINA (the “SINA Agreements”) were recognized in connection with the
Group’s acquisition of China Online Housing Technology Corporation (“COHT”) in 2009, and provide the Group with exclusive rights
to operate SINA’s real estate and home furnishing related channels and the exclusive right to sell advertising relating to real estate, home
furnishing and construction materials on these channels as well as SINA’s other websites. If the Group sells advertising on SINA’s
websites other than the above channels, it will pay SINA fees of approximately 15% of the revenues generated from these sales. The
SINA Agreements had an original expiration date in 2019. In March 2014, the SINA Agreements were extended by five years to 2024
for no additional consideration. All other terms of the SINA Agreements remained the same. The acquisition cost was recognized as an
intangible asset and amortized over the term of the agreement.
Amortization expenses were $10,994,923, $10,839,284 and $10,665,705 for the years ended December 31, 2021, 2022 and 2023
respectively. The Group expects to record amortization expenses of $1,786,075 and $3,996 for the years ending December 31, 2024 and
2025, respectively.
6. Borrowings
Short‑term borrowings
As of December 31,
2022
$
717,915
2023
$
—
In September 2021, the Group entered into a one-year RMB 5.0 million facility agreement with Shanghai Pudong Development Bank.
The interest rate was set at 65 basis points over Loan Prime Rate (“LPR”). The bank borrowing was unguaranteed and unsecured. The
loan was refunded in September 2022.
In March 2022, the Group entered into a one-year RMB 5.0 million facility agreement with Shanghai Pudong Development Bank. The
interest rate was priced at 80 basis points over LPR. The bank borrowing was unguaranteed and unsecured. The loan was refunded in
March 2023.
For the years ended December 31, 2021, 2022 and 2023, the Group recognized interest expenses of $9,147, $51,972 and $1,534 which
was recorded in interest income, net.
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7. Other Income (Loss), Net
Realized gain on marketable securities
Unrealized gain (loss) on marketable securities
Income (loss) from sales of properties held for sales
Foreign exchange gain (loss)
Others
Total
8. Income Tax
2021
$
2,127,985
(1,722,700)
(17,430)
(431,686)
252,706
Year Ended December 31,
2022
$
31,891
—
742
1,217,262
246,497
2023
$
—
—
—
(74,190)
—
208,875
1,496,392
(74,190)
The following table summarizes income (loss) before income taxes incurred in the PRC and outside of the PRC:
Loss before income taxes:
PRC
Outside of PRC
Total
Expenses (benefits) for income taxes are comprised of:
Current Tax
PRC
Outside of PRC
Deferred Tax
PRC
Outside of PRC
2021
$
Year Ended December 31,
2022
$
2023
$
(148,696,060)
(14,711,876)
(99,596,774)
(2,197,049)
(54,239,842)
(3,314,311)
(163,407,936)
(101,793,823)
(57,554,153)
2021
$
Year Ended December 31,
2022
$
2023
$
(1,409,996)
4,895
(32,295,286)
276
(24,342,764)
2,075
(1,405,101)
(32,295,010)
(24,340,689)
(12,092,683)
—
20,174,775
—
22,559,108
—
(12,092,683)
20,174,775
22,559,108
Income tax benefits
(13,497,784)
(12,120,235)
(1,781,581)
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 domestic
enterprises.
Shanghai SINA Leju was granted a high and new technology enterprise (“HNTE”) status. Shanghai SINA Leju renewed its qualification
of “high and new technology enterprise” in 2018 and 2021, and was entitled to a favorable statutory tax rate of 15% from 2018 through
2023.
F-28
Table of Contents
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 Kong tax 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 for unrecognized tax benefit within next 12 months. The Group will classify interest and penalties related to income tax matters,
if any, as income tax expense.
According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due
to tax authority’s mistake or due to computational errors made by the taxpayer. The statute of limitations will be extended to five years
under special circumstances, which are not clearly defined, but an underpayment of tax liability exceeding RMB100,000 ($14,119) is
specifically listed as a special circumstance. In the case of a transfer pricing related adjustment, the statute of limitations is 10 years.
There is no statute of limitations in the case of tax evasion.
The principal components of the deferred income tax assets/liabilities are as follows:
Deferred tax assets:
Accrued salary expenses
Bad debt provision
Net operating loss carry-forwards
Advertising expenses
Accrued expense
Others
Gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Intangible assets from acquisition and other assets
Total deferred tax liabilities
As of December 31,
2022
$
2023
$
2,792,431
29,096,796
24,801,075
1,013,274
8,862,609
508,950
67,075,135
(41,617,648)
25,457,487
1,330,327
24,530,121
15,226,856
413,645
7,471,246
41,955
49,014,150
(49,014,150)
—
3,517,837
3,517,837
824,771
824,771
The majority of deferred tax liabilities were recognized for temporary differences between the tax basis of intangible assets recognized
from acquisitions and their reported amounts in the financial statements.
