Sea
Annual Report 2023

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549_______________________FORM 20-F(Mark One)☐REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934OR☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2023.OR☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ____________ to ____________OR☐SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934Date of event requiring this shell company reportCommission file number: 001-38237Sea 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)1 Fusionopolis Place, #17-10, GalaxisSingapore 138522(Address of principal executive offices)Yanjun Wang, Esq.Sea Limited1 Fusionopolis Place, #17-10, GalaxisSingapore 138522Tel: +65 6270-8100E-mail: secnotice@sea.com(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)Securities registered or to be registered pursuant to Section 12(b) of the Act: Title of each classTrading SymbolName of each exchange on which registeredAmerican Depositary Shares, each representing one Class Aordinary shareSENew York Stock Exchange Class A ordinary shares, par value US$0.0005 per share* *Not for trading, but only in connection with the listing ofAmerican Depositary Shares on the New York Stock Exchange. Securities registered or to be registered pursuant to Section 12(g) of the Act:None(Title of Class) Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:None(Title of Class) 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 annualreport.526,812,214 Class A ordinary shares and 45,527,793 Class B ordinary shares, par value US$0.0005 per share, as of December 31, 2023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 theSecurities 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 duringthe 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 thepast 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 ofRegulation 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. Seedefinition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.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 notto 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.☐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 controlover 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 auditreport. ☒ 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 filingreflect 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 receivedby 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.Item 17 ☐ Item 18 ☐If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities ExchangeAct of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐ ___________________________† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its AccountingStandards Codification after April 5, 2012.TABLE OF CONTENTSPage INTRODUCTION5 PART I7 ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS7 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE7 ITEM 3. KEY INFORMATION7 ITEM 4. INFORMATION ON THE COMPANY47 ITEM 4A. UNRESOLVED STAFF COMMENTS91 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS91 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES114 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS124 ITEM 8. FINANCIAL INFORMATION125 ITEM 9. THE OFFER AND LISTING126 ITEM 10. ADDITIONAL INFORMATION127 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK140 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES140 PART II142 ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES142 ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS142 ITEM 15. CONTROLS AND PROCEDURES142 ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT143 ITEM 16B. CODE OF ETHICS143 ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES143 ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES144 ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS144 ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT144 ITEM 16G. CORPORATE GOVERNANCE144 ITEM 16H. MINE SAFETY DISCLOSURE145 ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS145 ITEM 16J. INSIDER TRADING POLICIES145 ITEM 16K. CYBERSECURITY145 PART III146 ITEM 17. FINANCIAL STATEMENTS146 ITEM 18. FINANCIAL STATEMENTS146 ITEM 19. EXHIBITS1474Table of ContentsCONVENTIONS THAT APPLY TO THIS ANNUAL REPORT ON FORM 20-F Unless otherwise indicated and except where the context otherwise requires: •“2023 convertible notes” refers to our 2.25% convertible senior notes due 2023, which were issued in June 2018; •“2024 convertible notes” refers to our 1.00% convertible senior notes due 2024, which were issued in November 2019; •“2025 convertible notes” refers to our 2.375% convertible senior notes due 2025, which were issued in May 2020; •“2026 convertible notes” refers to our 0.25% convertible senior notes due 2026, which were issued in September 2021; •“active users” in the context of digital entertainment refers to the number of unique accounts that interacted with our mobile and PC online games in aparticular period. A single account that plays more than one online game or in more than one market is counted as more than one active user. “GameQAUs” refers to the aggregate number of active users during the quarterly period; •“ADSs” refers to the American Depositary Shares, each of which represents one of our Class A ordinary shares, par value US$0.0005 per share; •“China” or “PRC” refers to the People’s Republic of China excluding, for the purpose of this annual report only, Taiwan, Hong Kong and Macau; •“gross merchandise value” or “GMV” refers to the value of orders of products and services on our Shopee marketplace. Our calculation of GMV for our e-commerce platform includes shipping and other charges; •“orders” refers to each confirmed order from a transaction between a buyer and a seller for products and services on our e-commerce platform, even if suchorder includes multiple items, during the specified period, regardless of whether the transaction is settled or if the item is returned; •“paying users” refers to the number of unique accounts through which a payment is made in our online games in a particular period. A unique accountthrough which payments are made in more than one online game or in more than one market is counted as more than one paying user. “Game QPUs” refersto the aggregate number of paying users during the quarterly period; •“shares” or “ordinary shares” refer to our Class A ordinary shares, par value US$0.0005 per share, and our Class B ordinary shares, par value US$0.0005per share; •“Southeast Asia” refers to Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam; •“SME” refers to small medium sized enterprises; and •“we,” “us,” “our company,” “our group,” “our” or “Sea” refers to Sea Limited, a Cayman Islands company, its consolidated subsidiaries and itsconsolidated affiliated entities, including its variable interest entities, or VIEs, and their subsidiaries and consolidated affiliated entities. Our reporting and functional currency is the U.S. dollar. This annual report contains translations of certain foreign currency amounts into U.S. dollars for theconvenience of the reader. Unless otherwise stated, all translations from Indonesian rupiah into U.S. dollars have been made at the rate of IDR15,439.00 to US$1.00,being the foreign exchange reference rate and the Jakarta interbank spot dollar rate published by the Bank Indonesia in effect as of December 29, 2023, all translationsof New Taiwan dollars, Thai baht, Singapore dollars and Malaysia ringgit into U.S. dollars have been made at the rates of NT$30.6200 to US$1.00, THB34.3500 toUS$1.00, S$1.3193 to US$1.00 and RM4.5903 to US$1.00, respectively, being the noon buying rates in The City of New York for cable transfers in New Taiwan dollars,Thai baht, Singapore dollars and Malaysia ringgit as certified for customs purposes by the Federal Reserve Bank of New York in effect as of December 29, 2023 setforth in the H.10 statistical release of the U.S. Federal Reserve Board for translation into U.S. dollars, and all translations from Vietnamese dong into U.S. dollars madeat the rate of VND23,866 to US$1.00, being the central rate published by The State Bank of Vietnam in effect as of December 30, 2023. We make no representation thatthe Indonesian rupiah, New Taiwan dollar, Vietnamese dong, Thai baht, Singapore dollar or Malaysia ringgit amounts referred to in this annual report could have beenor could be converted into U.S. dollars at any particular rate or at all. See “Item 3. Key Information—D. Risk Factors—Business and Operational Related Risks—RisksApplicable Across Multiple Businesses—Fluctuations in foreign currency exchange rates may adversely affect our operational and financial results, which we reportin U.S. dollars.” On March 28, 2024, the Jakarta interbank spot dollar rate for Indonesian rupiah was IDR15,873.00 to US$1.00, the noon buying rate for New Taiwandollars was NT$31.9900 to US$1.00, the central rate for Vietnamese dong was VND24,003 to US$1.00, the noon buying rate for Thai baht was THB36.42000 to US$1.00,the noon buying rate for Singapore dollars was S$1.3493 to US$1.00 and the noon buying rate for Malaysia ringgit was RM4.7321 to US$1.00. 5Table of Contents FORWARD-LOOKING STATEMENTS This annual report contains forward-looking statements that involve risks and uncertainties. All statements other than statements of current or historicalfacts are forward-looking statements. These forward-looking statements are made under the “safe harbor” provision under Section 21E of the Securities Exchange Actof 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties andother factors, including those listed under “Item 3. Key Information—D. Risk Factors,” that may cause our actual results, performance or achievements to be materiallydifferent from those expressed or implied by the forward-looking statements. In some cases, you can identify these forward-looking statements by words or phrases such as “may,” “could,” “will,” “expect,” “anticipate,” “aim,”“estimate,” “intend,” “plan,” “believe,” “likely to,” “potential” or other similar expressions. We have based these forward-looking statements largely on our currentexpectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy andfinancial needs. These forward-looking statements include statements about: •our goals and strategies; •our future business development, financial condition, financial results, and results of operations; •changes in, and market size of, the e-commerce, digital financial services, and digital entertainment industries in the markets where we operate, includingsegments within those industries; •expected changes or guidance in our revenue, costs or expenditures; •our ability to continue to source, develop and offer new and attractive online games and to offer other engaging digital entertainment content; •the expected monetization of our e-commerce, digital financial services, and digital entertainment businesses; •our expectations regarding growth in our user base, level of engagement and monetization; •our ability to continue to develop new technologies and/or upgrade our existing technologies; •growth and trends of our markets and competition in our industries; •government policies and regulations relating to our industries, including the effects of any government orders or actions on our businesses; •general economic, political, social and business conditions in our markets; and •the impact of widespread health developments. You should read this annual report with the understanding that our actual future results may be materially different from and worse than what we expect.Other sections of this annual report include additional factors which could adversely impact our business and financial performance. Moreover, we operate in anevolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors anduncertainties, 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 differmaterially from those contained in any forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements. 6Table of ContentsYou should not rely on forward-looking statements as predictions of future events. The forward-looking statements made in this annual report relate only toevents or information as of the date on which the statements are made in this annual report. Except as required by law, we undertake no obligation to update or reviseany forward-looking statements, whether as a result of new information, future events or otherwise. This annual report also contains statistical data and estimates that we obtained from industry publications and reports generated by government or third-party providers of market intelligence. Although we have not independently verified the data, we believe that the publications and reports are reliable. See “Item 3.Key Information—D. Risk Factors—Business and Operational Related Risks—Other Operational Risks—Industry data, projections and estimates contained in thisannual report are inherently uncertain and subject to interpretation.” 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 A.[Reserved] B.Capitalization and Indebtedness Not applicable. C.Reasons for the Offer and Use of Proceeds Not applicable. D.Risk Factors SUMMARY OF RISK FACTORS We believe some of the major risks and uncertainties that may materially and adversely affect us include the following: BUSINESS AND OPERATIONAL RELATED RISKS Risks Applicable Across Multiple Businesses •We may fail to maintain or grow the size of our user base or the level of engagement of our users. •Changes in macro-economic, geopolitical or social conditions or government policies, or government actions or restrictions, globally and in our marketscould have a material adverse effect on our business and operations. •We have a history of net losses and we may not remain profitable in the future. •Our results of operations are subject to fluctuations. •We may fail to monetize our businesses effectively. 7Table of Contents•Any future occurrence of natural disasters, epidemics, pandemics or other outbreaks, or other catastrophic events could also adversely affect ourbusiness. •We may not succeed in managing or expanding our business across the expansive and diverse markets in which we operate. •We are subject to extensive and changing laws and government regulations across our business. •We may fail to compete effectively. •Existing or future investments or acquisitions may not be successful. •We have a limited operating history for some of our businesses. •Our businesses involve third parties over whose actions we have no control. •Fluctuations in foreign currency exchange rates may adversely affect our operational and financial results, which we report in U.S. dollars. •We may be subject to intellectual property-related risks. •We may be liable for security breaches and attacks against our or our third-party partners’ platforms and network, particularly with regard to confidentialuser information and personal or other data or any other privacy or data protection compliance issue, and our platforms and games may containunforeseen “bugs”, vulnerabilities or errors. •We collect, process, transmit, and store personal information in connection with the operation of our businesses and are subject to complex andevolving international laws and regulations regarding privacy and data protection. •We may use artificial intelligence in our business, and challenges with properly managing its use could adversely affect our results of operations. Risks Related to Our E-Commerce Business •We face uncertainties relating to the growth and profitability of the e-commerce industry in our markets and we may face challenges and uncertainties inimplementing our e-commerce strategy. •We face risks related to logistics and fulfillment. •We may be held liable for actions by our marketplace participants. •We may suffer losses relating to the products we sell on Shopee. Risks Related to Our Digital Financial Services Business •We face uncertainties and risks relating to our digital financial services business. •We face risks related to our credit and banking businesses. •Our banking business may subject us to additional material business, operational, financial, legal and compliance requirements and risks. •We face risks related to our insurance business. •We could be held liable if our digital financial services and products are used for fraudulent, illegal or improper purposes. 8Table of ContentsRisks Related to Our Digital Entertainment Business •We derive a significant portion of digital entertainment revenue and gross profit from a limited number of online games. •We have a limited track record in game development and global game distribution. •We rely on third-party game developers for some of our digital entertainment content and also allow our users to contribute and interact with usergenerated content. •Our games are subject to scrutiny regarding the appropriateness of their content. Other Operational Risks •We rely on technology and internet infrastructure, data center and cloud service providers and telecommunications networks in the markets where weoperate. •We may fail to attract, motivate and retain the key members of our management team or other experienced and capable employees. •We face manpower-related risks. •We may be subject to risks related to litigation and regulatory proceedings. •We rely on structural arrangements to establish control over certain entities and government authorities may determine that these arrangements do notcomply with existing laws and regulations. We are also subject to other risks relating to such structural arrangements. BUSINESS AND OPERATIONAL RELATED RISKS Risks Applicable Across Multiple Businesses We may fail to maintain or grow the size of our user base or the level of engagement of our users. The size and engagement level of our user base are critical to our success. Our business and financial performance have been and will continue to besignificantly determined by our success in adding, retaining and engaging active users. We invest significant resources to grow and maintain our user base andincrease user engagement, whether through innovation, providing new or improved content or services, marketing efforts or other means. Our user base and engagement levels may not continue growing at satisfactory rates, or at all. Our user base and engagement could be adversely affected if: •we fail to maintain the popularity of our platforms among users; •we are unable to maintain the quality of our existing content and services; •we are unsuccessful in innovating or introducing new, best-in-class content and services; •we fail to adapt to changes in user preferences, market trends or advancements in technology; •technical, regulatory, governmental or other reasons prevent us from delivering our content or services in a timely and reliable manner, or at all, orotherwise affect the user experience; •there are user concerns related to privacy, data protection, safety, fund security or other factors; •monetization and cost reduction measures by us cause users to reduce their activity on our platforms or shift to other platforms; 9Table of Contents•new games cause players to shift from our existing games without growing the overall size of our user base or online games platform; •there are adverse changes to our platforms or offerings that are mandated by, or that we elect to make, to address legislation, regulation, governmentorders, or litigation, including settlements or consent decrees; •our users fail to accept or comply with our terms of service or the privacy policies that we have implemented or may implement, or we adopt terms,policies, or procedures that are perceived negatively by our users; •our marketing campaigns or promotional strategies fail to achieve the intended effect among users – for example, users may develop negativeperceptions towards our marketing campaigns or promotional strategies; •we are unable to achieve the expected synergies among our businesses, we are unable to achieve synergies in a cost-effective manner, or we fail tobalance the interests of all participants in our ecosystem; •we fail to maintain the brand image of our platforms or our reputation is damaged or changes negatively; or •changes to demographic trends or economic development affect our markets. Our efforts to avoid or address any of these events could require us to incur substantial expenditure to modify or adapt our content, services or platforms.We may not be able to avoid or address such events in a timely or satisfactory manner, or at all. If we fail to retain or grow our user base, or if our users reduce theirengagement with our platforms, our business, financial condition and results of operations could be materially and adversely affected. Changes in macro-economic, geopolitical or social conditions or government policies, or government actions or restrictions, globally and in our markets couldhave a material adverse effect on our business and operations. We have businesses in diverse global markets and are subject to risks associated with doing business internationally and in differing economic, political andregulatory environments. Our business, financial condition and results of operations may be influenced to a significant degree by geopolitical, macro-economic andsocial conditions globally and in our markets. A general slowdown or volatility in the global economy, including recession, inflation or a tightening of credit marketscould adversely affect our business, financial condition and results of operation. A rise in inflation, increases in interest rates including by the United States FederalReserve System, bank failures or limited liquidity in accessing bank deposits globally, in our markets or neighboring regions could negatively affect our liquidity andfinancial healthiness and could have a material adverse effect on our business. Changes in consumer behavior due to adverse economic conditions may alsonegatively impact us as such developments could lead to a decrease in consumer spending and reduction in demand for our products and services, which mayadversely affect our business, financial condition, results of operation or competitive position. Growth of the economy of our various markets has been uneven, both geographically and among various sectors of the economy. Any adverse changes ineconomic conditions in our markets or neighboring regions, or in the policies of the governments or of the laws and regulations in each respective market could have amaterial adverse effect on the overall economic growth of our markets. The economies in emerging markets generally differ from developed markets in many respects,including the level of government involvement, level of development, growth rate, control of foreign exchange, government policy on public order and allocation ofresources. In some of our markets, governments continue to play a significant role in regulating industry development by imposing industrial policies. Some localgovernments also exercise significant control over the economic growth, foreign capital investments, tax regulations and public order in their respective jurisdictionsthrough allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policies, and providing preferential treatment toparticular industries or companies. Governmental actions to control inflation, interest rate adjustments and other policies and regulations have often involved, amongother measures, price controls, currency devaluations, capital controls and limits on imports. These measures, or the perception that any of them could occur, maycause decreased economic activity and consumer spending in our markets, which may adversely affect our business, financial condition and results of operations. Ourbusiness, financial condition and results of operations may be adversely affected by changes in government policies or regulations, such as exchange rates andexchange control policies, inflation rates, interest rates, tariff and inflation control policies, price control policies, import duties and restrictions, liquidity of domesticcapital and lending markets, electricity rationing tax policies, including royalty, tax increases and retroactive tax claims, and other political, diplomatic, social andeconomic developments in or affecting the markets where we operate. 10Table of ContentsSome of our markets have experienced, and may in the future experience, geopolitical and social instability, including strikes, demonstrations, protests,marches, other types of civil disorder, war or armed conflict, refugee migration or other types of unrests. For example, the ongoing geopolitical tensions related toRussia’s actions in Ukraine, resulting sanctions imposed by the United States and other countries and retaliatory actions taken by Russia in response to suchsanctions have resulted in significant disruptions to supply chains, logistics and business activities globally. In addition, there have been and remain tensionssurrounding the Taiwan Strait. If such tension intensifies, our business in Taiwan might not be able to operate normally or at all. Such tensions or any deteriorations inrelations among the U.S., Taiwan and the PRC may negatively impact our ability to continue to do business in Taiwan. It is possible that geopolitical, macro-economicand social instability globally and in our markets may negatively impact economic growth, decrease consumer spending, cause uncertainty and volatility in thefinancial markets, disrupt supply chains globally and in our markets, and may accordingly affect our business, financial condition and results of operations. Wecannot predict the duration or outcome of these events and actions or whether future developments would have any material adverse impact on our business. Theseand other instabilities and any adverse changes in the political environment could increase our costs, increase our exposure to legal and business risks, disrupt ouroffice operations or the business activities of our ecosystem participants, or affect our ability to expand or retain our user base. In addition, governments or government agencies in any of our markets could censor, ban or block access to our services, mobile applications, platformsand/or the internet generally for various reasons, including political tensions and wars between countries, content restrictions, national security, data protection orregulatory concerns, or due to some misunderstanding. For example, due to unanticipated government actions, in early 2022, Free Fire was made unavailable in theGoogle Play and iOS app stores in India, and currently remains unavailable. Users generally need to access the internet and/or app stores to access, download or useour services and mobile applications. If governments either directly or indirectly block, limit or otherwise restrict us from publishing or making available our productsand services to users, block, limit or restrict our users from accessing our products, services or mobile applications, prevent us from onboarding new users, preventdata transfers to or from certain markets or services, or take similar actions against us, our business could be negatively impacted, and we could experience loss orslower growth of our user base, financial loss, and our reputation may be adversely affected. Further, any government actions taken against our service providers,partners or other third-party intermediaries on which our business relies could cause our products and services to become unavailable for extended periods of time oreven indefinitely. Governments or government agencies may take legislative, executive, administrative or other measures or implement policies to regulate foreign investments,including applying heightened scrutiny, imposing additional requirements, prohibitions and restrictions on investments by companies based on the place ofincorporation or country of origin of such companies or their shareholders and/or beneficial owners or where companies have employees or service providers, storedata or develop or provide their products and services. Any adverse implementation or changes in foreign investment restrictions or interpretations against us ofsuch restrictions in our markets may affect our ability to operate and maintain our business in such markets. In the event of such restrictions, we may face additionallegal and regulatory compliance costs and risks, lose investments we have made and/or exit such markets, our users may develop a negative perception of us, and ourbusiness, financial condition and results of operations could be negatively affected. We have a history of net losses and we may not remain profitable in the future. We had net losses of US$2.0 billion and US$1.7 billion in 2021 and 2022, respectively, and net income in 2023 of US$162.7 million. Our net losses in those 2years were primarily due to our investments in expanding our businesses, in particular our e-commerce and digital financial services businesses. While our pivot tofocus on efficiency and profitability has delivered positive total net income in 2023, we may not sustain this profitability given the uncertainty in global markets andfuture fluctuations in our performance. 