Movement of the valuation allowance is as follows:
Balance as of January 1
Reversal/(Additions)
Write-offs
Changes due to exchange rate translation
Balance as of December 31
2021
$
(5,714,480)
(20,905,451)
393,251
(505,365)
(26,732,045)
Year Ended December 31,
2022
$
(26,732,045)
(17,978,965)
138,479
2,954,883
(41,617,648)
2023
$
(41,617,648)
(8,158,994)
—
762,492
(49,014,150)
The Group recognized a valuation allowance against deferred tax assets of $20,905,451, $17,978,965 and $8,158,994 for the years ended
December 31, 2021, 2022 and 2023, respectively.
The Group assesses available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize
the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the
three-year period ended December 31, 2023. Such objective evidence limits the Group’s ability to consider other subjective evidence
such as its projections for future growth.
F-29
Table of Contents
Reconciliation between the provision for income tax computed by applying the statutory tax rate to income before income taxes and the
actual provision for income taxes is as follows:
PRC income tax rate
Share based compensation expenses not deductible for tax purposes
Other expenses not deductible for tax purposes
Effect of tax holiday
Effect of different tax rate of subsidiary operation in other jurisdiction
Valuation allowance movement
Withholding tax
The aggregate amount and per share effect of the tax holiday are as follows:
The aggregate dollar effect
Per ADS effect—basic
Per ADS effect—diluted
Year Ended December 31,
2022
2023
2021
25.00 %
(0.25)%
0.17 %
(5.29)%
(2.00)%
(12.37)%
3.01 %
8.27 %
25.00 %
(0.45)%
0.30 %
(5.15)%
(0.09)%
(8.17)%
0.48 %
11.92 %
25.00 %
(0.77)%
(0.03)%
(4.97)%
(0.68)%
(15.46)%
— %
3.09 %
2021
$
Year Ended December 31,
2022
$
(8,646,324)
(0.63)
(0.63)
(5,247,214)
(0.38)
(0.38)
2023
$
(2,862,485)
(0.21)
(0.21)
As of December 31, 2022 and 2023, the Group had net tax operating loss carry-forwards of $35,032,374, and nil, respectively. The tax
operating losses of entities not qualified as HNTE are available for offset against future profits that may be carried forward until calendar
years 2027 and 2028, respectively and further to 2032 and 2033, respectively for qualified HNTE according to the public announcement
made by the State Administration of Taxation in China in 2022.
Undistributed losses of the Company’s PRC subsidiaries of approximately $151,205,387 at December 31, 2023, no provision for PRC
dividend withholding tax has been provided thereon.
9. Share-Based Compensation
Leju Plan
In November 2013, the Company adopted a share incentive plan (“Leju Plan”), which allows the Company to offer a variety of share-
based incentive awards to employees, officers, directors and individual consultants who render services to the Group. Under the Leju
Plan, the maximum number 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 date of 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 the third, sixth and ninth anniversaries of the effective date of the Leju Plan. On December 1,
2016, the award pool under Leju plan was automatically increased by 7,553,422 ordinary shares. On December 1, 2019, the award pool
under Leju plan was automatically increased by 7,833,224 ordinary shares. On December 1, 2022, the award pool under Leju plan was
automatically increased by 8,020,119 ordinary shares. Options have a ten-year life.
Share Options:
During 2022 and 2023, 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 options expire ten years from the date of grant and vest ratably at each grant date anniversary over a period of three years.
F-30
Table of Contents
The Company has used the binomial model to estimate the fair value of the options granted under the Leju Plan. The fair value per option
was estimated at the date of grant using the following assumptions:
Risk-free rate of return
Contractual life of option
Estimated volatility
Dividend yield
A summary of option activities under the Leju Plan during the year ended December 31, 2023 is presented below:
Outstanding, as of January 1, 2023
Granted
Exercised
Forfeited
Expired
Outstanding, as of December 31, 2023
Vested and expected to vest as of December 31, 2023
Exercisable as of December 31, 2023
Number of
Options
Weighted
Average
Exercise Price
$
14,889,650
—
(399,980)
(1,439,283)
(3,328,379)
9,722,008
9,659,055
8,622,676
2.70
—
0.10
3.19
4.60
2.15
2.16
2.32
Weighted
Average
Remaining
Contractual
Term
(in years)
4.74
4.91
4.89
4.60
2021
1.56 %
10 years
72.06 %
0.00 %
Aggregate
Intrinsic
Value of
Options
$
83,773
The weighted average grant-date fair value of the options granted in 2021 was $1.74 per share. For the years ended December 31, 2021,
2022 and 2023, the Company recorded compensation expenses of $1,519,778, $1,789,992 and $1,765,781 for the share options granted
to the Group’s employees, respectively. During the years ended December 31, 2021, 2022 and 2023, 146,582, nil and 399,980 options
were exercised having a total intrinsic value of $193,492, nil and $83,773, respectively. The proceeds from exercise of options were
$208,025, nil and $39,998 for the years ended December 31, 2021, 2022 and 2023, respectively.
During the year ended December 1, 2023, 3,328,379 options were expired.
As of December 31, 2023, there was $560,602 of total unrecognized compensation expense related to unvested share options granted
under the Leju Plan. That cost is expected to be recognized over a weighted-average period of 0.31 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 the award 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
restricted shares. For the year ended December 31, 2019, the Company recorded compensation expenses of $1,225,000 for 800,000
restricted shares that were 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
of restricted shares. For the year ended December 31, 2020, the Company recorded compensation expenses of $1,425,000,and 600,000
options were granted 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 2022 and 2023.