11Table of ContentsOur operating expenses may increase as we continue to invest in our businesses to enhance consumer experience and user engagement. Such investmentsmay not generate immediate positive financial returns and may result in increased or higher than expected costs, operating losses or other losses in the short term withno assurance that we will eventually achieve the intended long-term benefits or maintain profitability. These factors, among others set out in this “Item 3. KeyInformation—D. Risk Factors” section, may negatively affect our ability to sustain profitability in the near term. Our results of operations are subject to fluctuations. We are subject to seasonality and other fluctuations in our business. Our revenue is affected, by our promotional and marketing activities, including thetiming of promotions, and may fluctuate due to changes in user base, user engagement, user behavior and preferences and seasonality, and other factors. Maintainingour scale may also put strain on our existing resources due to increased capital expenditures and operating expenses, including sales and marketing expenses, staffhiring and procurement of infrastructure. See “—Business and Operational Related Risks—Risks Applicable Across Multiple Businesses—We may not succeed inmanaging or expanding our business across the expansive and diverse markets in which we operate.” Our historical results may not be indicative of our future performance and you should consider our future prospects in light of the risks and uncertainties weface operating in evolving industries in many emerging markets. Our revenue, profits and other operating results may vary significantly from quarter to quarter due toa variety of factors, many of which are outside our control. Factors that may contribute to the fluctuations of our results include, among others, (i) fluctuations andchanges in overall consumer demand for our products and services in certain markets or overall or during certain months and holidays, including calendar year-endholiday season, or due to certain short-lived consumer trends, hypes or other factors; (ii) timing of new products and services releases and monetization rates of ourproducts and services or content enhancements in different markets; (iii) increases in sales and marketing and other operating expenses; (iv) timing of promotional andmarketing activities; (v) macro-economic conditions including recessionary fears, rising inflation or interest rates, and their effect on consumer spending; (vi)geopolitical conditions; and (vii) other risk factors as described in this annual report. As a result, our businesses may not continue to grow as fast as in the past yearsor at all. Should our businesses experience a slowdown in growth, flattening or decrease in scale or profit, there could be material fluctuations in our financial results,which could negatively affect our stock performance. In addition, changes in cash flow generated from our games may not match our revenue trends due to revenuerecognition policies under U.S. GAAP, which require proceeds from our sales of in-game virtual items to be recorded as deferred revenue and recognized over a periodof time based on estimated service periods. As deferred revenue contributes a significant amount of the revenue we report each quarter, a decrease in bookings in anyone quarter may not significantly reduce our revenues for that quarter but could negatively affect our revenues in future quarters or periods. Accordingly, the effectsof declines in our bookings are not fully reflected in our results of operations until future periods. We may fail to monetize our businesses effectively. Our financial performance largely depends on our ability to monetize our businesses, and any failure to adequately increase revenue or contain the relatedcosts could prevent us from attaining or increasing profitability which could materially and adversely affect our business, financial condition and results ofoperations. Our focus for our e-commerce business is to continue to enhance our ecosystem of sellers and buyers, improve the shopping experience and increase ourprofitability. We monetize Shopee mainly by offering sellers paid advertising services, charging transaction-based fees, and charging for certain value-added services,including logistics. If our efforts to monetize our e-commerce business are not successful, revenue generated from monetizing our Shopee marketplace may not offsetits significant operating costs. Moreover, monetization efforts could increase the costs of using our Shopee platform to users, which could render our products orofferings less attractive, negatively affect the number of users and the level of user engagement on our platform. Our monetization efforts may also lead to usersswitching to using platforms offered by our competitors. 12Table of ContentsWe mainly monetize our digital financial services business by earning interest and fees from our credit and banking businesses, charging fees from ourmobile wallet services and by earning premium or commission from our insurance business. Our ability to continue to successfully monetize our digital financialservices business in the future will depend significantly on our user base, the number of use cases available, the strengths of our credit modeling and riskmanagement capability, and the availability of funds for our digital financial services business which may not be achieved at the level we anticipate. In addition, wemay offer new digital financial services and products or offer existing services and products to new markets. Our monetization efforts or offering of new products toexisting or new markets, including credit, banking and insurtech services, on our digital financial services platform may not succeed or generate revenue at levels weexpect, or at all. In order to sustain monetization of our digital entertainment business, we must maintain paying users and convert active game players to paying users andincrease their spending. Spending on our games is discretionary and our users may be price-sensitive, which may negatively affect our ability to monetize ourbusiness. It is crucial to balance creating sufficient in-game monetization opportunities on the one hand, and ensuring our games continue to attract a considerablenumber of users by offering them an enjoyable free-to-play experience on the other. To stimulate in-game spending, we need to continue to ensure that our games areengaging, the in-game items we offer are appealing, our monetization strategies comply with applicable laws and regulations, our prices are attractive and ourmarketing and promotional activities, such as esports events, are effective. For all our businesses, we invest to better understand our users and their preferences. This allows us to introduce content and services that are appealing toour users and to properly deploy and price content and services to enhance our monetization. However, if we fail to properly interpret user preferences or convert ourunderstanding into effective business strategies, our monetization may not be effective. Any future occurrence of natural disasters, epidemics, pandemics or other outbreaks, or other catastrophic events could also adversely affect our business. Our business, financial condition and results of operations could be materially and adversely affected by severe weather conditions, natural disasters,geopolitical events, terrorist attacks, wars, sanctions, the occurrence or re-occurrence of other outbreaks, epidemics or pandemics, including COVID-19, avianinfluenza, severe acute respiratory syndrome, the influenza A (H1N1) or H7N9, and other catastrophic events that disrupt our operations, adversely affect our marketsor the economy generally or adversely affect our employees, third-party service providers, business partners or a significant portion of our users. We may not succeed in managing or expanding our business across the expansive and diverse markets in which we operate. Our business has become increasingly complex given the scale of our operations, product offerings and the diverse markets in which we operate. It is costlyto establish, develop and maintain international operations, adapt our business model to new or diverse regulatory environments and to promote our brandinternationally. Our international operations may not become profitable on a sustainable basis. As our operations continue to expand, our technology infrastructuresystems and corporate, legal and compliance functions will need to be scaled to support our operations, and if they fail to do so, our business, financial condition andresults of operations may be negatively affected. The markets where we operate or expand to are diverse and unique, with varying levels of economic and infrastructure development and distinct legal andregulatory systems, and do not operate seamlessly across borders as a single or common market. Managing our businesses across these markets requiresconsiderable management attention and resources. Operating across multiple distinct markets also requires certain additional costs, including costs relating tostaffing, logistics, intellectual property protection, regulatory and legal compliance, tariffs and other trade barriers and higher tax rates in certain markets, whereapplicable. We may be less well-known or have fewer local resources and we may be unsuccessful in adapting our business practices, culture and operations. Fromtime to time, we may test the waters for certain businesses in new markets where we believe there may be an opportunity to use our experience in highly diverseenvironments to reach underserved buyers and sellers. We may also exit from certain markets or cease certain operations in certain markets due to a variety of factors. Our operations and expansions in new markets may become subject to risks associated with: •user acceptance of a digital economy, especially in the new markets to which we may expand in the future; 13Table of Contents•lack of experience operating in these new markets, including our ability to understand different user behaviors and/or culture in new markets and roll-outrelevant products and services localized to each market’s needs or preferences; •challenges in adapting our approach and strategies in existing markets to new markets; •recruiting and retaining talented and capable management and employees in various markets; •our ability to appropriately deploy resources and management attention that otherwise would be focused on the development of our existing marketsand businesses; •limited technology infrastructure and low levels of use of the internet; •challenges caused by distance, language and cultural differences, and local and regional competitive landscapes; •providing content and services that appeal to the tastes and preferences of users in a larger number of markets; •implementing our businesses in a manner that complies with local laws and practices, which may differ significantly from market to market, including lawsregarding data protection, privacy, network security, cybersecurity, encryption and payments; •maintaining adequate internal and accounting control across various markets, each with its own accounting principles that must be reconciled to U.S.GAAP upon consolidation; •compliance with privacy laws and data security laws and compliance costs across different legal systems; •currency exchange rate fluctuations; •protectionist laws and business practices that could, among other things, hinder our ability to execute our business strategies and put us at acompetitive disadvantage relative to domestic companies, including restrictions on foreign ownership; •actions by governments or others to restrict access to our products and services, whether these actions are taken for political, security or other reasons,or that may cause us to discontinue our operations in a particular market; •complex local tax regimes; •differing, complex and potentially adverse customs, import/export laws, tax rules and regulations or other trade barriers or restrictions which may beapplicable to transactions conducted through cross-border e-commerce business, related compliance obligations and consequences of non-compliance,and any new developments in these areas; •establishing strategic partnerships, as well as maintaining our relationships with any of our existing or future strategic partners; •potential political, economic and social instability, including future major geopolitical events, and related actions taken by other countries in response, orperceived, threatened or actual security concerns; and •higher costs associated with doing business in a larger number of markets. Any of the foregoing could negatively affect our business, financial condition and results of operations. 14Table of ContentsAs the consumer internet business may be relatively new in certain markets, the relevant regulations are evolving and expanding. We may be regularlysubject to formal and informal reviews, inquiries and investigations by governments and regulatory authorities. Unfavorable regulations, laws, decisions orenforcement actions could cause us to incur substantial costs, expose us to unanticipated civil and criminal liability or penalties (including substantial monetaryfines), diminish the demand for, or availability of, our products and services, increase our cost of doing business, require us to change our business practices in amanner materially adverse to our business, damage our reputation, impede our growth or monetization strategy, or otherwise have a material adverse effect on ouroperations. We are subject to extensive and changing laws and government regulations across our business. Our business is affected by laws and regulations across multiple jurisdictions that affect the industries in which we operate, and their scope and stringencyhave increased significantly in recent years. We are subject to a variety of regulations, including those relating to game operations, game ratings, e-commerce, socialnetworking, internet applications or content services, digital platforms, marketing, advertising, artificial intelligence technology and services, privacy, personalinformation, data use, data transfer, data processing, data localization, data storage, data retention and data protection, livestreaming services, antitrust or competitionlaws, employment and labor laws, national language requirements, intellectual property, virtual items, user generated content, loot boxes, national security,nationalization, content restrictions, platform regulations, sale of regulated or prohibited items, protection of minors, data of minors, consumer protection, pricing,product safety and product liability, prevention of money laundering and financing criminal activity and terrorism, anti-bribery and anti-corruption regulation,economic or other trade prohibitions or sanctions, electronic contracts and other communications, digital financial services regulation, electronic payment servicesregulation, lending regulation, foreign investment and currency control regulation and regulations related to logistics, insurance, and banking. Because the industriesin which we operate are relatively new in our markets, the relevant laws and regulations, as well as their interpretations, are often unclear and evolving. Some of theseregulations also implicate licensing and approval requirements, and the variety of potentially applicable laws and regulations can make it difficult to know or determinewhich licenses and approvals are necessary, or the processes for obtaining them. For these same reasons, we also cannot be certain that we will be able to maintainthe licenses and approvals that we have previously obtained, or that once they expire, we will be able to renew them. We are also uncertain as to whether we will beable to obtain the licenses or approvals we apply for in a timely manner or at all. If we fail to obtain, maintain or renew any required licenses or approvals, comply withthe licensing conditions or make any necessary filings, or are found to require licenses or approvals that we believed were not necessary or we were previouslyexempted from obtaining, we may be subject to various penalties, such as loss of the revenue or assets that were generated through the unlicensed businessactivities, imposition of fines, suspension or cancelation of the applicable license, written reprimands, termination of relevant businesses or offerings, criminalprosecution and the discontinuation or restriction of our operations, or other disputes. Any such penalties or disputes may disrupt our business operations andmaterially and adversely affect our business, financial condition and results of operations. Laws and regulations and their enforcement vary from jurisdiction to jurisdiction and are often evolving, unclear or inconsistent with other applicable laws.At the same time, authorities may introduce protectionist measures or may observe regulatory developments in other jurisdictions and seek to implement similarmeasures, including measures to bring their respective jurisdictions in line with international standards that may be more stringent or restrictive, thus potentiallysubjecting us to more extensive regulation in each market. Future expansion in terms of our services and geographic coverage, including the expansion of our e-commerce platform, licensed or self-developed games and digital financial services and products, could subject us to additional regulatory requirements and otherrisks that may be costly or difficult to comply with. As the digital economy of our markets develop and new regulations and compliance requirements are introduced,there may be ambiguity regarding the applicability and scope of new and existing regulations and compliance requirements, which may in turn cause uncertainty toour business operations, user engagements and investor confidence. We may require more time than expected to adapt to these new requirements and may facedelays during the implementation or transition period. Any failure to timely comply with such new requirements may disrupt our business operations, damage ourreputation, cause us to lose users or reduce user engagement. News or rumors about potential introductions of new regulations, restrictions or compliancerequirements may also result in significant uncertainties to our business operations and may negatively affect the market price of our ADSs. 15Table of ContentsIn addition, data protection, privacy, content, competition, and other laws and regulations may impose different obligations and are expected to become morerestrictive in certain of our markets. There are a number of recently enacted and amended data protection laws and regulations as well as legislative and regulatoryproposals in various jurisdictions where we operate that could impose new obligations or limitations in areas affecting our business. There are also jurisdictions thatare considering or have passed legislation implementing data transfer restrictions or requiring local storage and processing of data or similar requirements, whichcould affect our business operations. If we are required to make changes to or are otherwise restricted in the manner in which we transfer data between and amongcountries and regions or share data among our businesses, it could affect our ability to and the manner in which we provide our content, products and services, whichcould adversely affect our financial results. We may be required to implement different operating practices and protocols depending on the requirements of each localmarket, which may be costly, and increase the complexity of delivery of our content, products and services. There has been increased scrutiny over the power and influence of big technology companies globally. Competition authorities scrutinize technologycompanies around issues such as exclusivity, tying or bundling, and abuse of market power. In addition, government agencies and regulators may, among otherthings, prohibit future acquisitions, divestitures or combinations, impose significant fines or penalties, or impose other restrictions that limit or require us to modifyour operations with platform users or place restrictions on our business models due to anti-competition concerns. Such restrictions may alter the way in which we dobusiness, increase our costs or liabilities or reduce demand for our platforms, which could adversely affect our business, financial condition and results of operations.From time to time, we have received inquiries from or are subject to inquiries and investigations by competition authorities. Unfavorable laws, regulations, decisions,administrative rulings, interpretations of competition rules, or other actions by government or regulatory authorities applying those laws and regulations, includinginquiries, investigations, or enforcement actions threatened or initiated by them, could cause us to incur substantial costs, expose us to unanticipated civil andcriminal liability or penalties (including substantial monetary fines), diminish the demand for, or availability of, our products and services, increase our cost of doingbusiness, require us to change our business practices in a manner materially adverse to our business, damage our reputation or otherwise have a material effect on ouroperations. Regulators may regularly re-examine and increase legislation, regulation and enforcement of compliance obligations, which may require us or our businesspartners to revise or expand compliance programs, including the procedures we use to verify the identity of our users and to monitor the transactions on ourplatforms. Such new legislation, government policies or compliance requirements may also make it more burdensome for us to operate our businesses, expand ourofferings and for our users to use our services and products, which could potentially discourage users from using our services and products. We may also makechanges to or expand our product offerings or services in a manner that subjects our businesses to additional legislation, regulations or other compliance obligations,which may result in similar burdens and risks to our businesses. The provision of financial services such as mobile wallet services, payment processing, cross-border e-commerce transactions, consumer and SME creditproducts, banking and insurtech services are typically more regulated and subject to a broad range of complex laws and regulations that are rapidly changing. Themonetary, commercial, customs or equivalent authorities in the markets in which we operate could impose new or additional licensing requirements, capitalcommitments, governance standards, reporting obligations or other regulatory requirements, requiring us to devote substantial operational and financial resources tocomply with such requirements. We may fail to compete effectively. We face competition in each of our business lines and the failure to compete effectively in any of them could materially and adversely affect our business,financial condition and results of operations. Our e-commerce business faces competition from global and regional players and retailers that operate across several markets, and from single-market playersand retailers. Global e-commerce or internet companies are also making efforts to enter into our markets or e-commerce to further expand their footprints in suchmarkets. Such competitors may have longer operating history, different business models and growth strategies, and greater access to financial, technological andmarketing resources than we do. We compete with online and offline players to attract, engage, and retain buyers based on the variety and value of products andservices listed on our marketplaces, overall user experience and convenience, online communication tools, social features, integration with mobile and networkingapplications and tools, mobile applications and availability, quality and costs of payment, customer support and logistics services. We also compete to attract andretain sellers based on the number and the engagement of buyers, the effectiveness, cost, and quality of the services we offer to sellers, commission rates, and theavailability of support and other platform services. We also compete to attract and retain content creators for e-commerce. As e-commerce is evolving in our markets,competition for market share is particularly intense. Our competitors may also consolidate or be acquired by other competitors, allowing them to obtain greater marketshare, gain access to greater resources and gain real advantages over us. In addition, we may face increasing competition from social media and social-commerceplatforms, online and app-based search engines through which products and services may be researched and sold, and other content-providing market players. Socialmedia platforms with high levels of user engagement may be able to leverage content and user connections and traffic on their platform to increase the visibility andattractiveness of a wide variety of brands and products. 