F-31
Table of Contents
A summary of restricted share activity under the Leju Plan during the year ended December 31, 2023 is presented below:
Outstanding, as of January 1, 2023
Granted
Vested
Forfeited
Outstanding, as of December 31, 2023
Number of
Restricted
Shares
266,668
—
(266,668)
—
—
Weighted
Average
Grant-date
Fair Value
$
1.50
—
1.50
—
—
The total grant-date fair value of restricted shares vested in 2021, 2022 and 2023 was $537,498, $537,500 and $400,002, respectively.
For the years ended December 31, 2021, 2022 and 2023, the Company recorded compensation expenses of $137,500, $34,375 and nil for
the restricted shares granted to the Group’s employees which did not include the restricted shares granted as the bonus for the senior
management team, respectively.
As of December 31, 2023, there was no unrecognized compensation expense related to unvested restricted shares granted under the Leju
Plan.
10. Employee Benefit Plans
The 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 the payments of such benefits. The Group contributed $14,677,938, $12,357,772, and $6,462,449 for the years ended
December 31, 2021, 2022 and 2023, respectively, for such benefits.
11. Distribution of Profits
Relevant PRC statutory laws and regulations permit payment of dividends by the Group’s PRC subsidiaries and VIEs only out of their
retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC law, each of the
Group’s PRC subsidiaries 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 reserve reaches 50% of its registered capital. Each of the Group’s subsidiaries with foreign investment is also required
to further set aside a portion of its after-tax profits to fund the employee welfare fund at the discretion of the board. Although the
statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained
earnings of the respective companies, the reserve funds are not distributable 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, 2022 and 2023 were $10,125,676 and $10,225,550, 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 net assets, including general reserve and registered capital, either in the form of dividends, loans or advances. Such restricted
portion amounted to $35,914,216 and $36,014,090, as of December 31, 2022 and 2023, respectively. The amount of $8,982,249 and
$8,974,110 was attributed to general reserve and registered capital of the VIEs.
F-32
Table of Contents
12. Segment Information
The Group operates and manages its business as a single segment. The Group uses the management approach to determine operating
segments. The management approach considers the internal organization and reporting used by the Group’s chief operating decision
maker (“CODM”) for making decisions, allocating resources and assessing performance. The Group’s CODM has been identified as the
chief executive officer, who reviews the consolidated results of the Group as a whole when making decisions about allocating resources
and assessing performance.
The following table summarizes the revenue information of the Group:
E-commerce of discount coupons
E-commerce of commission coupons
Online advertising
Listing
Geographic
2021
$
411,097,123
—
122,522,232
497,615
534,116,970
Year Ended December 31,
2022
$
182,940,792
95,522,903
64,707,215
11,274
343,182,184
2023
$
28,385,689
237,748,379
50,720,362
—
316,854,430
Substantially all of the Group’s revenues from external customers are located in the PRC.
Major customers
There were no customers from whom revenue accounted for 10% or more of total revenue for the years ended December 31, 2021, 2022
and 2023, respectively.
13. Related Party Balances and Transactions
The table below sets forth major related parties and their relationships with the Group:
Company Name
E-House Enterprise
E-House
TM Home
SINA
Tencent Holdings Ltd. or certain of its affiliates (“Tencent”)
Alibaba Investment Ltd. or certain of its affiliates (“Alibaba”)
Shanghai Tianji Haofang Network Services Ltd. (“Tianji Network”) (formerly
known as Shanghai Yunchuang Information & Technology Ltd.)
Yunnan Huixiangju Information & Consultant Ltd. (“Huixiangju”)
Shanghai Quanzhuyi Home Furnishing Accessories Ltd. (“QuanZhuYi”)
Jupai Holdings Ltd. (“Jupai”)
Relationship with the Group
Mr. Xin Zhou, executive chairman of Leju, is E-House Enterprise’s chairman. E-
House Enterprise was a subsidiary of E-House before it became a listed company in
Hong Kong in July, 2018. Leju became a subsidiary of E-House Enterprise as of
November 4, 2020.
Under the common control of E-House Holdings until December 30, 2016, and E-
House Holdings was the largest shareholder from December 31, 2016 to November
4, 2020. Mr. Xin Zhou, executive chairman of Leju, is E-House’s ultimate
controller.(Note 1).
The Company’s parent company, which was controlled by E-house Enterprise. TM
Home is owned by E-House Enterprise and Alibaba Investment Limited as to
approximately 89.207% and 10.793%.
A shareholder with significant influence
A shareholder with significant influence
A shareholder with significant influence on TM Home, the Company’s controlling
shareholder, from November 4, 2021 to August 15, 2023.
Mr. Xin Zhou, executive chairman of Leju, is Tianji Network’s ultimate controller
by May 2021. Tianji Network became a subsidiary of E-House Enterprise since
May 2021.
One of the Group’s investment affiliates and the Group owns 51% equity interest
and has significant influence
One of the Group’s investment affiliates and the Group owns 13.5% equity interest
and has significant influence
Mr. Xin Zhou, executive chairman of Leju, is Jupai’s director. E-House Holdings
has significant influence on Jupai and Leju
F-33
Table of Contents
Subsequent to Leju’s IPO, E-House began charging the Group corporate service fees pursuant to agreements entered into in March 2014
in connection with Leju’s IPO. Under these service arrangements, E-House provides various corporate support services to the Group,
including general finance and accounting, human resource management, administrative, internal control and internal audit, operational
management, legal and information technology. The termination provisions in the arrangements were amended on November 4, 2020 and
E-House continues to provide such services under the amended services arrangements. E-House charges the Group a fee based on an
estimate of the actual cost incurred to provide such services, which amounted to $1,352,382 for the year ended December 31 2021.
Since 2022, E-House Enterprise provides such services to the Group. E-House Enterprise charges the Group a fee based on an estimate
of the actual cost incurred to provide such services, which amounted to $1,335,164 and $569,092 for the years ended December 31, 2022
and 2023, respectively.
During the years ended December 31, 2021, 2022 and 2023, significant related party transactions were as follows:
Corporate service provided by E-House under service agreements
Corporate service provided by E-House Enterprise
Reimbursement to TM Home (Note A)
Online advertising resources fee recognized as cost of revenues purchased from SINA
Online advertising resources fee recognized as cost of revenues purchased from Tencent
Services purchased from/rental cost paid to E-House
Services purchased from E-House Enterprise
Services purchased from Alibaba (Note B)
Services purchased from Jupai
Services purchased from Tianji Network (Note C)
Total services purchased from related parties
Online advertising services provided to E-House
Services provided to E-House Enterprise
Services provided to Investing affiliates
Total online advertising services provided to related parties
Fee paid to Tencent for advertising resources on behalf of customers (Note D)
2021
$
1,352,382
—
—
10,078,875
18,671,019
886,866
20,557,777
875,072
—
69,762
52,491,753
484,185
36,334
548,075
1,068,594
2,502,309
Year Ended December 31,
2022
$
2023
$
—
1,335,164
—
110,464
14,787,449
700,726
7,694,981
855,183
24,372
—
25,508,339
—
—
109,934
109,934
1,798,079
—
569,092
3,087,796
35,259
13,727,964
131,511
9,562,138
135,987
—
—
27,249,747
—
—
—
—
1,667,914
Note A: In September, 2023, the Company entered into an agreement with TM Home that TM home would entrust the operation of its
Online platform business to the Company from October 1, 2023. The Company agreed to reimburse TM Home for any losses generated
from the operation. Likewise, any profit from the operation would be shared by the Company. The amounts represent compensation
payable to TM Home due to losses generated from the operation. The loss generated from the entrusted operation was recognized as
“Other operating income (loss), net”. Such agreement would be subject to renewal upon mutual agreement on December 31, 2024.
Note B: Alibaba became the Company’s related party since 2021.
Note C: The amount represents services purchased from Tianji Network from January to May, 2021 while the amount for the services
purchased for the remaining period was included in the amount of E-House Enterprise.
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 outlets and 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 is recorded net of the costs for advertising placements from suppliers, equal to the amount retained for its fee
or commission. Fees paid to Tencent for advertising 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.
F-34
Table of Contents
As of December 31, 2022 and 2023 amounts due from related parties were comprised of the following:
Tencent (1)
Alibaba(2)
E-House Enterprise(3)
E-House (4)
Allowance for current expected credit losses
Total
As of December 31, 2022 and 2023, amounts due to related parties were comprised of the following:
SINA (5)
Investing affiliates (6)
E-House Enterprise (3)
Total
As of December 31,
2022
$
1,855,275
498,258
—
123,010
(743)
2,475,800
2023
$
782,140
239,973
30,827,666
26,493
(12,995,675)
18,880,597
As of December 31,
2022
$
1,382,173
124,208
3,298,210
2023
$
1,346,340
150,177
—
4,804,591
1,496,517
(1) The amounts due from Tencent as of December 31, 2022 and 2023 represent prepaid fees for online advertising resources.
(2) The amounts due from Alibaba as of December 31 2022 and 2023 represent prepaid fees for online advertising resources and
technical service.
(3) The amounts due from/to E-House Enterprise as of December 31, 2022 and 2023 represent net results for receivable for online
advertising revenue from E-House Enterprise, payable for marketing service fees charged by E-House Enterprise and payable to TM
Home (See Note A).
(4) The amount due from E-House as of December 31, 2022 and 2023 was primarily for the prepayment for the service purchased from
E-House.
(5) The amounts due to SINA as of December 31, 2022 and 2023 represent payable for online advertising resources fee.
(6) The amounts due to affiliates as of December 31, 2022 and 2023 represent the advance from Huixiangju.
F-35
Table of Contents
The roll forward of the payable to / (receivable from) E-House for the years ended December 31, 2021, 2022 and 2023 is as follows:
Balance at January 1
Corporate service provided by E-House under services agreements
Service provided to E-House
Service purchased from/rental cost paid to E-House
Net received/(payment)
Balance at December 31
(A)
(A)
(A)
(B)
Net results for service fee (A and B)
Amounts due/(from) to E-House
(A) Represents the services provided by or to E-House.