16Table of ContentsOur digital financial services business faces competition from existing online and offline consumer and SME financial products and services. We expectcompetition to intensify as existing and new competitors introduce new services or enhance existing services. Some of our competitors may have more experience,greater financial resources or larger bases of customers than we have. In addition, certain competitors may have longstanding relationships with certain merchants toaccept the payment services they offer, which may make it difficult or costly for us to establish partnerships with these merchants. New entrants tied to establishedbrands may engender greater user confidence in the safety and efficacy of their services, along with greater liquidity. We may also face pricing pressures and otherforms of competition from competitors. Some potential competitors may charge lower commissions to merchants or subsidize users through other services they offer.Such competition may result in the need for us to alter the pricing we offer, which could reduce our gross profit and negatively affect our business, financial conditionand results of operations. Competitors in the banking space such as banks and larger financial institutions may be able to offer more extensive or enhanced productsand services, or offer such products and services at more attractive rates, credit or other terms, including more attractive rates on deposits and rates on loans. If suchcompetitors appear more attractive to high quality customers or credit users, such customers or users may be less likely to use our products and services, and we mayhave a decreased pool of high-quality customers or credit users. For our consumer and SME credit business, we compete with other non-bank fintechs, neobanks,credit unions, multi-finance companies, off-card financing, private credit card and point-of-sale service providers, banks and larger financial institutions may also buildsolutions to compete in the consumer and SME lending space. Our competitors may also be able to obtain certain licenses that we are unable to obtain, which mayhinder our ability to offer certain products or access certain pools of liquidity that are the subject of such licenses. Our digital entertainment business competes globally on the basis of a number of factors, including user base, game portfolio, quality of user experience,brand awareness and reputation, relationships with game developers, access to developer talent, monetization strategies and access to distribution and paymentchannels. Our competitors for game publishing include companies with a presence in just one or several markets, as well as companies offering global publishingplatforms. Our competitors for game development include global developers, who may have more experience, better reputation and more data obtained fromdeveloping games that target the same user pool. Our competitors may capitalize on their significant financial, technical or know-how resources to develop, distributeand operate mobile, console and PC online games or acquire other game or developer studios. Some developers may choose to distribute games themselves throughother channels such as the iOS App Store, the Google Play Store, Steam, or through consoles which may compete with games distributed and developed by us. Inaddition, we face competition from other games, platforms and entertainment formats for the time, attention and entertainment spending of our online game players. Ifother leisure time activities are perceived by our players to offer greater variety, affordability, interactivity and overall enjoyment, our digital entertainment businessmay be materially and adversely affected. We may offer new products and services, develop new or enhance the features and functionality of our platforms, that may lead to increased or additionalcompetition. We may also periodically change or remove new features and functionality, and optimize our operational efficiency and increase monetization efforts,which may not be well received and decrease the time spent by users on our platforms. We may need to compete with existing service providers who have moreexperience and infrastructure than us. We may also face potential protectionist policies, political measures or regulatory challenges that are more supportive of localplayers in such markets, which may, among other things, hinder our ability to compete effectively in such markets. Existing or future investments or acquisitions may not be successful. We have invested in or acquired, and may in the future invest in or acquire, teams, businesses, services, assets or technologies from time to time. We may failto select appropriate investment or acquisition targets, or we may not be able to negotiate optimal arrangements, including arrangements to finance such investmentsor acquisitions. Investments and acquisitions entail uncertainties and risks, such as: 17Table of Contents•we may fail to successfully achieve the intended objectives; •our investments or acquisitions may be viewed negatively by customers, financial markets or investors; •the costs of identifying and consummating these transactions may be significant; •acquisitions and the subsequent integration of new assets and businesses into our own could require significant management attention and could divertresources from our existing businesses; •we may have difficulty in transitioning and integrating the business, technologies, products, personnel or operations of the acquired businesses; •we may face unforeseen operating challenges; •our relationships with existing employees, customers and business partners of our group, or those of the target, may be impaired; •we may assume pre-existing contractual relationships of an acquired company that we would not have otherwise entered into, the termination ormodification of which may be costly or disruptive to our business; •an acquisition may result in a delay or reduction of customer purchases for both us and the company acquired due to customer uncertainty aboutcontinuity and effectiveness of service from either company; •we may face challenges associated with managing additional and/or geographically remote businesses; •investments and acquisitions could result in the use of substantial amounts of cash or significant capital contributions, which could limit other potentialuses for our cash; •investments and acquisitions could result in increased leverage, dilutive issuances of equity securities, adverse tax consequences, goodwill impairmentcharges, investment impairment charges or write-offs, and amortization expenses for other intangible assets; •if we incur debt to fund any investments or acquisitions, such debt may subject us to material restrictions on our ability to conduct our business,including financial maintenance covenants; •we may need to issue new shares as acquisition consideration or to raise additional capital to fund the acquisition consideration, which may dilute ourexisting investors’ interest in us; •we may assume unknown material liabilities of acquired companies, or may be exposed to claims and disputes by shareholders and third parties,including intellectual property claims and disputes; •we may be unsuccessful in accurately projecting revenue, cost or other metrics of the invested or acquired entity in the due diligence process; •the invested or acquired assets or businesses may not generate the financial results we expect; and •the market value of our investments or acquisitions may fluctuate, particularly in volatile markets, or they may become obsolete. 18Table of ContentsThese factors could adversely affect our financial results. In addition, we may fail to obtain any required approvals and licenses from relevant governmentauthorities. We may become subject to new governmental regulations in connection with our investments and acquisitions, which could result in increased costs andnew strategic risks. Any of these risks may materially and adversely affect our business, financial condition and results of operations.We have a limited operating history for some of our businesses. We have a limited operating history upon which to evaluate the viability and sustainability of our businesses, in particular our e-commerce business in newermarkets that may be very different from Southeast Asia and Taiwan, our digital financial services business, and new game genres and markets for our digitalentertainment business. In particular, our history of operating our digital financial services business in its current business model with its services and productofferings is relatively short. Our historical results may not be indicative of our future performance and you should consider our future prospects in light of the risksand uncertainties we face operating in a fast evolving digital financial services industry in certain markets. Our businesses involve third parties over whose actions we have no control. Each of our e-commerce, digital financial services and digital entertainment businesses involves the participation of third parties such as third-party gamedevelopers, owners of other third-party intellectual properties, users who generate content on our platforms, including livestreaming or other real-time contentdissemination, sellers and merchants who own the content and services offered through our platforms, as well as intermediaries and other third-party serviceproviders including other financial institutions providing financial services. We rely on a number of third-party channels to provide content and services to our users,as well as performing other functions of our platforms. For example, we primarily rely on third-party application distribution channels, such as the iOS App Store andthe Google Play Store, to allow users to download and access our applications and games. If our third-party distribution channels voluntarily or involuntarily suspendtheir services to us, including taking down or removing our applications in response to government actions or other legal action or pursuant to their own policies, andwe are unable to arrange for alternative measures in a timely manner or at all, our users will have difficulties accessing our applications and games or making paymentsfor our products and services. Consequently, we will lose users temporarily or permanently, and our financial results could be materially and adversely affected.We may not be able to control the actions of these or other third parties and thus are subject to various risks associated with working with or relying on thirdparties in our businesses, including:•risks relating to third-party sellers on our platforms and merchant partners, including deficiencies in the quality of products, misrepresentations of orabout products, listing or sale of restricted or prohibited products, failure to comply with applicable laws and regulations, and potential intellectualproperty issues (see “—We may be subject to intellectual property-related risks”); •risks relating to third-party publishing or distribution channels we use to make our applications available for download, such as the iOS App Store andthe Google Play Store; •risks relating to content generated by third parties and any user generated content in our games (see “—We rely on third-party game developers forsome of our digital entertainment content and also allow our users to contribute and interact with user generated content”), e-commerce platform, orother platforms, including content posted in real-time, which may be illegal, obscene, defamatory, infringing or otherwise inappropriate or unlawful; •risks relating to third-party payment service providers we depend on to provide users with various payment options or mobile wallet top-up options,such as the iOS App Store and the Google Play Store, payment on delivery, bank transfers, direct carrier billing, credit cards, debit cards,telecommunication card and over-the-counter top-up and payment through other third-party payment services; •risks relating to services by third-party logistics service providers (see “—We face risks related to logistics and fulfillment”); •risks relating to third party developers and independent software vendors; 19Table of Contents•risks relating to third party collection agents in relation to our credit products and loans receivable; •risks relating to manpower agencies and independent contractors (see “—We face manpower-related risks”); •risks relating to business process outsourcing vendors, including customer service agents; •risks relating to users’ personal data that is received or used by third parties in connection with our services, such as when sellers or third-partypayments or logistics providers receive user information in connection with payment services or order fulfillment; •risks relating to third party banks, insurance, lending and wealth management service providers providing services on our platforms. If such third partyservice providers engage in activities that are negligent, fraudulent, or otherwise harm the interest of users subscribing to such services or productsthrough our platforms, we may be subject to legal and financial harm, including potential contractual or non-contractual liability, reputational damage,litigation risk and/or user loss even if due to actions or activities not related to, attributable to or caused by us, or within our control; •risks relating to users of our services or platforms who engage in fraud or other conduct that violates our terms of service, other policies, or the law; •risks relating to our business and/or banking partners or counterparties being sanctioned and/or otherwise being found to have violated our agreements,other policies, or the law; •risks relating to third-party data center providers and cloud services for the storing of data from our users and operations, including any risks relating tousers’ personal data hosted by such service providers. In addition, we do not control the operation of these facilities and rely on contracts to employtheir use. The owners of the data center facilities have no obligation to renew their agreements with us on commercially reasonable terms, or at all. If weare unable to renew these agreements on commercially reasonable terms, we may be required to transfer our servers and other infrastructure to new datacenter facilities, or change to other service providers, and we may incur significant costs and possible lengthy service interruptions in connection withdoing so; and •damage to our reputation if third parties on our platforms or our other business partners do not properly perform their functions and negatively affectour users’ experience with our platforms. Although we take efforts to prevent third parties from engaging in prohibited conduct via the content available on our platforms, we may not detect everyunlawful, improper or fraudulent third-party action. In some of our markets, we may be liable for certain third-party conduct under local law, including if users commitfraud or cause other users of our services to incur losses. While we have agreements with some of these parties that obligate them to carry out their respectivedealings in a lawful and professional manner and to indemnify us for losses subject to applicable laws, any legal protection we may have could be insufficient tocompensate us for our losses or may not repair the damage to our reputation. If any of our third-party service providers and channel providers delivers unsatisfactory service, engages in fraudulent or prohibited actions, or is unable orrefuses to continue to provide its services to us and our users for any reason, our business, financial condition and results of operations may be materially andadversely affected.20Table of ContentsFluctuations in foreign currency exchange rates may adversely affect our operational and financial results, which we report in U.S. dollars. We operate in multiple markets, which exposes us to the effects of fluctuations in currency exchange rates as we report our financials and key operationalmetrics in U.S. dollars. We earn revenue denominated in local currencies of our markets in Southeast Asia, Taiwan and Brazil, among other currencies, while some ofour costs and expenses are paid in other foreign currencies. We generally pay license fees to game developers in U.S. dollars, and incur operating expenses in the localcurrencies in the markets in which we operate. From time to time, we may pay acquisition considerations in U.S. dollars. We do not rely on any single currency as weearn revenue in different local currencies across our markets and keep a significant cash position in U.S. dollars. However, fluctuations in the exchange rates amongthe various currencies that we use could cause fluctuations in our operational and financial results. Our expenses may become higher and our revenue and operatingmetrics may become lower than would be the case if exchange rates were stable or if we were operating and reporting in one currency. Movements in foreign currencyexchange rates may have a material adverse effect on our results of operations, which may cause our financial and operational metrics reported in U.S. dollars to be notfully representative of our underlying business performance. A significant amount of our revenue and some of our operating metrics are denominated in certain localcurrencies that have been subject to significant volatility in the past. Because fluctuations in the value of these local currencies are not necessarily correlated, ourresults of operations in any period may be adversely affected by such volatility. See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Major Factors Affecting Our Results of Operations” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk.”We may enter into foreign exchange derivatives transactions and incur relevant costs from time to time to manage our exposure to exchange rate risk. Suchderivatives transactions while intended to be non-speculative, are designed to protect us against increases or decreases in exchange rates, but not both. If we enteredinto derivatives transactions to protect against, for example, decreases in the value of a local currency and such local currency instead increases in value, we mayincur financial losses. Such losses could materially and adversely affect our financial condition and results of operations. We may be subject to intellectual property-related risks. We rely on a wide portfolio of intellectual properties to operate our businesses. We may not be able to effectively protect these intellectual properties againstinfringement, or efforts to safeguard our intellectual properties may be costly. We rely on a combination of trademark, patent, fair trade practice, copyright and trade secret protection laws, as well as confidentiality procedures andcontractual provisions, to protect our intellectual properties. We also enter into confidentiality agreements with our employees and any third parties who may accessour proprietary information, and we rigorously control access to our proprietary technology and information. Our intellectual property protection measures may not besufficient, and confidentiality agreements may be breached by counterparties. There may not be adequate remedies available to us for any such infringement orbreach. For example, in the event any third-party game developer, publisher or hacking group infringes the copyright of our self-developed game, our users may loseinterest in our games. In addition, policing any unauthorized use of our intellectual properties is difficult, time-consuming and costly, and the steps we take may beinadequate to prevent the misappropriation of our intellectual properties. In the event that we resort to litigation to enforce our intellectual property rights, suchlitigation could result in substantial costs and a diversion of our managerial and financial resources. We may not prevail in such litigation. In addition, our tradesecrets may be leaked or otherwise become available to, or be independently discovered by, our competitors. Any failure in protecting or enforcing our intellectualproperty rights could have a material adverse effect on our business, financial condition and results of operations. From time to time, we receive notices from third parties or are named in lawsuits by third parties alleging infringement of their proprietary intellectual propertyrights or in connection with claims relating to our content, products or marketing activities. For example, with respect to our e-commerce business, we receivecomplaints alleging that items offered on or sold through our Shopee platform infringe third-party copyrights, trademarks and patents or other intellectual propertyrights, or contain obscene, defamatory or libelous content. Although we have adopted measures to reduce infringements or offense by product listings on our Shopeeplatform before they appear on the marketplace, these efforts may not always be successful. In January 2024, the Office of the U.S. Trade Representative, or USTR,published its latest annual Review of Notorious Markets for Counterfeiting and Piracy, which identified the Shopee platform in several of our markets as “notoriousmarkets.” The USTR may continue to identify those Shopee markets as notorious markets, and the USTR may identify other Shopee markets as notorious markets inthe future. Since December 2020, the European Commission placed Shopee on its Counterfeit and Piracy Watch List. Any public perception that counterfeit, pirated, orotherwise inappropriate or illegal items are commonplace on Shopee, even if factually incorrect, or perceived delays in our removal of these items could damage ourreputation and result in regulatory action against us and diminish the value of our brand name. We may be subject to allegations of civil or criminal liability for allegedintellectual property infringement, including based on allegedly unlawful activities carried out by third parties through our platforms. We may also be subject to finesor sanctions by local authorities for infringing products or improper content offered on our marketplace, including requiring the removal of the infringing products or atemporary or permanent block of our platform. 21Table of ContentsWe may implement further measures to protect users and ourselves against potential intellectual property liabilities, and these measures could cost ussubstantial additional resources or require us to discontinue certain service offerings. In addition, these measures may reduce the attractiveness of our platforms tousers. For example, a seller whose listings are removed or suspended by us, regardless of our compliance with the applicable laws, rules and regulations, may disputeour actions and commence action against us for damages based on breach of contract or other causes of action or make public complaints or allegations. Any costsincurred as a result of such liability or asserted liability could also harm our business. As the number of interactive games increases and the features and content of these games continue to overlap, software developers and distributors haveincreasingly become subject to infringement claims. Some of our game content is highly realistic and features materials that are based on real‑world objects or people,which may also be the subject of claims of infringement, including right of publicity, copyright, trademark and unfair competition claims. Despite any steps taken by usto avoid knowingly violating the intellectual property rights of others, third parties may still claim that content we develop or license from third parties infringes theirintellectual property rights. We received intellectual property related claims in the past. In addition, as we begin to allow user generated content on our platforms, wemay also become subject to third party claims relating to such content. Any such claims, whether or not meritorious, that we need to defend or litigation we take to enforce our intellectual property rights may be time-consuming,distracting to management and costly, and we may not prevail in any such litigation. We may also be forced to stop distributing, cease using or redesign the relevantcontent or product, obtain a license from the claimant, which, if available at all, may not be available on commercially favorable terms. We may be liable for security breaches and attacks against our or our third-party partners’ platforms and network, particularly with regard to confidential userinformation and personal or other data or any other privacy or data protection compliance issue, and our platforms and games may contain unforeseen “bugs”,vulnerabilities or errors. Our business stores, generates and processes a large amount of data, including personal data and payment information from users, and any failure to preventor mitigate security breaches and the improper access, use or disclosure of such data could impact our operations negatively and harm our reputation. We alsomaintain certain other proprietary and confidential data relating to our business and personal data of our consumers and personnel. Although we have employedsignificant resources to develop and implement security measures aimed at preventing breaches, our cybersecurity and data protection measures have not and maynot detect or prevent all attempts to compromise our systems, including distributed denial-of-service attacks, viruses, malicious software, physical or electronic break-ins, phishing attacks, data leaks, social engineering, security breaches or other attacks and similar disruptions and fraudulent behavior or improper use by ouremployees or third party partners that may jeopardize the security of information stored in and transmitted by our systems or that we otherwise maintain. Any securitybreach, including personal data breaches or incidents, including cybersecurity incidents, could result in unauthorized access to our systems or a user’s system,misappropriation of our or a user’s information or data, loss, corruption or alteration of such data, financial loss, deletion or modification of user information, damageto our systems or those of our users, or a denial-of-service or other interruption to our business operations. Any such incidents could impact our operations andcould expose us to claims, litigation, regulatory or other governmental investigations, administrative fines, and potential liability, as well as remediation costs andincreased cybersecurity and/or data protection costs. We have in the past been and are likely again in the future to be subject to these types of attacks and securitybreaches. As techniques used to obtain unauthorized access to or otherwise breach or sabotage systems change frequently, we may not be aware that we have beenattacked and we may be unable to anticipate or implement adequate measures to protect against these security breaches until they have been launched against us, ourplatforms or services, our users or our third-party service providers. We may not have the resources, technical sophistication, or ability to anticipate or prevent rapidlyevolving or sophisticated types of cyberattacks or other types of security breaches. 