(B) Represents net cash flow for activities between the Company and E-House.
Year Ended December 31,
2022
$
2021
$
129,566
1,352,382
(484,185)
886,866
316,498
2,201,127
2,201,127
—
—
700,726
(3,024,863)
(123,010)
2023
$
(123,010)
—
—
131,511
(34,994)
(26,493)
As of December 31,
2022
$
(123,010)
(123,010)
2023
$
(26,493)
(26,493)
The roll forward of the payable to / (receivable from) E-House Enterprise for the years ended December 31, 2021, 2022 and 2023 is as
follows:
Balance at January 1
Corporate service provided by E-House Enterprise
Service provided to E-House Enterprise
Service purchased from E-House Enterprise
Compensation to TM Home
Net payment
Balance at December 31
(C) Represents services provided by or to E-House Enterprise.
(D) Represents compensation to TM Home. See Note A above.
Year Ended December 31,
2021
$
2,238,543
—
(36,334)
20,557,777
—
(18,809,147)
3,950,839
(C)
(C)
(C)
(D)
(E)
2022
$
3,950,839
1,335,164
—
7,694,981
—
(9,682,774)
3,298,210
2023
$
3,298,210
569,092
—
9,562,138
3,087,796
(47,344,902)
(30,827,666)
(E) Represents net cash flow for the activities between the Company and E-House Enterprise.
14. Repurchase of Shares
On November 14, 2023, the Company’s board of directors has authorized a share repurchase program under which the Company may
repurchase up to US$2 million of its shares over the next 12 months, ending on November 13, 2024. In 2023, The Company repurchased
a total of 52,334 shares for $60,930. The ultimate disposition has not been decided, the Company has shown the cost separately as a
deduction from stockholders’ equity.
F-36
Table of Contents
15. Commitments and Contingencies
The Group is subject to claims and legal proceedings that arise in the ordinary course of its business. Each of these matters is subject to
various uncertainties, and it is possible that some of these matters may be decided unfavorably to the Group. The Group does not believe
that any of these matters will have a material effect on its business, assets or operations.
16. Subsequent Events
Delisting Notice from the New York Stock Exchange
On April 11,2024, the Company was notified by the New York Stock Exchange(“NYSE”) that the staff of NYSE Regulation has
determined to commence proceedings to delist the American depositary shares (“ADSs”) of the Company, each representing ten (10)
ordinary shares of the Company, from the NYSE. Trading in the Company’s ADSs was suspended after the market close on the NYSE on
April 11,2024. By April 29,2024, New York Stock Exchange had complied with its rules to strike the Company’s ADR from listing on
the Exchange.
F-37
Agreement
Exhibit 4.45
Party A: Shanghai TM Home E-Commerce Limited (上海天猫好房电子商务有限公司)
Party B: Shanghai SINA Leju Information Technology Co., Ltd. (上海新浪乐居信息科技有限公司)
Whereas, Party A intends to entrust Pary B to operate business as stipulated herein, and both Party A and Party B have reached an
agreement as follows on the relevant matters:
I.
II.
III.
IV.
Both Party A and Party B has agreed that, during the term stipulated herein, Party A (including its subsidiaries) shall entrust
Party B to operate business, and Party B shall be entitled to the operating income and bear the operating costs (hereinafter
referred to as this “agreement”). Party A has undertaken that it shall not entrust any third party to operate the business within the
scope of entrustment or carry out the same on its own.
Scope of entrustment: The business operation of Haofang, including attraction of merchants based on the rules of entry of the
industry, operation and maintenance of merchant platforms (which continue to meet the needs of store merchants for capacity
enhancement in business operation; implement the management standards of commodities and merchants formulated by the
industry in the system level), undertaking of the customer service for store merchants (including answering various inquiries
and problems encountered by merchants in registration, operation and other aspects; timely informing merchants of the latest
business information, including new business rules, planning of marketing campaigns and risk alerts, and collecting feedback
and recommendations from merchants); production, research and management in relation to the operation, and human
resources, financial, property and legal affairs management.
Term: Commencing from [1 October] 2023 and ending on [31 December] 2024.
This Agreement shall be automatically renewed unless terminated by Party B by giving a notice in writing [30] days prior to the
expiry of the term to Party A. At the end of each calendar year after the renewal, Party B has the right to terminate this
Agreement in advance by giving [30] days’ written notice to Party A, otherwise this Agreement shall be renewed again; upon
termination of this Agreement, any and all rights and obligations of Party B as stipulated herein shall be terminated accordingly,
and Party A shall operate the business on its own and shall be entitled to the operating income and bear the operating costs.
V.
This Agreement is made in duplicate and shall enter into force upon execution by Party A and Party B on [13 September] 2023,
with one copy for each party.