22Table of ContentsIn addition, our confidential or proprietary information or our users’ personal data or payment information may, in some instances, be stored or processed bycertain third-party partners, which poses similar risks. If an actual or perceived breach of our or our third-party partners’ security occurs, public perception of theeffectiveness of our security measures and brand could be harmed, demand for our platforms or services may be reduced, our operations may be disrupted, we mayincur significant legal liabilities, financial loss, and remediation costs, and our business could be materially and adversely affected. While we take measures to requirethird-party service providers to adopt necessary security measures and to protect against data breaches in accordance with applicable laws and regulations, we alsoface similar risks where personal data is shared with third-party service providers. If our third party partners engage in activities that are negligent, fraudulent, illegal orotherwise harm the trustworthiness and security of our platforms, including improper disclosure or use of user data, or if our third party partners otherwise fail to meettheir data security and privacy obligations, or users are otherwise dissatisfied with their service quality on or off our platforms, we may be subject to user complaintsand suffer reputational harm, even if due to actions or activities not related to, attributable to or caused by us, or within our control. Any compromise of our or ourthird-party partners’ security or data could have a series of significant consequences, ranging from violation of applicable security, privacy or data protection,consumer and other laws, regulatory or other governmental investigations, enforcement actions, to other legal and financial exposure, including potential contractualliability, reputational damage, litigation risk and/or user loss. Our platforms services, applications, websites and games have in the past contained and may in the future contain errors, “bugs” or other vulnerabilities thatare not detected until after the applications, products or services are published or released. Additionally, many of our products and services are available on multipleoperating systems and/or multiple devices offered by different manufacturers, and changes or updates to such operating systems or devices may cause errors,vulnerabilities, or functionality problems in our products, including rendering our products or services inoperable by some users. Any such errors or a significantunavailability of our platforms, services or games or any breach of users’ data protection rights due to these errors or “bugs” could affect the overall user experience,which could cause users to reduce their time on or interest in our platforms, services or games, or not recommend our content and services to others. Such errorscould also result in non-compliance with applicable laws and regulations, cause financial loss, or create legal liability for us. Resolving such errors could also disruptour operations, cause us to divert resources from other matters, or materially harm our business, financial condition and results of operations. In addition, “cheating”programs or other unauthorized software tools and modifications that enable players to cheat in games harm the experience of players who play fairly and couldnegatively impact the volume of purchases of in-game items. Also, vulnerabilities in the design of our products, services and of the platforms on which they run couldbe discovered after their release and exploited by malicious actors before they are remedied. This may lead to loss of revenues or increased cost of developingtechnological measures to respond to these, either of which could negatively affect our business, reputation, financial condition and results of operations. We collect, process, transmit, and store personal information in connection with the operation of our businesses and are subject to complex and evolvinginternational laws and regulations regarding privacy and data protection. Our businesses are subject to an increasingly complex and at times divergent data privacy, data protection, data use, data governance, artificial intelligenceand information security laws and requirements in the markets in which we operate and where our users, merchant partners, customers and other participants arelocated. In addition, certain of our digital financial services businesses may be subject to more stringent and restrictive banking secrecy laws or other heightenedrequirements with respect to customer data. We are also subject to agreements with third parties such as Apple, Alphabet, Meta and others that place conditions andrequirements on the processing of data and on data collected via their services. As we continue to operate internationally and as laws continue to evolve and change,we will be subject to additional data protection laws and requirements. The privacy and data protection related laws, rules and regulations of jurisdictions we operatein may change or evolve to become more comprehensive or restrictive as compared to laws, rules and regulations we are currently subject to. In addition, such laws,rules and regulations, including any penalties, may differ or be inconsistent from jurisdiction to jurisdiction. Complying with privacy and data protection related laws,rules and regulations for an increasing number of jurisdictions could require significant resources and costs. Such laws, rules and regulations may also restrict thetransfer of data across jurisdictions, require data localization, require us to obtain user consent for the use and collection of their data, to delete or limit the processingof their data, and require us not to sell or engage in marketing data with respect to certain users, among other things, which may impose additional and substantialoperational, administrative and compliance burdens on us, and may also restrict our operations and expansions in new markets. The costs to comply with, or ouractual or perceived failure to comply with, new or changing laws, rules and regulations regarding privacy and data protection, privacy and data protection laws, rulesand regulations in new markets, and/or contractual obligations related to privacy and data protection may adversely affect our business, financial condition andresults of operation. Further, as we develop integrated and personalized products and services to enhance our user experience, we have expanded our data profilethrough additional data types and sources, across multiple channels, and involving new partners. This expansion has amplified the impact of these various laws andregulations on our businesses. As a result, we are required to constantly monitor our data practices and potentially change them when necessary or appropriate. 23Table of ContentsIf we fail to comply with any of these laws, we may face potentially significant fines, reputational loss and customer loss, and may be subject to proceedingsor actions against us by governmental entities, consumers or others relating to privacy and data protection. We may use artificial intelligence in our business, and challenges with properly managing its use could adversely affect our results of operations. We may incorporate artificial intelligence (“AI”) solutions into our platforms, offerings, services and features, or in support of internal business operations. Ifthe content, analyses, or recommendations that the AI applications are used in are or are alleged to be deficient, inaccurate, inappropriate, or biased, or if the use of AIresults in, or is alleged to have resulted in, the infringement of the intellectual property of third parties, we may be subject to legal claims or liability and our business,financial condition, and results of operations may be adversely affected. The use of AI applications may result in data leakage or unauthorized use or exposure ofpersonal data, or other information. Such leakage or unauthorized use or exposure of personal data related to or arising from our use of AI applications could result inlegal claims or liability. AI also presents emerging ethical issues and is subject to rapidly developing legal and regulatory frameworks in our markets, and if our use ofAI becomes controversial or becomes subject to new laws or regulations in any of our markets, we may experience reputational harm or legal liability or otherwise needto make changes to our practices and offerings. Our competitors or other third parties may incorporate AI into their products more quickly or more successfully thanus, which could impair our ability to compete effectively and adversely affect our results of operation. Risks Related to Our E-Commerce Business We face uncertainties relating to the growth and profitability of the e-commerce industry in our markets and we may face challenges and uncertainties inimplementing our e-commerce strategy. Our future results of operations and ability to grow our platforms and to sustain or increase profitability will depend on numerous factors affecting thedevelopment of the e-commerce retail industry in our markets, which may be beyond our control. These factors include: •the growth rate of internet, broadband, personal computer and smartphone penetration and usage in our markets, including any changes or fluctuationsin growth rates and/or usage; •the trust and confidence level of e-commerce consumers, as well as changes in customer demographics and consumer tastes and preferences; •the selection, pricing and popularity of products that online sellers offer; •attracting and retaining a wide range of merchants, brands and retailers; •providing effective technologies, infrastructure and services that meet the evolving needs of consumers and merchants; •economic landscape, macro-economics, and consumer discretionary spending; •competition from online and offline players, such as alternative retail channels or business models that better address the needs or preferences ofconsumers, including social commerce or multi-category service e-commerce platforms; •the differing and quickly changing laws and regulations applicable to e-commerce businesses in our markets, including any required licenses or permits,exposure to additional liability, including for conduct by or content originating from third parties, and new labor legislation or changes to anyemployment or independent contractor classification frameworks; and •the development of logistics (especially last-mile delivery and warehousing infrastructure), payment and other ancillary services associated with e-commerce. 24Table of ContentsOur e-commerce revenue is currently concentrated, with our top three markets accounting for approximately half of our total e-commerce revenue. If we wereto experience a material decline in Shopee’s major markets, especially those profitable or near profitable markets, or we are prohibited from operating or subject torestrictions limiting our operations in such markets, it could materially and adversely affect our financial results and the prospects and profitability of our e-commercebusiness. Our investments and future investments in new markets may not generate sufficient user engagement or revenues to justify continued investment. We maynot gain market share in such new markets or turn profitable. We face risks related to logistics and fulfillment. We rely on our own logistics operations as well as third-party logistics service providers to deliver Shopee’s orders. Interruptions or failures in such logisticsservices could prevent the timely or successful delivery of Shopee’s orders. These interruptions or failures may be due to unforeseen events that are beyond ourcontrol or the control of our third-party logistics service providers, such as inclement weather, natural disasters, virus outbreaks, transportation disruptions or laborunrest, government inspections or regulatory orders mandating service halts or temporary or permanent shutdowns or due to fraud, theft or other individualwrongdoings. Our logistics operations as well as third-party logistics service providers are subject to risks associated with transportation safety, fraud, theft, robbery,or other natural events or human errors, which may result in personal injury, loss or damage to the parcels or other consequences. If Shopee’s orders are not deliveredon time or are delivered in a damaged state, our users may have less confidence in our services. We have in the past received customer complaints from time to timeregarding our delivery services. Further, we may incur additional costs and may not be able to pass such costs to our users. As we continue to develop our last-mile delivery and warehousing capacity as well as expand the categories of services we offer through Shopee, we expectthese developments to potentially require additional capital expenditures or increase our operating expenses. In addition, we may acquire land or land use rights tobuild warehouses and to support such capabilities, which may expose us to risks relating to declining real estate value, construction risks and additional regulatoryrequirements. If we fail to accurately predict demand for such services, or accurately adjust our operations in response to evolving business needs and economic andregulatory conditions, we may suffer increased costs or impairment charges. Any such adjustments may also not achieve their desired or expected results. Thedevelopment of our logistics and fulfillment capabilities may also become increasingly complex and challenging to operate as it expands, and we may not be able toacquire land, land use rights, set up warehouses, or lease suitable facilities to directly handle delivery of products to our customers, on commercially acceptable termsor at all. In addition, the classification of certain types of contingent workforce is currently being challenged in some of our markets. If, as a result of changes to law orregulation or for any other reason, we are required to reclassify our contingent workforce as employees, we may incur significant additional expenses for manpowercosts, including expenses associated with the application of wage and hour laws, benefits, social security contributions, taxes, and potential penalties. Any suchreclassification may require us to fundamentally change our e-commerce business model with respect to such workforce, decrease our operational efficiency andconsequently have a material and adverse effect on our business, financial condition, results of operations and cash flows. We may be held liable for actions by our marketplace participants. With the increasing use of e-commerce marketplaces and development of legislation in different markets towards e-commerce marketplaces, proposed andnewly enacted laws as well as recent court decisions in certain markets may increase our liability as a marketplace platform for the actions of, content created by,and/or products sold by users of our Shopee platform. We may also be held directly or secondarily liable for intellectual property infringement, product related claimsor consumer protection deficiencies, privacy and data protection incidents, regulatory violations by sellers, or other similar conduct of sellers over which we havelimited or no influence or control. As Shopee is readily identifiable, buyers may seek claims against us rather than the seller, which in the aggregate could be costly todefend. We also receive inquiries or demands from regulators and law enforcement regarding defective, unregistered, unlicensed or fraudulent or restricted productssold by sellers through our Shopee platform. We have developed robust consumer protection policies and procedures focused on requiring sellers to comply withapplicable laws and creating a secure and reliable shopping environment for our buyers. When these policies and procedures are circumvented or fail to operatesufficiently, our business could be adversely impacted and our reputation could be harmed. In addition, we could face civil or criminal liability for unlawful activitiesby our sellers. 25Table of ContentsWe may suffer losses relating to the products we sell on Shopee. In connection with our direct sales and certain value-added services on our Shopee platform, we purchase certain products from manufacturers and thirdparties and subsequently sell such products on our Shopee platform. This subjects us to risks relating to such products and to managing our inventory turnover. Wedepend on our forecasts of demand and popularity for a variety of products to make decisions regarding product purchases. Our customers may not order products atthe levels expected by us due to our failure to forecast accurately, unfavorable market conditions or changes in consumer trends. In addition, if the supply of productsfrom manufacturers and third parties deteriorates, we may be unable to obtain the products that buyers want to purchase. Manufacturers and third parties maydiscontinue selling products due to factors that may or may not be within our control. Our inability to secure timely and sufficient supplies of products wouldnegatively affect inventory levels and our platform popularity. We do not always have the right to return unsold items to sellers or suppliers. If we fail to efficientlymanage our inventory, we may suffer losses. We may also be subject to legal claims in relation to such products or the conduct of our sellers from time to time. Wecannot guarantee that all products we purchase for direct sale are of the quality expected by our buyers. If buyers have any disputes with us regarding the productswe sell, including disputes relating to product quality or authenticity, we may suffer reputational loss or liability and may need to incur additional costs to addresssuch disputes, which in turn may adversely affect our business and results of operations. Risks Related to Our Digital Financial Services Business We face uncertainties and risks relating to our digital financial services business. Although there are trends of uptick of digital financial services and products across the globe, there is no guarantee that this will continue or will result inwidespread market acceptance of our digital financial services and products across all or any of the markets in which we operate. We may be unable to achieve therequired level of market acceptance in order for us to recoup the investment costs involved in developing and launching our digital financial services and products orto bear the associated risks involved in providing such services and products. Our ability to achieve or maintain market acceptance for our digital financial servicesand products are affected by a number of factors, such as the community’s lack of trust in digital financial services and products being provided by a company that isnot a traditional financial institution, entrenched preferences in traditional payment methods, insufficient use cases for our digital payment services and lack ofinfrastructure support locally. Even if there is adequate acceptance of our digital financial services and products, we continue to be subject to a quickly changingregulatory environment for such services and to the changing needs and demands of users, which may change for a multitude of reasons such as availability ofalternative payment methods that are more popular or widely accepted. If we are found or alleged to be non-compliant, we may suffer financial and reputationaldamage, and may be required to modify our operations or stop offering our products and services, among other things that could negatively impact our business. While we endeavor to consistently increase demand for our digital financial services and products by broadening and improving our use cases and productofferings, we cannot predict with certainty the reasons for the changes in user demands, and the consequential effects of such changes on our business. In our digitalfinancial services business, the larger the number of users, the greater the potential to generate revenue. In particular, the Shopee ecosystem offers a uniqueadvantage for SeaMoney in terms of user acquisition. However, there is no guarantee that our Shopee user base and engagement levels will continue growing atsatisfactory rates, or at all. If we experience a decline in growth in our Shopee user numbers or decrease in Shopee user base or user engagement level, our digitalfinancial service business may be negatively impacted. In addition to other relevant risk factors described herein, our own mobile wallet business is subject to other risks including: (i) changes to rules or practicesapplicable to payment systems that link to our mobile wallet, (ii) increasing operating costs, including fees charged by banks to process transactions through ourmobile wallet and fees charged by payment card schemes to link or our mobile wallet, and higher costs from obligations to implement enhanced authenticationprocesses, and (iii) failure to manage user funds accurately or loss of user funds, whether due to employee fraud, security breaches, technical errors or otherwise. Inaddition, any breach, compromise, or failure to otherwise detect or prevent fraudulent activity involving our data security systems, could result in us being subject tosignificant fines and higher transaction fees, and loss of our ability to accept credit and debit card payments from our customers, process electronic funds transfers, orfacilitate other types of online payments. As we expand various product offerings including credit services to consumers and SMEs across more markets and roll outmore digital financial products and services on our platform, including banking and insurtech services, our limited operating history in these markets or with theseproducts and service hinders our ability to forecast and maintain appropriate capital reserves for any losses that may arise. 26Table of ContentsIn addition, our digital financial services business faces intense competition with existing services providers and other new entrants. Our competitors mayhave greater experience in the financial services sector and greater resources than we have. To attract users, we may have to create differentiated product and servicesofferings or offer incentives. Our current or future digital financial products and services may not be successful or generate sufficient revenue to cover the costs andexpenses of their launch and development. We face risks related to our credit and banking businesses. As our credit and banking businesses develop, we face increased exposure to credit cycle volatility and potential credit losses due to deterioration inborrowers’ credit profile. Credit risks may be affected by changes in the political, economic or social environment, volatility in the financial markets resulting from bank failures anddisruptions to the banking system, market concerns related to the liquidity, solvency or capitalization of banks or other financial institutions, such as the availabilityand terms of government assistance to financial institutions under financial pressure and limited liquidity in accessing bank deposits, or credit cycles, rising interestrates, changes in user base or consumer behavior, legal or regulatory changes, and other factors. Our ability to assess creditworthiness may be impaired if the strategies or policies we use to manage our credit risks do not achieve their desired effect. If ourassessment of, assumptions used or expectations concerning the above-mentioned factors differ from actual developments, if the quality of our total loan portfoliodeteriorates, for any reason, or if future actual losses exceed our estimates of expected losses, we may be required to increase our provisions for credit losses and/orbe subject to increased liquidity risks, which may adversely impact our results of operation and financial condition. We allow for and reserve against credit risks based on our assessment of expected credit losses in our loan portfolios. Our allowance for credit losses isbased on our historical credit loss experience, adjusted for forward-looking factors specific to the receivables and economic environment, and the allowance we makefor credit losses are calculated on an aggregate basis for various customer segments that are considered to have similar credit characteristics and risk of loss. Thereare various factors used to help us assess the credit risks of our banking and consumer and SME credit businesses. These factors may be based on limited history orbe beyond our control, and we may be unable to accurately predict the creditworthiness of a borrower, merchant or consumer due to inaccurate assumptions. We may fail to quickly identify and reduce our exposure to borrowers that are likely to default on their payment obligations. Moreover, upon a borrower’sdefault, we may need to devote internal resources or engage third-party collection agencies to collect the receivables, which may not be successful at all. If any third-party collection personnel are involved with any misconduct or there are perceptions that these collection practices are considered to be aggressive or not compliantwith relevant laws and regulations, our reputation and business may be harmed or may become subject to fines or other penalties. As we further diversify our credit product offerings and services and our business scale remains large or further increase, we may explore alternative fundingmethods such as partnering with external funding providers or consider securitization of our credit portfolio. If we are unable to fund our credit business at idealfunding cost, it may affect our credit product or loan offering capabilities, lead to loss of users, borrowers or slower growth, and constrain our working capital. Further,increases in interest rates could increase our cost of funding and may make our credit products less attractive. Interest rates we charge may not be sufficient to coverour costs and expenses in providing the loans, including the costs associated with borrower defaults and cost of funding. We also engage in certain asset-backed financings, which are generally limited recourse obligations to the company because we may provide a guarantee orother credit support to the special purpose vehicle or we may be required to repurchase receivables sold by us pursuant to such asset-backed financings. Anyobligation to make future repurchases could have an adverse effect on our financial position, results of operations and cash flows. 27Table of ContentsOur ability to manage credit risk is also affected by legal or regulatory changes such as restrictions on collections, caps on interest rates, bankruptcy laws,minimum payment regulations and competitors’ actions. Recently, regulators in some of our markets have implemented additional regulations or guidelines on lendinglimits and practices. For example, in Indonesia, the Financial Services Authority (Otoritas Jasa Keuangan) has capped the maximum interest rate and administrativefees chargeable by a P2P lending company per day for consumption loans to (i) 0.3% starting from 2024 (ii) 0.2% starting from 2025 and (iii) 0.1% stating from 2026, andfor productive loans to (i) 0.1% starting from 2024 and (ii) 0.067% starting from 2026. Meanwhile, Singapore and Malaysia regulators have been reviewing buy now,pay later offerings with a view to limiting consumer debt and adoption of fair dealing practices to guard against predatory lending. There can be no assurance thatregulators will not impose requirements or restrictions on credit offerings and any such requirements could materially impact our credit product offerings under ourconsumer and SME credit business and banking business. Our banking business may subject us to additional material business, operational, financial, legal and compliance requirements and risks. We offer banking services in Singapore, Indonesia and the Philippines. The banking business is heavily regulated and subject to various laws, regulatoryrequirements and guidelines imposed by the relevant regulators. Such laws, regulations and guidelines may impose rules and/or restrictions on the type of bankingproducts and services we offer, eligibility criteria of our customers, related party transactions, market entry, risk management, corporate governance, regulatory capitalrequirements, capital adequacy, liquidity and/or regulatory ratios, and tax and accounting policies, among other things. Local authorities may have the authority toinspect our operations and conduct periodic and/or ad hoc audits of our operations to assess our compliance with the relevant regulatory requirements andguidelines. They may also have the authority to impose fines, sanctions or order remediations. Laws, regulations and guidelines applicable to banking may change or increase, and we may not be able to adapt to new or revised laws, regulations andguidelines in a timely manner or at all. Changes in regulations in the markets in which we operate may expose us to increased compliance costs and limit our ability topursue certain business opportunities or offer certain products and services. We are a new player in the banking industry, and have limited experience operatingbanks. Recent disruptions to the banking system and the surrounding speculation and uncertainty related to liquidity, solvency and capitalization of banks maynegatively impact the industry’s reputation and lead to a level of distrust towards banks, especially in relation to new entrants or smaller scale players like us, whichcould adversely affect our banking business’ ability to access additional funds and attract more customer deposits. If we fail to comply with new laws, regulations or guidelines, or our strategies to develop and grow our banking business, including products and services,fail to achieve their intended effect, our business, financial condition and results of operations, as well as our reputation, could be materially and adversely affected. We face risks related to our insurance business. We act as underwriters for selective types of insurance products in certain of our markets. We also conduct insurance brokerage and agency businesses incertain of our markets. Demand for insurance depends on numerous factors, including general macro-economic conditions, regulatory constraints and competition. Negative marketconditions may impair our ability to underwrite insurance at rates we consider appropriate and commensurate relative to the risk assumed. Adverse market conditionscould result in a decline in policies sold, an increase in the frequency of claims and premium defaults, and an uptick in the frequency of falsification of claims.Accordingly, we may experience periods with excess underwriting capacity and unfavorable premium rates, and if we cannot underwrite insurance at appropriate rates,our ability to transact business will be materially and adversely affected. We must accurately and timely evaluate and pay claims that are made under our policies. Many factors affect our ability to pay claims accurately and timely,including the efficacy of claims processing, and our ability to develop or select and implement appropriate procedures and systems to support our claims functions.Any failure to pay claims accurately or timely could also lead to regulatory and administrative actions or litigation, or result in damage to our reputation, which couldmaterially and adversely affect our business, financial condition, results of operations, and prospects. If we experience higher than expected claims, our liquidity maybe constrained and our financial condition and results of operations may be adversely affected. We are also engaged in the insurance brokerage and insurance agency businesses in certain of our markets and derive revenues primarily from commissionfees paid by the insurer partners. Commission fee rates and premiums can change based on the prevailing economic, regulatory, taxation and competitive factors aswell as consumer demand and the growing availability of alternative methods for clients to meet their risk-protection needs. We have no control over these factors andfluctuations in fee or premium rates, and our revenues and profitability are subject to change to the extent that fee or premium rates fluctuate or trend in a particulardirection. 28Table of ContentsWe could be held liable if our digital financial services and products are used for fraudulent, illegal or improper purposes. Despite measures we have taken and continue to take, our digital financial services and products remain susceptible to potentially illegal or improper uses,which could damage our reputation and subject us to liability. These may include the use of our payment services in connection with fraudulent sales of goods orservices, unauthorized purchases or transfers, software and other intellectual property piracy, money laundering, bank fraud and prohibited sales of restrictedproducts. Criminals are using increasingly sophisticated methods to capture consumer personal information and engage in illegal activities such as counterfeiting andto gain unauthorized access to other users’ accounts. We could be subject to fraud related claims if confidential information obtained from our users is used forunauthorized purposes. Our risk management policies and procedures may not be fully effective in identifying, monitoring and managing these risks. We are unable to monitor ineach case the sources of funds from users of our digital financial services and products, or the ways in which they are used. An increase in fraudulent or unlawfultransactions or publicity regarding payment disputes could harm our reputation and reduce consumer confidence in our services. The use of our products andservices for illegitimate, fraudulent, unlawful or similar transactions can also expose us to governmental and regulatory sanctions, including U.S. anti-moneylaundering and economic sanctions violations. Risks Related to Our Digital Entertainment Business We derive a significant portion of digital entertainment revenue and gross profit from a limited number of online games. Our digital entertainment business substantially depends on a small number of popular games, including our self-developed game, Free Fire, for revenue andprofit. In 2023, our top five games, comprising Free Fire and games licensed to us by third-party game developers, contributed 96.8% of our digital entertainmentrevenue, among which Free Fire contributed a significant portion. If we are unable to identify, source, develop and launch new games titles that gain widespreadpopularity and generate significant revenue, our revenue and revenue growth may continue to depend on the success of just a few game titles. Our digitalentertainment revenue decreased by 44.0% from US$3.9 billion in 2022 to US$2.2 billion in 2023, primarily attributable to the moderation in active and paying user base.Any negative developments or occurrences to any of our key revenue-earning games including Free Fire, such as decline in popularity, content quality issues,competing products, content restrictions, government actions, regulatory or legal changes that affect our ability to monetize our games, reductions in consumerspending and engagement levels, delay or failure in producing new engaging content, or real or perceived security risks or data breaches could lead to material declineor slower growth. We may also select and invest significant financial and human resources in games that later prove unsuccessful. There may also be unforeseendelays in the launch of new games. If we are unable to source or launch new popular games in a timely manner, our game players may seek entertainment elsewhere.As the gross margin of self-developed game content tends to be higher than that of content licensed from third parties, any fluctuations in the mix of our revenuegenerated from self-developed game content and licensed game content may also affect our profitability. We have a limited track record in game development and global game distribution. While we have developed Free Fire, we are still relatively new to game development outside of Free Fire. We may be unable to continue to identify marketopportunities and develop new games, and subsequent self-developed games may not always have the same or comparable levels of success. Development of newgames requires considerable cost and resources, including research, testing, marketing, infrastructure and staff expenses. Free Fire is currently available in more than 130 markets. Any self-developed games we may develop in the future may also be offered in multiple jurisdictions.Future growth of our digital entertainment business, including through our self-developed games, may subject us to additional regulatory and compliancerequirements and other new risks. We may have to adopt differing methods and processes to adhere to each jurisdiction’s laws and regulations, which could result inundue delays in launching such self-developed games or increased costs. 29Table of ContentsWe rely on third-party game developers for some of our digital entertainment content and also allow our users to contribute and interact with user generatedcontent. We license many of our online games from third-party game developers. The term of our game license agreements with game developers typically ranges fromtwo to seven years, renewable unless either party elects not to renew. However, we may not be able to develop or procure new games or renew existing licenses onterms acceptable to us. Our game developer partners may terminate our agreements prior to their expiration if we are not in compliance with the relevant terms orconditions and we fail to remedy such non-compliance in time, or they may refuse to renew the agreements. Any failure on our part to effectively localize, operate,market or monetize their games, safeguard their intellectual properties, or otherwise perform our obligations under the license agreements may cause substantial harmto our relationships with game developers, who may then choose other game operators to distribute their games. Some of our most popular games are owned or developed by Tencent Holdings Limited and its affiliates, or Tencent, one of our shareholders. In November2018, we obtained a right of first refusal from Tencent to publish its mobile and PC games in Indonesia, Taiwan, Thailand, the Philippines, Malaysia and Singapore,subject to certain terms and conditions. The term of this right of first refusal is for an initial term of five years, with an automatic renewal option for consecutive 2-yearterms unless either party elects not to renew with 3 months’ notice. The term of this right of first refusal was automatically renewed in 2023. Although we have alreadylaunched certain games under such right of first refusal arrangement, there is no guarantee that we will continue to publish the existing games or publish more gamesunder such right of first refusal arrangement or renew such contract on terms satisfactory to us or at all, or that any games published under such arrangement willyield a positive result. As part of our continued efforts to encourage user participation and user content creation, we have introduced and continued to explore game features thatenable users to contribute and interact with user generated content. While we believe the move towards having more user generated content is aligned with majoremerging industry trends, we are unable to predict and cannot guarantee that such features in our existing or new games will contribute to the penetration orprofitability of our games or achieve their desired or expected results. In certain circumstances, the actions of our third-party game developers and content creators or contributors which are beyond our control could materiallyand adversely affect the success of our games, causing our games revenue to fluctuate or even be lower than expected. These actions by game developers couldinclude software updates resulting in adverse changes in gameplay that are poorly received by our users, game or update releases with insufficient content to attractusers or maintain the level of their engagement, or delays in any release of anticipated games in our pipeline or game updates. User-generated content features make itrelatively easy for developers, content creators or contributors, and other users to upload and contribute content, which may result in content moderation challenges,including the possibility that infringing or inappropriate content is added to our games or platforms. There is no guarantee that we will be able to successfullyimplement policies or procedures to moderate user generated content or identity and block infringing or inappropriate content before it is uploaded and/or beforeother users view it, which could lead to legal or regulatory actions being taken against our games or platforms and/or user complaints and litigations. Our games are subject to scrutiny regarding the appropriateness of their content. Our games are subject to reviews, ratings, age restrictions or other restrictions for example on processing of data of minors or on content, advertisement ordistribution mandated by laws in some of our markets or ratings by third-party application distribution channels. For example, in Vietnam, online game publishers arerequired to obtain certain licenses, approval on game content, certificate and/or acknowledgement of announcement from the competent authority, depending on theclassification of each game to be provided to the market. In Thailand, applications to publish online games need to be reviewed and approved by the Thailand Filmand Video Censorship Committee. Apple uses its own proprietary app rating system and Google Play uses the International Age Rating Coalition (IARC) ratingsystem. If we are unable to obtain the ratings we have targeted for our games, it could delay the launch or upgrade of our games.30Table of ContentsLegislation or regulations may be introduced in our markets to impose age, spending or playtime restrictions or to allow government censorship or toestablish a system for protecting users from the potential influence of graphic violence, gaming addiction or other objectionable elements contained in various typesof games. Some of our games may be subject to stricter regulations caused by government actions or legal proceedings, including those imposed against otherdevelopers’ games which are in the same genre as ours, and these restrictions may vary by jurisdiction. We may be required to modify our game content or features oralter our marketing or monetization strategies to comply with new governmental regulations or ratings assigned to our current or future games, which could delay orprohibit the release of new games or upgrades and reduce the existing and potential scope of our user base. We may also be required to modify or remove certaingame features to react to government actions, court decisions such as injunctions or complaints from activist groups or organizations. If we are required or elect to doso, it could adversely affect our monetization, user base and financial results. If any of our key games, including Free Fire, is banned or temporarily suspended by anygovernment, court or distribution channels, our business, financial condition and results of operations may be materially and adversely affected. The WHO’s Eleventh Revision of the International Classification of Diseases (ICD-11) lists gaming addiction as a disorder. While the effects of gaming andwhether gaming addiction is a disorder continues to be discussed and researched by health officials and others, the WHO and other governments may continue totake measures against gaming addiction, such as imposing gaming curfews or spending limits for minors and establishing treatment programs aimed at addressinggaming addiction. There are increasing discussions in many jurisdictions globally regarding whether certain game mechanics, such as loot boxes, should be subject to a higherlevel or different type of regulation to protect consumers. Some jurisdictions have seen enforcement or actions initiated by activist groups or organizations to protectconsumers, in particular minors and other susceptible persons. For example, in February 2021, the National Association of Centers for the Defense of the Rights ofChildren and Adolescents in Brazil, or ANCED Brazil, a youth rights group in Brazil, filed lawsuits against a number of electronic games companies and distributionplatforms, including our gaming entity in Brazil, in a court dedicated to resolving matters concerning children and adolescents regarding alleged loot box mechanismsin the games. In addition, to the extent Apple, Alphabet, or any of our other platform providers or game distribution channels restrict the use of loot boxes or similarmechanism in games, we may need to adjust our game content or monetization strategy in order to continue distribution on such platforms or channels, which maycause a decline in the revenues generated from these games and require us to incur additional costs. If new or amended legislations or regulations, which may varysignificantly across jurisdictions and which we may be required to comply with, require certain game mechanics of our games to be modified or removed, suchrequirements would increase the costs of operating our games, impact player engagement and monetization, or may otherwise harm our business performance. Inaddition, the increased attention focused on potential liability issues or alleged harms as a result of any lawsuits and legislative proposals could harm our reputationor otherwise impact our business. As debate in the industry continues, we cannot predict the likelihood, timing, scope or terms of gaming related laws or regulations in our markets, or theextent to which implementation or public reactions of such laws or regulations (including lawsuits brought against game companies by alleged victims of gamingaddiction or other issues relating to gaming content) may adversely affect our reputation and business. We may need to adjust our game content or monetizationstrategy to respond to local legal or regulatory requirements. Moreover, public dialogue concerning online games may have an adverse impact on our reputation andusers’ willingness to play our games. Any costs incurred as a result of this potential liability or reputational concerns could harm our business, financial condition andresults of operations. Other Operational Risks We rely on technology and internet infrastructure, data center and cloud service providers and telecommunications networks in the markets where we operate. We are continuously upgrading our technology to provide improved performance, increased scale, security and better integration among our threebusinesses. If we experience problems with the functionality and effectiveness of our software or platforms, or are unable to maintain and constantly improve ourtechnology infrastructure to handle our business needs and ensure a consistent and acceptable level of service for our users, our business, financial condition andresults of operations, as well as our reputation, could be materially and adversely affected. In addition, our businesses depend on the performance and reliability ofour internet ecosystem and infrastructure and contracted data center and cloud service providers in the markets where we operate. Adopting new technologies andupgrading our internet ecosystem and infrastructure require significant investments of time and resources, including adding new hardware, updating software andrecruiting and training new engineers. Adverse consequences for the failure to do so may include unanticipated system disruptions, security breaches, computervirus attacks, slower response times, impaired quality of experiences for our users and delays in reporting accurate operating and financial information. 31Table of ContentsThe internet infrastructure in some of the markets where we operate may not support the demands associated with continued growth in internet usage. Wemay not have access to alternative networks or data servers in the event of disruptions or failures of, or other problems with, the relevant internet infrastructure.Interruptions in our services may reduce our revenue and/or subject us to potential liability. We also rely on major telecommunication operators and internet service providers in the markets where we operate to provide us with data communicationscapacity primarily through local telecommunications lines and data centers to host our servers. We and our users may not have access to alternative services in theevent of disruptions or failures of, or other problems with, the fixed telecommunications networks of these telecommunications operators, or if such operatorsotherwise fail to provide such services. Some of these operators and providers may take measures that could degrade or disrupt, as well as restrict or prohibit the useof their lines for our businesses. Any unscheduled service interruption could disrupt our operations, damage our reputation and result in a decrease in our revenue.We have no control over the costs of the services provided by the telecommunications operators to us and our users. If the prices that we pay for telecommunicationsand 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 revenue to decline. We may fail to attract, motivate and retain the key members of our management team or other experienced and capable employees. Our future success significantly depends on the continued service of our executives and other key employees. If we lose the services of any member ofmanagement or any key personnel, we may not be able to locate a suitable or qualified replacement and we may incur additional expenses to recruit and train areplacement, which could severely disrupt our business and growth. In addition, from time to time, there may be changes in our management team that may bedisruptive to our business. We will need to identify, hire, develop, motivate and retain highly skilled employees. Identifying, recruiting, training, integrating and retaining qualifiedindividuals requires significant time, expense and attention. We may also be subject to local hiring restrictions in certain markets, particularly in connection with thehiring of foreign employees, which may affect the flexibility of our management team and workforce. If our management team, including any new hires that we make,fail to work together effectively and execute our plans and strategies, or if we are unable to recruit and retain employees effectively, our ability to achieve our strategicobjectives will be adversely affected and our business and growth prospects will be harmed. Competition for highly skilled personnel is intense. We may need to invest significant amounts of cash and equity to attract and retain new employees andwe may not be able to realize returns on these investments. We face manpower-related risks. We have a significant employee base across various markets. In addition, we rely on a contingent workforce, such as agency workers, dispatched workers,outsourced workforce and other types of arrangements, to operate our logistics, customer services and certain other operations. We may require additional manpowerduring promotional activities and holiday seasons. Our inability to effectively meet our manpower needs can hinder our ability to execute our business strategy,negatively impact cost and service levels, and adversely affect our business and results of operations. Further, our workforce may attempt, successfully or unsuccessfully, to form one or more unions or enter into collective bargaining agreements against us ortheir respective employers. Work stoppages or strikes could occur within a unionized workforce. We may be required to participate in or facilitate such unionization orcollective bargaining efforts within certain jurisdictions. These efforts could increase our costs, decrease our operational flexibility, and impact how we are able to staffour operations and supplement our workforce. See “– We face risks related to logistics and fulfillment.” 32Table of ContentsIn addition, in order to optimize our operating efficiency, we have made adjustments to a number of teams across various markets and may in the futureimplement other such adjustments. Any adjustments may yield unintended consequences and costs, such as attrition beyond the intended adjustments, and couldmake it more difficult for us to hire new personnel in the future. A failure to properly manage our operating efficiency may materially and adversely affect our business,reputation, financial condition and results of operations. We may need additional capital, but may be unable to obtain it on favorable terms or at all. We may require additional cash capital resources in order to fund future growth and the development of our businesses, including expansion of our e-commerce and digital financial service businesses and any investments or acquisitions we may decide to pursue. If our cash resources are insufficient to satisfy ourcash requirements, we may seek to issue additional equity or debt securities, obtain new or expanded credit facilities or enter into securitization or channelingarrangements. Our ability to obtain external financing in the future is subject to a variety of uncertainties, including market conditions, our future financial condition,results of operations, cash flows, share price performance, liquidity of international capital and lending markets, governmental regulations over foreign investment andthe e-commerce, digital financial services, and digital entertainment industries in our various markets. In addition, incurring indebtedness would subject us toincreased debt service obligations and could result in operating and financing covenants that would restrict our operations. There can be no assurance that financingwill be available in a timely manner or in amounts or on terms acceptable to us, or at all. Any failure to raise needed funds on terms favorable to us, or at all, couldseverely restrict our liquidity as well as have a material adverse effect on our business, financial condition and results of operations. Moreover, any issuance of equityor equity-linked securities could result in significant dilution to our existing shareholders. We may have exposure to greater than anticipated tax liabilities, and our financial position and results of operations may be adversely affected by theimplementation of legislation or internationally accepted principles. Tax legislation relating to the digital economy is still developing. Governments in our markets may promulgate or strengthen the implementation of taxregulations and impose more tax obligations on our services and product offerings, which could increase the costs to our users and merchants and make our servicesand product offerings less competitive. Shopee as the marketplace operator could potentially be required to report transactions made by sellers and other service providers through the platform tothe tax authorities in the future and may also be subject to additional tax or withholding obligations. Governments in some of our markets have discussedpromulgating or promulgated laws to require e-commerce marketplace operators and the payment service providers to assist in the enforcement of tax requirements onsellers and collection of taxes with respect to revenues or profits generated by sellers. If we are held responsible, whether financially or operationally for such taxes,our business, financial condition and results of operations may be materially and adversely affected. We may also be requested by government authorities to supplyinformation about our sellers, such as transaction records and seller’s information, and assist in the enforcement of other tax regulations, which could affect ourrelationships with sellers. Corporate tax reform, base-erosion efforts and tax transparency continue to be high priorities in many tax jurisdictions, including in our markets or in otherjurisdictions we may operate in the future. The Organization for Economic Cooperation and Development, or OECD, has published proposals to advance internationalnegotiations to ensure that large and highly profitable multinational enterprises, including digital companies, pay tax in market jurisdictions where they have businessactivities and earn profits if the prescribed threshold is met. The OECD has also introduced Global Anti-Base Erosion Rules to ensure that multinational enterprisespay a minimum level of tax on the income arising in each of the jurisdictions where they operate. These actions aim to standardize and modernize global corporate taxpolicy, including cross-border taxes, transfer-pricing documentation rules and nexus-based tax incentive practices, and has heightened scrutiny of policies regardingcorporate income and other taxes in many jurisdictions. Tax reform legislation has been enacted, implemented or is being proposed in many such jurisdictions. Forexample, certain jurisdictions in Asia, Europe and Latin America have already enacted or are discussing new tax laws, rules and regulations directed at the digitaleconomy and multi-national businesses. Such laws may increase our tax obligations in those markets or change the manner in which we operate our businesseslocally, and may adversely affect our business, financial condition and results of operations. 