(No text below)
Signature page of the Agreement
Party A: Shanghai TM Home E-Commerce Limited (上海天猫好房电子商务有限公司)
[Company seal is affixed]
Party B: Shanghai SINA Leju Information Technology Co., Ltd. (上海新浪乐居信息科技有限公司)
[Company seal is affixed]
PRINCIPAL SUBSIDIARIES AND CONSOLIDATED VARIABLE INTEREST ENTITIES
Exhibit 8.1
Name of Entity
Subsidiary
Branco Overseas Ltd
E-House China (Tianjin) Holdings Ltd.
E-House Property Consultancy Ltd.
E-House International Property Consultancy Ltd.
E-House City Rehouse Real Estate Broker (Shanghai) Co., Ltd.
China E-Real Estate Holdings Ltd.
China E-Real Estate Group Ltd.
Shanghai Yi Yue Information Technology Co., Ltd.
China Online Housing Technology Corporation
China Online Housing (Hong Kong) Co., Limited
Shanghai SINA Leju Information Technology Co., Ltd.
Shanghai Leju Zhitou Digital Technology Co., Ltd
Shanghai Fangxin Information Technology Co., Ltd.
Leju (China) Internet Technology Co., Ltd.
Omnigold Holdings Ltd.
China Commercial Real Estate Group Ltd.
China Real Estate Business Group Ltd.
Beijing Maiteng Fengshun Science and Technology Co., Ltd.
Consolidated Variable Interest Entities
Shanghai Leju Hao Fang Information Service Co., Ltd
Beijing Yisheng Leju Information Services Co., Ltd.
Beijing Weike Union Information Technology Co., Ltd.
Beijing Yisheng Leju Finance Culture Media Co., Ltd.
Beijing Jiajujiu E-Commerce Co., Ltd.
Place of Incorporation
British Virgin Islands
British Virgin Islands
British Virgin Islands
Hong Kong
PRC
British Virgin Islands
Hong Kong
PRC
Cayman Islands
Hong Kong
PRC
PRC
PRC
PRC
British Virgin Islands
British Virgin Islands
Hong Kong
PRC
PRC
PRC
PRC
PRC
PRC
Exhibit 12.1
Certification by the Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, 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 to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects 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 (as defined 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
our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us
by others within 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 under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external 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
about the 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
covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over
financial reporting; and
5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, 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 are reasonably 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’s internal control over financial reporting.
Date: May 14, 2024
By: /s/ Yinyu He
Name:Yinyu He
Title: Chief Executive Officer
Exhibit 12.2
Certification by the Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Li Yuan, 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 to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects 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 (as defined 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
our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us
by others within 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 under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external 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
about the 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
covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over
financial reporting; and
5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, 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 are reasonably 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’s internal control over financial reporting.
Date: May 14, 2024
By: /s/ Li Yuan
Name:Li Yuan
Title: Chief Financial Officer
Certification by the Principal Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 13.1
In connection with the Annual Report of Leju Holdings Limited (the “Company”) on Form 20-F for the year ended December 31,
2023 as filed with 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 the Company.
Date: May 14, 2024
By:/s/ Yinyu He
Name:Yinyu He
Title: Chief Executive Officer
Certification by the Principal Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 13.2
In connection with the Annual Report of Leju Holdings Limited (the “Company”) on Form 20-F for the year ended December 31,
2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Li Yuan, 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 the Company.
Date: May 14, 2024
By:/s/ Li Yuan
Name:Li Yuan
Title: Chief Financial Officer
Exhibit 15.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statements on Form S-8 (File Nos. 333-197069,
333-217644 and 333-239943) of our report dated May 14, 2024, relating to the consolidated financial statements
of Leju Holdings Limited (the “Company”), its subsidiaries and its consolidated variable interest entities
(collectively, the “Group”) as of December 31, 2023, and 2022 and for each of the three years ended December
31, 2023, in which our report expresses an unqualified opinion, and includes explanatory paragraphs relating to
substantial doubt on the Company’s ability to continue as a going concern, appearing in this Annual Report on
Form 20-F of the Group for the year ended December 31, 2023.
/s/ Yu Certified Public Accountant, P.C.
Yu Certified Public Accountant, P.C.
New York, New York
May 14, 2024
FANGDA PARTNERS
北京 Beijing·广州 Guangzhou·香港 Hong Kong·上海 Shanghai·深圳 Shenzhen
http://www.fangdalaw.com
Exhibit 15.2
电 话 Tel.: 86-21-2208-1166
传 真 Fax: 86-21-5298-5599
文 号 Ref.: 24GC0104
中国上海市石门一路288号
兴业太古汇香港兴业中心二座24楼
邮政编码：200041
24/F, HKRI Centre Two, HKRI Taikoo Hui,
288 Shi Men Yi Road,
Shanghai 200041, PRC
May 14, 2024
Leju Holdings Limited
S7-02, Building 1, Yard 22, Xidawang Road,
Chaoyang District, Beijing 100016
People’s Republic of China
Dear Sirs,
We consent to the reference to our firm under “Item 3. Key Information—Permissions Required from the PRC Authorities for
Our Operations” and “Item 4. Information on the Company—C. Organizational Structure” in Leju Holdings Limited’s Annual Report on
Form 20-F for the year ended December 31, 2023, which will be filed with the Securities and Exchange Commission (the “SEC”) in May
2024, 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 Form
20-F for the year ended December 31, 2023.