33Table of ContentsIn addition, a number of markets have been pursuing fundamental changes to the tax laws applicable to multinational companies like us, including developingglobal OECD guidelines and enacting taxes relevant to the provision of digital services, including with respect to digital services taxes, sales taxes, value-added taxes,withholding taxes, tariffs, revenue-based taxes, excise taxes or other similar taxes. If these developments lead to enacted policy changes, it may have an adverse impacton our income tax expense and negatively impact our business. Possible implications may include multiple levels of taxation, additional obligations, prospectively orretrospectively, as well as imposition of interest and penalties if non-compliance is determined. Potential heightened tax law enforcement against us could have amaterial adverse effect on our business, financial condition and results of operations. In addition, in some jurisdictions where we operate, tax laws and regulations or their application to our business may involve uncertainty, and theinterpretation of such laws and regulations by the relevant revenue or enforcement authorities may differ from our own or be unpredictable or the subject of disputesor controversy. We may, from time to time, be and, in some cases, are subject to inquiries, investigations or audits from or disputes with tax authorities of the relevantjurisdictions on various tax matters, including challenges to positions asserted on income, withholding, or other tax returns. Developments in an audit, investigation,or other tax controversy can have an adverse effect on our business, financial condition and results of operations. Due to the inherent complexity and uncertainty ofthese matters, interpretations of certain tax laws by authorities, and judicial, administrative, and regulatory processes in certain jurisdictions, the outcome of any suchcontroversy may be materially different from our expectations. We may not achieve the intended tax efficiencies of our corporate structure and intercompany arrangements, which could increase our worldwide effective taxrate. Our corporate structure and intercompany arrangements, including the manner in which we conduct our intercompany and related party transactions, areintended to provide us with worldwide tax efficiencies while adhering to the arm’s length principle. The application of tax laws of various jurisdictions to our businessactivities is subject to interpretation and also depends on our ability to operate our business in a manner consistent with our corporate structure and intercompanyarrangements. The tax authorities of the jurisdictions where we operate may challenge our methodologies for intercompany and related party arrangements, includingtransfer pricing. We could face adverse tax consequences if local tax authorities assert that any transactional arrangements among our group entities were not enteredinto on an arm’s length basis in such a way as to result in an impermissible reduction in taxes under the applicable laws, rules and regulations, and adjust the incomeof such group entities in the form of a transfer pricing adjustment. A transfer pricing adjustment could, among other things, result in a reduction of expensedeductions recorded by our group entities for tax purposes, which could in turn increase their tax liabilities. In addition, local tax authorities may impose late paymentfees and other penalties on our entities for the adjusted but unpaid taxes according to the applicable regulations. If the manner in which we operate does not achievethe intended tax consequences, our financial condition and results of operations could be adversely affected. A certain degree of judgment is required in evaluating our tax positions and determining our provision for income taxes. In the ordinary course of business,there are many transactions and calculations for which the ultimate tax determination is uncertain. For example, our effective tax rate could be adversely affected bylower than anticipated earnings in markets where we have lower statutory rates and higher than anticipated earnings in markets where we have higher statutory rates,by changes in foreign currency exchange rates or by changes in the relevant tax, accounting and other laws, regulations, principles and interpretations. Any of thesefactors could materially and adversely affect our business, financial condition and results of operations. We have limited insurance coverage. We do not have extensive insurance coverage. While we have obtained insurance to cover certain potential risks and liabilities for certain businesses weoperate, we have not insured against many other risks and liabilities (including the risk of business interruption), and the coverage of any insurance we have may beinsufficient to compensate for losses that may occur. Any uninsured liabilities, damage or losses could require us to incur substantial costs and divert our resources,which could have an adverse effect on our business, financial condition and results of operations. 34Table of ContentsIndustry data, projections and estimates contained in this annual report are inherently uncertain and subject to interpretation. Certain facts, forecasts and other statistics relating to the industries in which we compete contained in this annual report have been derived from varioussources, which may have used different assumptions and estimates to derive their published data. While we generally believe such sources to be reliable, we have notindependently verified the accuracy or completeness of such information. Such sources may not be prepared on a comparable basis or may not be consistent withother sources. Industry data, projections and estimates are inherently uncertain as they require certain assumptions and judgments. Moreover, geographic markets and theindustries we operate in are not rigidly defined or subject to standard definitions, and are the result of subjective interpretation. Accordingly, our use of the termsreferring to our geographic markets and industries such as e-commerce, digital financial services, and digital entertainment markets may be subject to interpretation,and the resulting industry data, projections and estimates may not be reliable. Our industry and market data should be interpreted in light of the defined geographicmarkets and defined industries we operate in. Any discrepancy in interpretation could lead to different industry data, measurements, projections and estimates andresult in errors and inaccuracies. For these reasons, you should not place undue reliance on such information. Our user metrics and other estimates are subject to inherent challenges in measuring our operating performance. From time to time we disclose certain metrics, including, without limitation, our Game QAUs, Game QPUs, orders, GMV, loans outstanding, and non-performing loans, to evaluate trends, measure our performance, and make strategic decisions. These metrics are calculated using internal company data and have notbeen validated by an independent third party. While these numbers are based on what we believe to be reasonable estimates for the applicable period of measurement,there are inherent challenges in measuring how our services are used across large populations throughout our markets. For example, we believe that we cannotdistinguish individual users who have multiple accounts unless certain official individual identification information is provided to us. Our user metrics are alsoaffected by technology on certain mobile devices that automatically runs in the background of our applications when another phone function is used, and this activitycan cause our system to miscount the user metrics associated with such accounts. Our user metrics may also differ from estimates published by third parties or fromsimilarly titled metrics of our competitors due to differences in assumptions, methodologies or data used. Errors or inaccuracies in our metrics or data could result in incorrect business decisions and inefficiencies. For instance, if a significant understatement oroverstatement of active users were to occur, we may expend resources to implement unnecessary business measures or fail to take required actions to remedy anunfavorable trend. If partners or investors do not perceive our user, geographic or other operating metrics to accurately represent our user base, or if we discovermaterial inaccuracies in our user, geographic or other operating metrics, our reputation may be seriously harmed. If we fail to maintain an effective internal control over financial reporting, we may be unable to accurately report our results of operations, meet our reportingobligations or prevent fraud. As a public company, we are subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate and determinethe effectiveness of our internal control over financial reporting, report any material weaknesses in such internal controls and for our independent registered publicaccounting firm to issue an attestation report on management’s assessment on the effectiveness of internal control over financial reporting. Our management has concluded that our internal control over financial reporting is effective as of December 31, 2023. See “Item 15. Controls and Procedures—Management’s Annual Report on Internal Control over Financial Reporting.” Our independent registered public accounting firm has issued an attestation report onmanagement’s assessment on the effectiveness of internal control over financial reporting. However, if we fail to maintain an effective internal control environment, wecould suffer material misstatements in our financial statements and fail to meet our reporting obligations, which could cause investors to lose confidence in ourreported financial information. This could in turn limit our access to capital markets, and investor confidence in us and the market price of our ADSs may decline.Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potentialdelisting from the New York Stock Exchange, regulatory investigations and civil or criminal sanctions. 35Table of ContentsWe may be subject to risks related to litigation and regulatory proceedings. Our businesses and our directors and officers may be, and in some instances are or have been, subject to claims, lawsuits (including class actions andindividual lawsuits), regulatory and government investigations, and other proceedings relating to alleged infringement or violation of third-party intellectual propertyrights, consumer protection, privacy and data protection, content restrictions, labor and employment, import and export practices, antitrust or competition, securities,tax, marketing and communications practices, contracts, commercial disputes, consumer complaints, and various other matters. The number and significance of ourlegal disputes and inquiries have increased as we have grown larger, as our business has expanded in scope and geographic reach, and as our services have increasedin complexity. As a public company, our public profile has grown, which may result in increased litigation as well as increased public awareness of any such litigation. Inaddition, we may be, and in some instances are or have been, the target of securities class action or derivative lawsuits, as well as other types of claims. We will needto defend against such lawsuits, including any appeals, and we may also initiate legal proceedings to protect our rights and interests. We may also be, and in someinstances are or have been, subject to regulatory and government investigations or actions in various jurisdictions. There is substantial uncertainty regarding thescope and application of many of the laws and regulations to which we are subject, which increases the risk that we will be subject to actions or claims allegingviolations of those laws and regulations. Any adverse outcome could have a material adverse effect on our reputation, business, financial condition and results ofoperations. In particular, we will need to defend against the putative shareholder class action lawsuits described in “Item 8. Financial Information—A. ConsolidatedStatements and Other Financial Information—Legal and Administrative Proceedings,” including any appeals of such action. We are currently unable to ascertain thepossible loss or possible range of loss, if any, associated with the resolution of such lawsuits. The litigation process may utilize our cash resources and divertmanagement’s attention from the day-to-day operations of our company, all of which could materially harm our business. An adverse determination in these lawsuits,including an adverse determination on appeal in such lawsuits, may have a material adverse effect on our financial condition and results of operations. Regardless of its outcome, any legal proceeding can have a material adverse effect on us due to costs, diversion of our resources, negative publicity andother factors. We may decide to settle legal disputes, including on terms that are unfavorable to us. If any litigation to which we are a party is resolved adversely, wemay be subject to an unfavorable judgment that we may not choose to appeal or that may not be reversed upon appeal. We may have to seek a license or settlementterms to continue practices alleged or found to be in violation of a third party’s rights. If we are required or choose to enter into royalty or licensing arrangements orother settlement terms, such arrangements may not be available on reasonable terms, or at all, and may significantly increase our operating costs and expenses. As aresult, we may also be required to develop or procure alternative technology or products or discontinue the use of certain allegedly infringing technology or products,and doing so could require significant effort and expense, or may not be feasible. In addition, the terms of any settlement or judgment in connection with any legalclaims, lawsuits, or proceedings may require us to cease some or all of our operations, make changes to our business operations or other practices, terminateagreements, arrangements or transactions found to be violative of applicable laws or regulations, or pay fines or substantial amounts to the other party to thoseproceedings and could materially and adversely affect our business, financial condition and results of operations. We rely on structural arrangements to establish control over certain entities and government authorities may determine that these arrangements do not complywith existing laws and regulations. We are also subject to other risks relating to such structural arrangements. The laws and regulations in some of the markets in which we operate place restrictions on foreign investment in and ownership of entities engaged in anumber of business activities. To comply with the relevant laws and regulations, we and certain of our wholly-owned subsidiaries in the Cayman Islands andSingapore have entered into a series of contractual arrangements with certain local entities, or VIEs, and their shareholders who are local citizens, which enable us to(i) exercise effective control over such VIEs, (ii) receive substantially all of the economic benefits and absorb the losses of such VIEs, and (iii) have an exclusive calloption to purchase all or part of the equity interests in and/or assets of such VIEs when and to the extent permitted under the relevant laws. Because of thesecontractual arrangements, we have control over and are the primary beneficiary of such VIEs and hence consolidate their financial results under U.S. GAAP. For theyear ended December 31, 2023, revenue from all our VIEs (which excludes entities for which we have majority direct equity ownership) accounted for less than 5% ofour total revenue. None of our VIEs is individually a significant subsidiary as defined in Rule 1-02(w) of Regulation S-X. See “Item 4. Information on the Company—C.Organizational Structure—Contractual Arrangements among Our VIEs, Their Shareholders and Us.” 36Table of ContentsIn Thailand, we conduct our business activities using a tiered shareholding structure in which direct foreign ownership in each Thai entity is less than 50%.See “Item 4. Information on the Company—C. Organizational Structure—Thailand Shareholding Structure.” As Thai laws only consider the immediate level ofshareholding, no cumulative or look-through calculation is applied to determine the foreign ownership status of a company when it has several levels of foreignshareholding. Such shareholding structure has allowed us to consolidate our Thai operating entities as our subsidiaries. While we believe the structural or contractual arrangements we use are in compliance with applicable local laws, the local or national authorities or regulatoryagencies in such jurisdictions may reach a different conclusion, which could lead to an action being brought against us, the VIEs and their shareholders byadministrative orders or in local courts. If local authorities find that our arrangements do not comply with their prohibition or restrictions on foreign investment in ourlines of business, or if the relevant government otherwise finds that we or any of our subsidiaries, VIEs or their subsidiaries are in violation of the relevant laws orregulations or lack the necessary registrations, permits or licenses to operate our businesses in such jurisdictions, they would have broad discretion in dealing withsuch violations or failures, including: •revoking the business licenses and/or operating licenses of such entities; •discontinuing or placing restrictions or onerous conditions on the operations of our VIEs or Thai subsidiaries, or on our operations through anytransactions between our company or our Cayman Islands or Singapore subsidiaries on the one hand and our VIEs, subsidiaries of such VIEs or ourThai subsidiaries on the other hand; •imposing fines, prohibiting payments by our VIEs or their shareholders to us as contemplated in the contractual arrangements with our VIEs,confiscating income from us, our Cayman Islands or Singapore subsidiaries, VIEs or Thai subsidiaries, or imposing other requirements with which suchentities may not be able to comply; •imposing criminal penalties, including fines and imprisonment on our VIEs or Thai subsidiaries, their shareholders or directors; •requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with our VIEs and theirshareholders, which in turn would affect our ability to consolidate, derive economic interests from, or exert effective control over our VIEs or Thaisubsidiaries; or •restricting or prohibiting us from providing funding to our business and operations in Vietnam and Thailand. Any of these actions could disrupt the business operations of such entity and may damage our reputation, which would in turn adversely affect ourbusiness, financial condition and results of operations. If any of these occurrences results in our inability to direct the activities of our VIEs or Thai subsidiaries thatmost significantly impact such entity’s economic performance, or prevent us from receiving the economic benefits or absorbing losses from such entity, we may not beable to consolidate the entity in our consolidated financial statements in accordance with U.S. GAAP. 37Table of ContentsThe shareholders of our VIEs are our local employees or other local citizens. None of these shareholders has a significant equity interest in our company andthus their interests may not be aligned with ours, or they may have other potential conflicts of interest with us. These shareholders of our VIEs may breach, or causeour VIEs to breach, the existing contractual arrangements we have with them and our VIEs, which would adversely affect our ability to effectively control our VIEs andreceive economic benefits and absorb losses from them. Currently, we do not have any arrangements to address potential conflicts of interest between theseshareholders and our company. If our VIEs or their shareholders fail to perform their respective obligations under any such contractual arrangements, fail to conducttheir operations in an acceptable manner or take other actions that are detrimental to our interests, we may incur substantial costs and expend additional resources toenforce such arrangements. We may also have to rely on legal remedies, including seeking specific performance or injunctive relief, and claiming damages. Such legalremedies may differ between jurisdictions, and may be more difficult to pursue than those available in the United States. In addition, if any third parties claim anyinterest in the equity interests of our VIEs, our ability to exercise shareholders’ rights or foreclose the share pledge according to the contractual arrangements may beimpaired. If any dispute relating to these contracts remains unresolved, we will have to enforce our rights under these contracts through the operations of the lawswhere our VIEs are located and through arbitration, litigation or other legal proceedings and therefore will be subject to uncertainties in the legal systems in therelevant jurisdiction. Our contractual arrangements with our VIEs may not be as effective in ensuring our control over the relevant portion of our business operationsas direct ownership would be. As part of our structural arrangements with our VIEs, certain of our VIEs hold certain licenses and assets that are used in the operation of their business inthe relevant jurisdictions. If any of our VIEs go bankrupt and all or part of their assets become subject to liens or rights of third-party creditors, we may be unable tocontinue some or all of the business activities conducted by such VIEs. Under the structural arrangements, our VIEs may not, in any manner, sell, transfer, mortgage ordispose of their assets or legal or beneficial interests in the business without our prior consent. If our VIEs undergo a voluntary or involuntary liquidation proceeding,their independent third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate the business the VIEs currentlyconduct, which could adversely affect our business, financial condition and results of operations. There are risks relating to joint venture or partnership arrangements. We may carry out operations through joint ventures, subsidiaries that are not wholly owned by us, or other partnerships with third parties in certain markets.Such arrangements may carry a higher risk than operating through wholly owned subsidiaries. If there are disagreements between us and the other shareholders ofentities operating under such arrangements, we cannot assure you that we will be able to resolve them in a manner that will be in our best interests. We may also notbe able to make decisions as quickly as compared to wholly owned operations. These other shareholders may have interests that are inconsistent with ours. All or anysuch factors could have an adverse effect on our businesses, prospects, financial condition and results of operations. There may also be heightened governmentscrutiny of shareholding arrangements in industries or sectors that have foreign ownership restrictions. If local or national authorities reach a different conclusion,they would have broad discretion including imposing penalties, and the business operations of such entity could be disrupted, and our reputation may be damaged. MARKETS RELATED RISKS Our businesses and operations in Taiwan may be materially and adversely impacted if we are deemed to be a PRC investor. There have been and remain tensions surrounding the Taiwan Strait. Such tensions may affect the economic and social activities in Taiwan, which may inturn affect our businesses and operations in Taiwan. There has historically been imposed prohibitions and restrictions on investments, directly and indirectly, by PRCinvestors in Taiwan. “PRC investors” refer to PRC individuals, juristic persons, organizations and other institutions, and PRC invested companies from otherjurisdictions. “PRC invested companies from other jurisdictions” refer to those entities incorporated outside of the PRC and invested by PRC individuals, juristicpersons, organizations and other institutions that: (i) directly or indirectly hold more than 30% of the shares or capital of such entities (each intermediate holdingcompany shall be separately assessed based on this 30% test to determine whether it is deemed a PRC invested company from other jurisdictions), or (ii) have theability to control such entities. Under the current policies on PRC investments in Taiwan, PRC investors are allowed to invest, upon prior approval, in Taiwancompanies that operate business in the statutory business categories listed as permitted in the Positive Listings promulgated by the Taiwan authorities, and areprohibited or restricted from investing in all other businesses. In addition, if a PRC investor is a juristic person, organization, or other institution invested by (a) the“political party,” military, administrative or political agency of PRC, or (b) PRC invested companies from other jurisdictions (defined in “Item 4. Information on theCompany—B. Business Overview—Regulation—Taiwan—Regulations on Foreign Investment”) invested by the agency listed in item (a) above, the Taiwanauthorities may restrict or prohibit such PRC investor from investing in businesses in Taiwan. 38Table of ContentsUnder Taiwan company law, a Taiwan company is required to select from a statutory list of business categories for inclusion in its corporate registrationbased on various aspects of its business operations. Some of the statutory categories currently listed in the corporate registration of our Taiwan operating entitiesinclude computer recreational activities, software publication, third-party payments, general advertising services and sales of certain medical or cosmetics relatedgoods that are not within the Positive Listings. The other statutory business categories currently listed in the business scope of the corporate registration of ourTaiwan operating entities are within the Positive Listings, including the data processing services listed in the corporate registration of our e-commerce and digitalentertainment business entities, and the software design services currently listed in the corporate registration of our digital entertainment business entity. We do not believe, based on advice from our Taiwan counsel, LCS & Partners, that we are a PRC investor under existing Taiwan law and court judgments.Therefore, we do not believe that we are prohibited from operating businesses that have statutory business categories not listed as permitted in the Positive Listingsor that we need to seek prior PRC investment approval for operating businesses that have statutory business categories listed as permitted in the Positive Listings.We currently operate our e-commerce and digital entertainment businesses in Taiwan through our wholly-owned branch offices in Taiwan. Both of such entities wereacquired or established upon approval by the relevant Taiwan government authorities. However, should the Taiwan authorities deem us to be a PRC investor, theTaiwan authorities may take a range of actions, including: •imposing fines between NT$120,000 (US$3,919) to NT$25,000,000 (US$816,460) and further fines if the non-compliance is not rectified as ordered; •ordering us to reduce any direct or indirect ownership or control by PRC investors in our company; •requesting us to divest some or all of our ownership or control in our operating entities in Taiwan; •suspending the rights of shareholders of our Taiwan operating entities; and •discontinuing the operations and revoking the business licenses of our Taiwan operating entities. If any such action is taken, our operations in Taiwan and our business, financial condition and results of operations may be materially and adversely affected. Uncertainties with respect to the legal system in certain of our markets could adversely affect us. The legal systems in many of our markets vary significantly from jurisdiction to jurisdiction. Some jurisdictions have a civil law system based on writtenstatutes and others are based on common law. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but havelimited precedential value. Many of the markets in which we operate have not developed a fully integrated legal system, and laws and regulations may not cover all aspects of economicactivities in such markets with a high degree of certainty or predictability. In particular, the interpretation and enforcement of these laws and regulations involvepolitical uncertainties, and the application of some of these laws and regulations to our businesses is not settled. Since local administrative and court authorities mayhave significant discretion in interpreting and implementing statutory provisions, legal principles and contractual terms, it may be difficult to evaluate or predict theoutcome of administrative and court proceedings or the level of legal protection we have in many markets in which we operate. Local courts may have broad discretionto reject enforcement of foreign court decisions or arbitration awards. These uncertainties may affect our judgment on the relevance of legal requirements and ourability to enforce our contractual rights or claims. In addition, the legal and regulatory uncertainties in such markets may be exploited by other parties throughunmerited or frivolous legal actions, claims concerning the conduct of third parties, or threats in attempt to extract payments or benefits from us. 39Table of ContentsMany jurisdictions in our markets have enacted, and may enact or amend from time to time, laws and regulations governing the distribution of content andcommunications, including games, services, advertising, marketing, messages, applications, electronic documents, personal data and other information through theinternet or on digital platforms. The relevant government authorities may prohibit the distribution of information through the internet that they deem to beobjectionable on various grounds, such as public interest or public security, protection of minors, data protection related, obscene, offensive or defamatory content,or to otherwise be in violation of local laws and regulations. If any information disseminated through our platforms were deemed by any relevant governmentauthorities to violate content restrictions, we may not be able to continue to display such content and could be subject to penalties, including confiscation of theproperty used in the non-compliant acts, removal of the infringing content, temporary or permanent blocks, administrative fines, suspension of business, revocationof the registration to act as an electronic systems provider and revocation of required licenses, which could materially and adversely affect our business, financialcondition and results of operations. Many of the legal and regulatory requirements in markets where we operate are based in part on government policies and internal rules, some of which arenot published on a timely basis or at all and may have retroactive effect. There are other circumstances where key regulatory definitions are unclear, imprecise ormissing, or where interpretations that are adopted by regulators or governmental authorities are inconsistent with previous interpretations or interpretations adoptedby courts in analogous cases. As a result, we may not be aware of our violation or alleged violation of certain policies and rules until sometime after the violation. Inaddition, any administrative and court proceedings in our markets may be protracted, resulting in substantial costs and diversion of resources and managementattention. It is possible that laws and regulations may be adopted or construed to apply to us that could restrict or otherwise impact our industries. Scrutiny andregulation of the industries in which we operate may further increase, and we may be required to devote additional legal and other resources to addressing suchregulation. For example, existing laws or new laws regarding the regulation of currency, money laundering, banking institutions, unclaimed property, e-commerce,consumer and data protection and intermediary payments may be interpreted to cover services offered on Shopee, virtual items offered in our digital entertainmentbusiness or through our digital financial services platforms. Changes in current laws or regulations or the imposition of new laws and regulations regarding ourindustries may slow the growth of our industries and adversely affect our financial condition and results of operations. It is not certain if Sea Limited will be classified as a Singapore tax resident. Under the Income Tax Act 1947 of Singapore, or the Singapore Income Tax Act, a company established outside Singapore but whose governing body, beingthe board of directors, usually exercises de facto control and management of its business in Singapore could be considered a tax resident in Singapore. However, suchcontrol and management of the business should not be deemed to be in Singapore if physical board meetings are mainly conducted outside of Singapore. Whereboard resolutions are passed in the form of written consent signed by the directors each acting in their own jurisdictions, or where the board meetings are held byteleconference or videoconference, it is possible that the place of de facto control and management will be considered to be where the majority of the board arelocated when they sign such consent or attend such conferences. We believe that Sea Limited is not a Singapore tax resident for Singapore income tax purposes. However, the tax residence status of Sea Limited is subject todetermination by the Inland Revenue Authority of Singapore, or IRAS, and uncertainties remain with respect to the interpretation of the term “control andmanagement” for the purposes of the Singapore Income Tax Act. If IRAS determines that Sea Limited is a Singapore tax resident for Singapore income tax purposes,the income of Sea Limited on a standalone basis that is received or deemed by the Singapore Income Tax Act to be received in Singapore, where applicable, may besubject to Singapore income tax. If Sea Limited is regarded as a Singapore tax resident, any dividends received or deemed received by Sea Limited in Singapore fromsubsidiaries located in a foreign jurisdiction with a rate of income tax or tax of a similar nature of less than 15% may be subject to additional Singapore income tax.Income is considered to have been received in Singapore when it is: (i) remitted to, transmitted or brought into Singapore; (ii) applied in or towards satisfaction of anydebt incurred in respect of a trade or business carried on in Singapore; or (iii) applied to purchase any movable property that is brought into Singapore. In addition, asSingapore does not impose withholding tax on dividends declared by Singapore resident companies, if Sea Limited is considered a Singapore tax resident, dividendspaid to the holders of our ordinary shares and ADSs will not be subject to withholding tax in Singapore. Regardless of whether or not Sea Limited is regarded as aSingapore tax resident, holders of our ordinary shares or the ADSs who are not Singapore tax residents would generally not be subject to Singapore income tax ongains derived from the disposal of our ordinary shares or the ADSs if such shareholders do not maintain a permanent establishment in Singapore, to which thedisposition gains may be effectively connected, and the entire process (including the negotiation, deliberation, execution of the acquisition and sale, etc.) leading upto the actual acquisition and sale of the ADSs or our ordinary shares is performed outside of Singapore. For Singapore resident shareholders, if the gain from disposalof our ordinary shares or the ADSs is considered by IRAS as revenue in nature, such gain will generally be subject to Singapore income tax, and not taxable inSingapore if the gain is considered by IRAS as capital gains in nature to the extent that it does not fall within the ambit of Section 10L of the Singapore Income TaxAct. See “Item 10. Additional Information—E. Taxation—Singapore Taxation—Income Tax—Gains With Respect to Disposition of Our ADSs or Our Ordinary Shares.” 40Table of ContentsIt will be difficult to acquire jurisdiction and enforce liabilities against our assets based in some of our markets. Substantially all of our assets are located outside the United States. In addition, substantially all of our directors and executive officers are nationals orresidents of jurisdictions other than the United States and substantially all of their assets are located outside the United States. As a result, it may be difficult orimpossible for our shareholders to effect service of process within the United States upon us or these persons, or to enforce judgments obtained in the United Statescourts against us or them, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the UnitedStates. It may also be difficult for you to enforce judgments obtained in the United States based on the civil liability provisions of the United States federal securitieslaws against us and our directors and executive officers. Even if our shareholders are successful in bringing an action of this kind, they may be unable or may find itdifficult to enforce a judgment against our assets or the assets of our directors and executive officers due to the laws of the Cayman Islands and of the jurisdictionsthat comprise our markets. Management has been advised that many of the jurisdictions within Southeast Asia do not have treaties providing for the reciprocalrecognition and enforcement of judgments of courts with the United States. It is unclear if extradition treaties now in effect between the United States and some of ourmarkets would permit effective enforcement of criminal or other penalties, including those under U.S. federal securities laws. The ability of our subsidiaries to distribute dividends to us may be subject to restrictions under the laws of their respective jurisdictions. We are a holding company, and have subsidiaries located globally. Part of our primary internal sources of funds to meet our cash needs is our share of thedividends, if any, paid by our subsidiaries. The distribution of dividends to us from the subsidiaries in the markets where we operate may be subject to restrictionsimposed by the applicable laws and regulations. See “Item 4. Information on the Company—B. Business Overview—Regulation.” In addition, although there arecurrently no foreign exchange control regulations which restrict the ability of our subsidiaries in most of our markets to distribute dividends to us, the relevantregulations may be changed and the ability of these subsidiaries to distribute dividends to us may be restricted in the future. Restrictions on currency exchange may limit our ability to receive and use our cash effectively. A significant portion of our revenue and expenses are denominated in currencies subject to exchange control. If revenue denominated in such currenciesincreases or expenses denominated in such currencies decrease in the future, we may need to convert a portion of our revenue into other currencies to meet ourforeign currency obligations. Currently, in Taiwan, a single remittance by a company for an amount over US$1 million or its equivalent in foreign currency shall bereported and documents supporting the accuracy of such report shall be provided to the bank handling such remittance before the remittance is conducted. Inreported and documents supporting the accuracy of such report shall be provided to the bank handling such remittance before the remittance is conducted. Inaddition, remittances by a company in annual aggregate amounts exceeding US$50 million or its equivalent in foreign currency may not be processed without theapproval of the Central Bank of the Republic of China (Taiwan). In Vietnam, exchanging Vietnamese dong into foreign currency must be conducted at a licensed creditinstitution such as a licensed commercial bank. Conversion of Thai baht to another currency is subject to regulations promulgated by the Ministry of Finance andBank of Thailand. Conversion of Indonesian rupiah into any foreign currency that exceeds a certain specific threshold is required to have an underlying transactionand supported by underlying transaction documents. In Malaysia, the foreign exchange policy requires the approval of the Central Bank of Malaysia (BNM) for cross-border remittances which are either set out in the foreign exchange policy notices (“FEP Notices”) or applied for on an ad hoc basis. BNM has the discretion whetherto grant its approval, and to impose any condition on such approval so there is no assurance that its approval will be granted. We may be unable to convert such localcurrencies into U.S. dollars or other foreign currencies to pay dividends or for other purposes on a timely basis or at all. 41Table of ContentsRISKS RELATED TO THE ADSs The trading price of the ADSs is likely to be volatile, which could result in substantial losses to investors. The trading price of the ADSs is likely to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad marketand industry factors, including the performance and fluctuation of the market prices of other companies with business operations located mainly in the same marketsas us that have listed their securities in the United States. The stock markets have experienced extreme price and volume fluctuations that have affected and continueto affect the market prices of equity securities of many technology companies. In addition to market and industry factors, the price and trading volume for the ADSsmay be highly volatile for factors specific to our own operations, including the following: •variations in our quarterly or annual revenue, earnings and cash flow; •guidance or other projections we may provide to the public, including any changes or failure to meet any guidance or other projections; •announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors; •announcements of new content and services or plans of expansion or exits by us or our competitors; •changes in financial estimates by securities analysts and data providers, or our failure to meet these estimates or the expectations of investors; •downgrades by industry or securities analysts that publish research or reports on us; •detrimental adverse publicity about us, our businesses or our industries or investor sentiment with respect to our competitors, our shareholders andinvestors, and our industry in general; •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, including the perception thatthese sales could occur; •dilution of the ownership interests of our ADS holders due to conversions of our 2024, 2025 and 2026 convertible notes, which we may choose to settleby issuing ADSs, or from the unwinding of capped call transactions in connection with our 2024 and 2025 convertible notes; •current or potential litigation, government actions or regulatory investigations, including class actions; •volatility in the stock market, including price and volume fluctuations in the overall stock market, changing trends in the economy, interest rate hikes orother interest rate-related decisions; and •general political, economic, or market conditions, or other events or factors, including those resulting from war, incidents of terrorism, pandemics, andother disruptive external events, or responses to these events. Any of these factors may result in large and sudden changes in the volume and price at which the ADSs will trade. Shareholders of public companies have often brought securities class action suits against those companies following periods of volatility or decline in themarket price of their securities. Sea Limited is currently a defendant in multiple putative securities class actions. See “Item 8. Financial Information—A. ConsolidatedStatements and Other Financial Information—Legal and Administrative Proceedings.” Involvement in a securities class action lawsuit could divert a significantamount of our management’s attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, whichcould harm our results of operations. Any such class action suit, whether or not meritorious, could harm our reputation and restrict our ability to raise capital in thefuture. In addition, if a claim is successfully established against us, we may be required to pay significant damages, which could have a material adverse effect on ourfinancial condition and results of operations. 42Table of ContentsAs we operate globally, we may receive an increasing degree of media coverage. We have been the subject of media coverage involving concerns around ourmarkets, our products or services and business developments and our efficiency initiatives, and we continue to receive publicity relating to these concerns amongothers. Any publicity that is unfavorable or perceived to be unfavorable may affect our business, brand and reputation. For example, such publicity could have anadverse effect on the size, engagement, and loyalty of our user base as well as result in increased scrutiny of our business, including our business practices andpolicies. Substantial future sales or perceived potential sales or issuances of our ADSs, Class A ordinary shares or other equity securities could cause the price of ourADSs to decline significantly. As of March 31, 2024, the aggregate principal amount outstanding of our 2024, 2025 and 2026 convertible notes was approximatelyUS$152.0 million, US$1.1 billion and US$1.6 billion, respectively. The holders of our 2024, 2025 and 2026 convertible notes may convert their convertible notes inaccordance with the instruments governing such convertible notes at the initial conversion rate of 19.9475 ADSs, 11.0549 ADSs and 2.0964 ADSs per US$1,000principal amount, respectively. To the extent our convertible notes are convertible in a given period and converted and we issue ADSs to settle our obligations, theownership interest of our ADS holders will be further diluted. Our founder has control over key decision making as a result of his control of a majority of the voting power of our outstanding share capital and has substantialinfluence over our company. We have adopted a dual-class voting structure such that our ordinary shares consist of Class A ordinary shares and Class B ordinary shares since our IPO.On February 14, 2022, our shareholders approved the amendment and restatement of our memorandum and articles of association at our annual general meeting. Uponthe effectiveness of such amendment, the voting power of our Class B ordinary shares increased from three votes per share to 15 votes per share on all matterssubject to vote at general meetings of our company and Forrest Xiaodong Li, our founder, chairman and Chief Executive Officer, is the sole beneficial owner of all ourClass B ordinary shares. The voting power of our Class A ordinary shares of one vote per share remains unchanged. Due to the different voting powers associatedwith our two classes of ordinary shares, as of March 31, 2024, our founder beneficially owns an aggregate of approximately 59.8% of the total voting power of ourissued and outstanding ordinary shares. As a result, our founder has substantial influence over our business, including significant corporate actions includingmergers, consolidations, and election of directors. As a board member and officer, Mr. Li owes a fiduciary duty to our company and must act in good faith in a mannerhe reasonably believes to be in the best interests of our company. As a shareholder, even a controlling shareholder, Mr. Li is entitled to vote his shares in his owninterests, which may not always be in the interests of our shareholders generally. Certain actions may be taken even if they are opposed by our other shareholders.This concentrated control could discourage, delay or prevent a change of control of our company, which could deprive our shareholders of an opportunity to receivea premium for their shares as part of a sale of our company and may reduce the price of our ADSs. It could also discourage a potential investor from acquiring ourADSs represented by our Class A ordinary shares, which has less voting power compared with our Class B ordinary shares, and may harm the trading price of ourADSs. In the event of his death, the Class B ordinary shares beneficially owned by Mr. Li will be automatically converted into an equal number of Class A ordinaryshares. The depositary for the ADSs will give us a discretionary proxy to vote our Class A ordinary shares underlying our ADSs at shareholders’ meetings if holders ofADSs do not give voting instructions to the depositary, except in limited circumstances, which could adversely affect the interests of such holders. Under the deposit agreement for the ADSs, the depositary will give us a discretionary proxy to vote our Class A ordinary shares underlying our ADSs atshareholders’ meetings if holders of ADSs do not give voting instructions to the depositary, unless: •we have failed to timely provide the depositary with our notice of meeting and related voting materials; •we have instructed the depositary that we do not wish a discretionary proxy to be given; 43Table of Contents•we have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting; or •a matter to be voted on at the meeting would have a material adverse impact on shareholders. The effect of this discretionary proxy is that, if holders of ADSs fail to give voting instructions to the depositary, they cannot prevent our Class A ordinaryshares underlying our ADSs from being voted, absent the situations described above, and it may make it more difficult for holders of our ADSs to influence ourmanagement. We have granted, and may continue to grant, share incentives, which may result in increased share-based compensation expenses and dilution to shareholders. We adopted our 2009 Share Incentive Plan, last amended and restated in April 2022, or the 2009 Plan, for the purpose of granting share-based compensationawards to officers, employees, directors and other eligible persons to incentivize their performance and align their interests with ours. In April 2022, our board ofdirectors approved the amendment and restatement of the 2009 Plan to increase the maximum aggregate number of shares available under the 2009 Plan, pursuant towhich on January 1 of each of 2023, 2024, 2025 and 2026, the maximum aggregate number of ordinary shares which may be issued under the 2009 Plan will increase by3% of the total number of ordinary shares of all classes of the company outstanding on that day immediately before the increase. The current maximum aggregatenumber of ordinary shares which may be issued pursuant to all awards under the 2009 Plan is 210,888,606. We are authorized to grant options, share appreciationrights, share awards of restricted shares and non-restricted shares, restricted share units and other types of awards the administrator of the 2009 Plan decides. We account for compensation costs for all share options using a fair-value based method and recognize expenses in our consolidated statements ofoperations in accordance with U.S. GAAP. As of March 31, 2024, outstanding awards granted under the 2009 Plan consisted of (i) options to purchase 59,598,234Class A ordinary shares, (ii) 16,005,794 restricted Class A ordinary share units, and (iii) 267,574 share appreciation rights. As a result of our grants of awards under the2009 Plan, we incurred share-based compensation expense of US$470.3 million, US$705.9 million and US$685.0 million in 2021, 2022 and 2023, respectively. For moreinformation on our share incentive plan, see “Item 6. Directors, Senior Management and Employees—B. Compensation—Share Incentive Plan.” We will incuradditional share-based compensation expenses in the future as we continue to grant share-based incentives. We believe the granting of share-based compensation isof significant importance to our ability to attract and retain key personnel and employees, and we will continue to grant share-based compensation to employees in thefuture. As a result, our expenses associated with share-based compensation may remain significant or increase, which may have an adverse effect on our results ofoperations. Because we do not expect to pay dividends in the foreseeable future, holders of ADSs must rely on price appreciation of our ADSs for return on their investment. We currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our business. As a result,we do not expect to pay any cash dividends in the foreseeable future. Therefore, holders of ADSs should not rely on an investment in ADSs as a source for anyfuture dividend income. Our board of directors has complete discretion as to whether to distribute dividends. Even if our board of directors decides to declare and pay dividends, thetiming, amount and form of future dividends, if any, will depend on our future results of operations and cash flow, our capital requirements and surplus, the amount ofdistributions, 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 the investment in our ADSs will likely depend entirely on any future price appreciation of our ADSs. There is no guarantee that our ADSswill appreciate in value or even maintain the price at which the holders purchased our ADSs. Holders of ADSs may not realize a return on their investment in ourADSs and may even lose their entire investment in our ADSs. 44Table of ContentsOur memorandum and articles of association contain anti-takeover provisions and a dual-class voting structure that could have a material adverse effect on therights of holders of our Class A ordinary shares and our 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 inchange-of-control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium overprevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction. Our memorandum andarticles of association contain a dual-class voting structure that gives disproportionate voting power to the Class B ordinary shares, all of which are held by ForrestXiaodong Li, our founder, chairman and Chief Executive Officer. As of March 31, 2024, our founder beneficially owned an aggregate of approximately 59.8% of the totalvoting power of our outstanding ordinary shares. In addition, in September 2022, Tencent granted an irrevocable voting proxy with respect to all its Class A ordinaryshares to our board of directors to vote on matters that are subject to the vote of shareholders of Sea. Such proxy gives our board of directors (duly constituted fromtime to time) approximately 8.6% of voting power. See “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” Our board of directors has theauthority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges, andrelative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms ofredemption 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 Class A ordinary sharesand our ADSs may be materially and adversely affected. Holders of ADSs may face difficulties in protecting their interests, and their ability to protect their rights through U.S. courts may be limited, because we areincorporated under Cayman Islands law. We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles ofassociation, 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 thedirectors, 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 lawof 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 fromthe common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of ourshareholders 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 insome 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, suchas Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may nothave standing to initiate a shareholder derivative action in a federal court of the United States. Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (save for thememorandum and articles of association, register of mortgages and charges, and special resolutions of shareholders) or to obtain copies of lists of shareholders ofthese companies. Our directors have discretion under our articles of association to determine whether or not, and under what conditions, our corporate records maybe inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for holders of ADSs to obtain theinformation 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 incorporatedin other jurisdictions such as the United States. To the extent we choose to follow home country practice with respect to corporate governance matters, ourshareholders 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. 