In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under
Section 7 of the 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 Partners
Fangda Partners
Leju Holdings Limited
CLAWBACK POLICY
Exhibit 97.1
The Board of Directors (the “Board”) of Leju Holdings Limited (the “Company”) believes that it is appropriate for the Company to
adopt this Clawback Policy (the “Policy”) to be applied to the Executive Officers of the Company.
1. Definitions
For purposes of this Policy, the following definitions shall apply:
a)
“Company Group” means the Company and each of its subsidiaries or consolidated affiliated entities, as applicable.
b)
“Covered Compensation” means any Incentive-Based Compensation granted, vested or paid to a person who served as an
Executive Officer at any time during the performance period for the Incentive-Based Compensation and that was Received
(i) on or after October 2, 2023, (ii) after the person became an Executive Officer, and (iii) at a time that the Company had a
class of securities listed on a national securities exchange or a national securities association such as the NYSE or Nasdaq.
c)
“Effective Date” means December 1, 2023.
d)
“Erroneously Awarded Compensation” means the amount of Covered Compensation granted, vested or paid to a person
during the fiscal period when the applicable Financial Reporting Measure relating to such Covered Compensation was
attained that exceeds the amount of Covered Compensation that otherwise would have been granted, vested or paid to the
person had such amount been determined based on the applicable Restatement, computed without regard to any taxes paid
(i.e., on a pre-tax basis). For Covered Compensation based on stock price or total shareholder return, where the amount of
Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in a
Restatement, the Board will determine the amount of such Covered Compensation that constitutes Erroneously Awarded
Compensation, if any, based on a reasonable estimate of the effect of the Restatement on the stock price or total shareholder
return upon which the Covered Compensation was granted, vested or paid and the Board shall maintain documentation of
such determination and provide such documentation to the applicable national securities exchange.
e)
“Exchange Act” means the U.S. Securities Exchange Act of 1934.
f)
“Executive Officer” means the Company’s president, principal financial officer, principal accounting officer (or if there is
no such accounting officer, the controller), any vice-president of the Company in charge of a principal business unit,
division, or function (such as sales, administration, or finance), any other officer who performs a policy-making function, or
any other person (whether or not an officer or employee of the Company) who performs similar policy-making functions
for the Company. “Policy-making function” does not
include policy-making functions that are not significant. Both current and former Executive Officers are subject to the
Policy in accordance with its terms.
g)
“Financial Reporting Measure” means (i) any measure that is determined and presented in accordance with the accounting
principles used in preparing the Company’s financial statements, and any measures derived wholly or in part from such
measures and may consist of IFRS/U.S. GAAP or non-IFRS/non-U.S. GAAP financial measures (as defined under
Regulation G of the Exchange Act and Item 10 of Regulation S-K under the Exchange Act), (ii) stock price or (iii) total
shareholder return. Financial Reporting Measures need not be presented within the Company’s financial statements or
included in a filing with the SEC.
h)
“Home Country” means the Company’s jurisdiction of incorporation, i.e., the Cayman Islands.
i)
j)
k)
l)
“Incentive-Based Compensation” means any compensation that is granted, earned or vested based wholly or in part upon
the attainment of a Financial Reporting Measure.
“Lookback Period” means the three completed fiscal years (plus any transition period of less than nine months that is
within or immediately following the three completed fiscal years and that results from a change in the Company’s fiscal
year) immediately preceding the date on which the Company is required to prepare a Restatement for a given reporting
period, with such date being the earlier of: (i) the date the Board, or the officer or officers of the Company authorized to
take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is
required to prepare a Restatement, or (ii) the date a court, regulator or other legally authorized body directs the Company to
prepare a Restatement. Recovery of any Erroneously Awarded Compensation under the Policy is not dependent on whether
or when the Restatement is actually filed.
“Received”: Incentive-Based Compensation is deemed “Received” in the Company’s fiscal period during which the
Financial Reporting Measure specified in or otherwise relating to the Incentive-Based Compensation award is attained,
even if the grant, vesting or payment of the Incentive-Based Compensation occurs after the end of that period.
“Restatement” means a required accounting restatement of any Company financial statement due to the material
noncompliance of the Company with any financial reporting requirement under the securities laws, including (i) to correct
an error in previously issued financial statements that is material to the previously issued financial statements (commonly
referred to as a “Big R” restatement) or (ii) to correct an error in previously issued financial statements that is not material
to the previously issued financial statements but that would result in a material misstatement if the error were corrected in
the current period or left uncorrected in the current period (commonly referred to as a “little r” restatement). Changes to the
Company’s financial statements that do not represent error corrections under the then-current relevant accounting standards
will not constitute Restatements. Recovery of any Erroneously Awarded Compensation under the Policy is not dependent
on fraud or misconduct by any person in connection with the Restatement.
m) “SEC” means the U.S. Securities and Exchange Commission.
2. Recovery of Erroneously Awarded Compensation
In the event of a Restatement, any Erroneously Awarded Compensation Received during the Lookback Period prior to the
Restatement (a) that is then-outstanding but has not yet been paid shall be automatically and immediately forfeited and (b) that has been
paid to any person shall be subject to reasonably prompt repayment to the Company Group in accordance with Section 3 of this Policy.
The Board must pursue (and shall not have the discretion to waive) the forfeiture and/or repayment of such Erroneously Awarded
Compensation in accordance with Section 3 of this Policy, except as provided below.
Notwithstanding the foregoing, the Board may determine not to pursue the forfeiture and/or recovery of Erroneously Awarded
Compensation from any person if the Board determines that such forfeiture and/or recovery would be impracticable due to any of the
following circumstances: (i) the direct expense paid to a third party (for example, reasonable legal expenses and consulting fees) to assist
in enforcing the Policy would exceed the amount to be recovered, including the costs that could be incurred if pursuing such recovery
would violate local laws other than the Company’s Home Country laws (following reasonable attempts by the Company Group to
recover such Erroneously Awarded Compensation, the documentation of such attempts, and the provision of such documentation to the
applicable national securities exchange), (ii) pursuing such recovery would violate the Company’s Home Country laws adopted prior to
November 28, 2022 (provided that the Company obtains an opinion of Home Country counsel acceptable to the applicable national
securities exchange that recovery would result in such a violation and provides such opinion to the applicable national securities
exchange), or (iii) recovery would likely cause any otherwise tax-qualified retirement plan, under which benefits are broadly available to
employees of the Company Group, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations
thereunder.
3. Means of Repayment
In the event that the Board determines that any person shall repay any Erroneously Awarded Compensation, the Board shall provide
written notice to such person by email or certified mail to the physical address on file with the Company Group for such person, and the
person shall satisfy such repayment in a manner and on such terms as required by the Board, and the Company Group shall be entitled to
set off the repayment amount against any amount owed to the person by the Company Group, to require the forfeiture of any award
granted by the Company Group to the person, or to take any and all necessary actions to reasonably promptly recover the repayment
amount from the person, in each case, to the fullest extent permitted under applicable law, including without limitation, Section 409A of
the U.S. Internal Revenue Code and the regulations and guidance thereunder. If the Board does not specify a repayment timing in the
written notice described above, the applicable person shall be required to repay the Erroneously Awarded Compensation to the Company
Group by wire, cash, cashier’s check or other means as agreed by the Board no later than thirty (30) days after receipt of such notice.
4. No Indemnification
No person shall be indemnified, insured or reimbursed by the Company Group in respect of any loss of compensation by such
person in accordance with this Policy, nor shall any person receive any
advancement of expenses for disputes related to any loss of compensation by such person in accordance with this Policy, and no person
shall be paid or reimbursed by the Company Group for any premiums paid by such person for any third-party insurance policy covering
potential recovery obligations under this Policy. For this purpose, “indemnification” includes any modification to current compensation
arrangements or other means that would amount to de facto indemnification (for example, providing the person a new cash award which
would be cancelled to effect the recovery of any Erroneously Awarded Compensation). In no event shall the Company Group be required
to award any person an additional payment if any Restatement would result in a higher incentive compensation payment.
5. Miscellaneous
This Policy generally will be administered and interpreted by the Board, provided that the Board may, from time to time, exercise
discretion to administer and interpret this Policy. Any determination by the Board with respect to this Policy shall be final, conclusive
and binding on all interested parties. Any discretionary determinations of the Board under this Policy, if any, need not be uniform with
respect to all persons, and may be made selectively among persons, whether or not such persons are similarly situated.
This Policy is intended to satisfy the requirements of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection
Act, as it may be amended from time to time, and any related rules or regulations promulgated by the SEC or the applicable national
securities exchange, including any additional or new requirements that become effective after the Effective Date which upon
effectiveness shall be deemed to automatically amend this Policy to the extent necessary to comply with such additional or new
requirements.
The provisions in this Policy are intended to be applied to the fullest extent of the law. To the extent that any provision of this Policy
is found to be unenforceable or invalid under any applicable law, such provision will be applied to the maximum extent permitted and
shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to applicable law.
The invalidity or unenforceability of any provision of this Policy shall not affect the validity or enforceability of any other provision of
this Policy. Recovery of Erroneously Awarded Compensation under this Policy is not dependent upon the Company Group satisfying
any conditions in this Policy, including any requirements to provide applicable documentation to the applicable national securities
exchange.
The rights of the Company Group under this Policy to seek forfeiture or reimbursement are in addition to, and not in lieu of, any
rights of recovery, or remedies or rights other than recovery, that may be available to the Company Group pursuant to the terms of any
law, government regulation or stock exchange listing requirement or any other policy, code of conduct, employee handbook, employment
agreement, equity award agreement, or other plan or agreement of the Company Group.
6. Amendment and Termination
To the extent permitted by, and in a manner consistent with applicable law, including SEC and applicable national securities
exchange rules, the Board may terminate, suspend or amend this Policy at any time in its discretion.
7. Successors
This Policy shall be binding and enforceable against all persons and their respective beneficiaries, heirs, executors, administrators or
other legal representatives with respect to any Covered Compensation granted, vested or paid to or administered by such persons or
entities.