45Table of ContentsThe voting rights of holders of ADSs are limited by the terms of the deposit agreement, and holders of ADSs may not be able to exercise their right to vote theirClass A ordinary shares. Holders of ADSs are only able to exercise the voting rights with respect to the underlying Class A ordinary shares in accordance with the provisions of thedeposit agreement. Holders of ADSs may not have the same voting rights as the holders of our Class A ordinary shares and may not receive voting materials in timeto be able to exercise the right to vote. Under the deposit agreement, holders of ADSs must vote by giving voting instructions to the depositary. If we ask forinstructions from the holders of ADSs, upon receipt of voting instructions from the holders of ADSs, the depositary will try to vote the underlying Class A ordinaryshares in accordance with these instructions. If we do not instruct the depositary to ask for instructions from the holders of ADSs, the depositary may still vote inaccordance with instructions given by the holders of ADSs, but it is not required to do so. Holders of ADSs are not able to directly exercise the right to vote withrespect to the underlying Class A ordinary shares unless holders of ADSs withdraw their Class A ordinary shares from the depositary and become a registered holderof such shares. When a general meeting is convened, holders of ADSs may not receive sufficient advance notice to withdraw their Class A ordinary shares to allowthem to vote with respect to any specific matter. If we ask for instructions from holders of ADSs, the depositary will notify holders of ADSs of the upcoming vote andwill arrange to deliver our voting materials to holders of ADSs. We have agreed to give the depositary prior notice of shareholder meetings as far in advance of themeeting date as practicable. Nevertheless, we cannot assure you that holders of ADSs will receive the voting materials in time to ensure that holders of ADSs caninstruct the depositary to vote the Class A ordinary shares underlying their ADSs. In addition, the depositary and its agents are not responsible for failing to carry outvoting instructions or for their manner of carrying out voting instructions. This means that holders of ADSs may not be able to exercise the right to vote and mayhave no legal remedy if the Class A ordinary shares underlying our ADSs are not voted as they requested. Holders of ADSs may be subject to limitations on the transfer of their ADSs. Our ADSs are transferable on the books of the depositary. The depositary may refuse to deliver, transfer or register transfers of ADSs generally when ourshare register or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or ofany government or governmental body, or under any provision of the deposit agreement, or for any other reason. 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 todomestic public companies in the United States. As a foreign private issuer under the Exchange Act, we are exempt from certain disclosure and other requirements and obligations that are applicable to U.S.domestic issuers, including: (i) the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC; (ii)the sections of the Exchange Act regulating the solicitation of proxies in respect of a security registered under the Exchange Act; (iii) the sections of the Exchange Actrequiring insiders to file public reports of their stock ownership and trading activities and “short swing” liability for insiders who profit from certain trades; and (iv) theselective disclosure rules by issuers of material nonpublic information under Regulation FD. We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we publish our results on a quarterly basisthrough press releases. Press releases relating to financial results and material events are furnished to the SEC on Form 6-K. However, the information we are requiredto file with or furnish to the SEC will be less extensive and may be less timely compared with that required to be filed with the SEC by U.S. domestic issuers. As aresult, holders of ADSs may not be afforded the same protections or information, which would be made available to them, were they investing in a U.S. domesticissuer. We are subject to the corporate governance requirements of the New York Stock Exchange. However, New York Stock Exchange rules permit a foreign privateissuer like us to follow the corporate governance practices of our home country in lieu of certain New York Stock Exchange rules. Certain corporate governancepractices in the Cayman Islands, which is our home country, may differ significantly from the New York Stock Exchange corporate governance requirements. To theextent we choose to follow home country practice, our shareholders may be afforded less protection than they would otherwise enjoy under the New York StockExchange corporate governance listing standards applicable to U.S. domestic issuers. 46Table of ContentsIf we are a passive foreign investment company for United States federal income tax purposes for any taxable year, United States holders of ADSs or our ordinaryshares could be subject to adverse United States federal income tax consequences. Depending upon the value and the nature of our assets and the amount and nature of our income over time, we could be classified as a passive foreigninvestment company (“PFIC”) for U.S. federal income tax purposes. We will be classified as a PFIC in any taxable year if either: (i) 75% or more of our gross income forsuch 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) duringsuch year produce or are held for the production of passive income. Passive income generally includes dividends, interest (including interest from our non-bankingcredit business), royalties, rents, annuities, net gains from the sale or exchange of property producing such income and net foreign currency gains. For this purpose,cash is generally categorized as a passive asset and the company’s unbooked intangibles associated with active business activity are taken into account as a non-passive asset. 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 whichwe own (or are deemed to own), directly or indirectly, 25% or more (by value) of the stock. In addition, although the law in this regard is not entirely clear, we treat ourVIEs as being owned by us for U.S. federal income tax purposes. As a publicly traded foreign corporation we intend for this purpose to treat the aggregate fair marketvalue of our gross assets as being equal to the aggregate value of our outstanding stock (“market capitalization”) plus the total amount of our liabilities and to treatthe excess of the fair market value of our assets over their book value as a non-passive asset to the extent attributable to our non-passive income. Because wecurrently hold, and expect to continue to hold, a substantial amount of cash and cash equivalents and other passive assets used in our business, and because thevalue of our gross assets is likely to be determined in large part by reference to our market capitalization, we would likely become a PFIC for a given taxable year if themarket price of the ADSs or Class A ordinary shares were to decrease significantly. The application of the PFIC rules is subject to uncertainty in several respects, andwe must make a separate determination after the close of each taxable year as to whether we were a PFIC for such year. If we are a PFIC for any taxable year duringwhich a U.S. investor held the ADSs or Class A ordinary shares, the U.S. investor might be subject to increased U.S. federal income tax and to additional reportingobligations. We do not intend to provide the information necessary for the U.S. investor to make a qualified electing fund election with respect to the ADSs or Class Aordinary shares. See “Item 10. Additional Information—E. Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment CompanyRules.” Based on our income and assets, and the value of the ADSs, we do not believe that we were a PFIC, for U.S. federal income tax purposes, for the taxable yearended December 31, 2023, and do not anticipate becoming a PFIC for the current taxable year or for the foreseeable future. Nevertheless, because PFIC status is afactual determination made annually after the close of each taxable year on the basis of the composition of our income and assets, there can be no assurance that wewill not be a PFIC for the current taxable year or any future taxable year. ITEM 4.INFORMATION ON THE COMPANY A.History and Development of the Company On May 8, 2009, we incorporated Garena Interactive Holding Limited, our holding company, as a limited liability company in the Cayman Islands. On April 8,2017, we changed our company name from Garena Interactive Holding Limited to Sea Limited. On October 20, 2017, we completed our initial public offering and listedour ADSs on the New York Stock Exchange under the symbol “SE.” Sea Limited is a holding company that does not have substantive operations. We conduct our three core businesses, namely e-commerce, digital financialservices, and digital entertainment, through our subsidiaries and consolidated affiliated entities. We began our digital entertainment business, Garena, at our inception in 2009, and have since expanded our game operations globally with the launch of ourself-developed game, Free Fire. We started to offer digital payment services in Southeast Asia in 2014. Since then, we have further expanded our digital financial service offerings acrosscredit, banking and insurtech services in Southeast Asia, and have started to grow our presence in Brazil. 47Table of ContentsWe launched our e-commerce business, Shopee, in Southeast Asia and Taiwan in 2015, and in Latin America in 2019. Our principal executive offices are located at 1 Fusionopolis Place, #17-10, Galaxis, Singapore 138522. Our telephone number at this address is +65 6270-8100.Our registered office in the Cayman Islands is at the offices of Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1-1104, CaymanIslands. Our agent for service of process in the United States in connection with the registration statement on Form F-1 for our initial public offering is Cogency GlobalInc., located at 122 East 42nd Street, 18th Floor New York, N.Y. 10168. Our agent for service of process in the United States in connection with the registrationstatement on Form F-3 is Puglisi & Associates, located at 850 Library Avenue, Suite 204, Newark, Delaware 19711. Our website is www.sea.com. B.Business Overview Our Mission Our mission is to better the lives of the consumers and small businesses with technology. Our Beliefs and Values We have Three Core Beliefs: •Our people define us. Sea shall be a place where talented people thrive at scale, enjoy freedom of ideas and achieve the unimaginable. It shall be amagnet for the smartest, the most creative and the most driven. •Our products and services differentiate us. We aspire to better every life we touch and make the world an ever more connected community throughinnovative products and services. •Our institution will outlast us. We strive to build an institution that will last for generations and evolve with time, and that is founded upon our corevalues. These Five Core Values are Sea’s foundation: •We serve. Our customers are the sole arbiter of the value of our products and services. We strive to meet unmet needs and serve the underserved. •We adapt. Rapid change is the only constant in the digital age of ours. We embrace change, celebrate it and always strive to be a thought leader thatinfluences it. •We run. We are in a constant race to success while grappling with rapidly shifting forces. We move faster, better and with more urgency every day. •We commit. Our work is our commitment. We commit to our values, institution, customers and partners. We commit to each other. Above all, we commit todoing the best we can and being the best we are. •We stay humble. We have traveled a long way from our humble beginning and yet, we never lose our humility in our continual quest for greater heights. Together, our Three Core Beliefs and Five Core Values form a consistent mindset which we believe is both a practical recipe for long-term organizationalsustainability and also a deeper philosophy for how we want to live our lives. They are a guide for the kind of people we hire and develop, as well as a roadmap forhow we interact with our customers, our business partners, and our broader stakeholders. Ultimately, they are our compass: whenever we are faced with a decision, wealways ask ourselves which alternative is most authentic to these Beliefs and Values. 48Table of ContentsOverview Sea is a consumer internet company operating three core businesses of e-commerce, digital financial services, and digital entertainment, known as Shopee,SeaMoney and Garena. Each business is localized to meet the unique characteristics of our markets. Many of our markets are experiencing a generational transition tothe new digital economy, with digital inclusion bringing consumers ever more closely to each other and online services, by leading internet business models such asour own. Our culturally rich and diverse markets observe a rise in traditionally underserved digital consumers, who require dedicated focus, resources, and respectivelocal market knowledge.•Shopee is the largest e-commerce platform in Southeast Asia and Taiwan. It also has a significant presence in Latin America. Since its inception, Shopeehas adopted a mobile-first approach and is a highly scalable marketplace platform that connects buyers and sellers. Shopee provides users with aconvenient, safe and trusted shopping environment that is supported by integrated payment, logistics, fulfillment, and other value-added services. Ourusers enjoy the social nature of Shopee’s platform, where users can follow, rate and easily browse for discovery to enhance their retail experience. We alsoempower sellers with various tools and support and other value-added services for them to better engage with their buyers. We monetize Shopee mainlyby offering sellers paid advertising services, charging transaction-based fees, and charging for certain value-added services, including logistics. We alsopurchase products from manufacturers and third parties and sell them directly to buyers on our Shopee platform. •SeaMoney is a leading digital financial services provider in Southeast Asia with a growing presence in Brazil. SeaMoney currently offers consumer andSME credit, mobile wallet, banking and insurtech services. •Garena is a global game developer and publisher. Garena provides users with access to popular and engaging mobile and PC online games that wedevelop, curate, license and localize for each market. We also promote esports in our markets to strengthen our game ecosystem and increase userengagement. Each of our businesses provides a distinct and compelling value proposition to our users, and each exhibits strong virtuous cycle dynamics, which webelieve support our leadership position and provide a strong foundation for continued growth while creating strong competitive moats. We have achieved significant scale and growth in the past years. Our total revenue increased from US$10.0 billion in 2021 to US$13.1 billion in 2023, a CAGRof 14.6%. We had gross profit of US$3.9 billion, US$5.2 billion and US$5.8 billion in 2021, 2022 and 2023, respectively. We incurred net losses of US$2.0 billion, US$1.7billion and net income of US$162.7 million in 2021, 2022 and 2023, respectively. See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Segment Reporting” and “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Description of Certain Statement of Operations Items—Revenue” for a breakdown of our total revenues by category of activity and geographic market for each of the last three financial years. Our Businesses Shopee E-commerce Business Our Shopee e-commerce platform is a mobile-centric, social-focused marketplace with integrated payment and logistics infrastructure and comprehensiveservices we offer to sellers. It is a highly scalable marketplace platform that provides users with a convenient, safe, and trusted shopping environment that issupported by integrated payment, logistics, fulfillment, and other value-added services. Shopee is the largest e-commerce platform in Southeast Asia and Taiwan. Wealso have a significant presence in Latin America. Shopee’s marketplace model allows it to scale rapidly. In addition, we introduce many social and gamification elements into Shopee which we believe enablesus to increase organic user acquisition, user retention and user time spent on our platform. Our GMV for the year ended December 31, 2023 was US$78.5 billion andgross orders totaled 8.2 billion. 49Table of ContentsWhile we primarily operate as a marketplace, we also purchase some products from manufacturers or third parties directly and sell on our Shopee platformunder our official store to meet buyers’ demand. Bulk purchasing and direct product sales for specific product categories also enable us to offer a more diversifiedproduct assortment to our buyers.Our Buyers and Sellers Our buyers are individuals and households who mainly purchase from sellers that are within the same market. Shopee sellers are primarily small and medium businesses, brands, large retailers as well as individuals, who view Shopee as an efficient and reliable way ofmanaging the selling process while maximizing customer needs. On Shopee, each seller has an online storefront on which they list their products, communicate withbuyers, and complete transactions. Our Shopee Mall hosts brands and large retailers prominently featuring their distinct logos and offers a premium shoppingexperience to a broad base of buyers. E-commerce Platform Operations Product Category Focus We use targeted seller engagement and product placement to attract sellers and bring products to our platform. We leverage our deep understanding of localmarket conditions and user preferences to prioritize product categories that we believe have higher realization rates and profitability for our sellers. We currently offera comprehensive general merchandise platform with strength in long-tail high-margin categories, such as fashion, health and beauty, and home and living. Meanwhile,we continue to expand categories to include an increasingly diverse range of products. Seller Support and Service by Shopee We offer strong support to sellers on the Shopee platform through large on-the-ground teams with deep knowledge of our local markets. Our local teams alsooffer fast and localized operational and technological assistance in using business management tools. Moreover, an extensive network of logistics and paymentsolution providers are integrated into the platform to provide users with a one-stop solution. In addition to such integrated payment and logistics, we also offer sellersfulfillment and other value-added services. Under “Service by Shopee,” we offer a range of value-added services to sellers, including inventory management, online store operations, and fulfillmentservices. Depending on sellers’ needs and preferences, we may help sellers manage inventory and fulfill orders from warehouses leased and operated by us, operatestores on our platform, or purchase products from sellers for reselling on our platform. “Service by Shopee” is currently available to sellers in our Southeast Asia andTaiwan markets. We take the user experience beyond a traditional online marketplace environment, making online shopping truly seamless. We believe that these efforts helpto streamline the whole online business operation from store setup to selling, inventory and revenue management, delivery and payment collection for our sellers,empowering them to achieve greater success in their commercial activities. Buyer Protection We focus on creating a secure and reliable shopping environment for our buyers and have developed robust consumer protection policies and procedures,including the following measures: •Seller Verification. Sellers on the Shopee platform are subject to verification process and must agree to our standard terms of service before opening aseller account. 50Table of Contents•Listing Screening. Shopee has adopted a set of policies and procedures to prevent and remove listings of inappropriate or illegal goods and to screenout repeat offenders. All listings on the Shopee platform first undergo automated screenings against a list of illegal product names, categories anddescriptions. We have developed this list based on local regulations and it is frequently updated by our local teams to reflect the latest regulatoryrequirements. Listings posted by sellers which are deemed to be of high risk based on our screening will not be visible on our platform until they aremanually cleared by our operations and compliance teams. Listings that are not cleared due to regulatory violations or other violations of our terms of usewill be permanently removed, and the seller will not be able to edit or re-submit the same product listing. We may suspend or remove accounts thatrepeatedly submit illegal or inappropriate listings. Moreover, users and other third parties may report listings that they believe to be illegal, inappropriate oroffensive for our further review. •Shopee Guarantee. We provide “Shopee Guarantee,” a free service to facilitate transactions on the Shopee platform. Under Shopee Guarantee, we holdpayments made by buyers in certain designated Shopee Guarantee account held by us until the ordered products are received or deemed to have beenreceived by the buyer. After this, we release the payment to the seller. If the purchased products are never delivered to or received by the buyer, we willreturn the funds to them. Shopee Guarantee is available for all transactions executed through the Shopee platform. We believe that Shopee Guaranteereduces settlement risks and improves transaction efficiency and security. •Dispute Resolution. We have on-the-ground teams to help resolve disputes between buyers and sellers. In the case of a dispute, a buyer may submitsupporting evidence through our dispute resolution system and seek compensation from the seller. Shopee Communication Tool The Shopee platform offers a live chat function enabling real-time communication between buyers and sellers. Buyers typically use the chat function toclarify product-related details, while sellers typically use the function to confirm payment and delivery information. We believe this communication tool hassignificantly improved the efficiency and security of transactions and the overall shopping experience. Integrated Logistics Services Logistics is critical for the development of e-commerce in our markets since many of them have terrain that is difficult to navigate and underdevelopedinfrastructure. We rely on a combination of our own logistics capability and third-party logistics service providers to service Shopee orders. The logistics serviceproviders which we cooperate with include some of the largest and most reliable service providers in our markets. We also build our own local logistics capabilities tomore effectively serve our buyers and sellers. Moreover, sellers and buyers can track the delivery status of their packages on our Shopee platform and provide feedback on logistics services. We evaluateand provide feedback to our logistics service providers to improve the level of services provided to our users, such as average delivery time. Payment on Shopee As transactions on Shopee are protected by Shopee Guarantee, buyers make payments to Shopee’s designated Shopee Guarantee account which are thenreleased by Shopee to the sellers upon buyers’ receipt or deemed receipt of the goods. Depending on the market, sellers and buyers can choose from a number ofpayment options to complete transactions on Shopee, including our own mobile wallet and consumption loan services, credit cards, bank transfers through ATM orover the internet, and cash payments upon delivery or at designated convenience stores. Shopee has already integrated its payment processing system withSeaMoney’s payment infrastructure. Marketing and Promotions We undertake both online and offline marketing efforts to promote our brand awareness and attract new users. Our online efforts mainly include onlineadvertisements through major web portals, search engines, social media, and our Shopee Affiliate Program. Our online advertisements focus on promoting campaignssuch as Shopee 3.3 Mega Shopping Sale, 9.9 Super Shopping Day, 11.11 Big Sale, and 12.12 Birthday Sale, as well as driving order conversions. Our offline marketingefforts are based on localized approaches, including television commercials on major TV channels and display advertisements in selected high traffic locations to caterto each market’s consumer landscape. 51Table of ContentsSocial and Gamification Features As part of our strategy to enhance user traffic and engagement on the Shopee platform, we have introduced a number of innovative social and gamificationfeatures such as “Shopee Coins,” “Shopee Prizes,” and “Shopee Live.” We also enhanced our augmented reality tools, namely “BeautyCam” and “SkinCam” thatenable virtual try-ons for a personalized online shopping experience. Users can win “Shopee Coins” from making purchases, sharing reviews, playing mini-games and participating in campaign activities, then use these ShopeeCoins to offset the cost of purchase from eligible sellers. “Shopee Prizes” are a variety of mini games that promote in-app interactions between fellow users throughachieving individual or group rewards. “Shopee Live” enables buyers to watch and purchase directly from livestreams hosted by sellers and content creators. Theselivestreams promote real-time product demonstrations and interactions between sellers, content creators and their viewers, driving a path to purchase. Monetization We monetize Shopee mainly by offering sellers paid advertising services, charging transaction-based fees, and charging for certain value-added services,including logistics. Revenue from Shopee also includes revenue of products sold by us. We purchase products from manufacturers or third parties directly and sell on ourShopee platform under our official store to meet buyers’ demand for such products. SeaMoney Digital Financial Services Business SeaMoney, our digital financial services business, is a leading digital financial services provider in Southeast Asia with a growing presence in Brazil.SeaMoney currently offers consumer and SME credit, mobile wallet, banking and insurtech services. SeaMoney’s credit business primarily consists of consumer and SME loans provided predominantly to both Shopee buyers and sellers. On the buyer side,we offer consumption loans (SPayLater) which gives users the ability to complete their purchase first and make the payment later or in instalments, and cash loanswhich allows users to meet their short-term borrowing needs. The tenure of such loans is short, generally in the range of 3 to 12 months. On the seller side, we offerunsecured SME loans to help sellers expand their operations and fast escrow services to help sellers receive their funds faster and improve cash flow management. Asof December 31, 2023, based on our total loan balance outstanding and number of loans outstanding, our average loan size was approximately US$18. We have integrated the mobile wallet services of SeaMoney with our Shopee platform across different markets, to promote efficient growth of SeaMoney andto reduce payment friction for Shopee users. Moreover, we have use cases of our mobile wallet services outside of Sea’s platforms, including other online and offlinemerchants, along with a variety of third-party use cases. Third-party merchants currently include telecommunications companies, online and offline entertainmentservice providers such as game operators or app stores, movie theaters, concert/event venues, utility service providers, food delivery service providers, credit cardissuers, banks, insurance companies, and car leasing companies. As we increase the number and type of merchants on the SeaMoney platform, we are able to offermobile payment solutions for a wider range of products and services to meet the daily needs of our users and attract more users to the platform. Moreover, SeaMoney offers other digital financial services to its users through technology, such as banking services in Singapore, Indonesia and thePhilippines. We also offer insurance products through our SeaInsure business. SeaInsure acts as an underwriter for selective types of life and non-life insuranceproducts in certain of our markets. We also act as the insurance agent and conduct insurance brokerage business in certain of our markets. Monetization We mainly monetize our digital financial services business by earning interest and fees from our credit and banking businesses, charging fees from ourmobile wallet services and by earning premium or commission from our insurance business. 52Table of ContentsMarketing Marketing of our SeaMoney products and services have been done through online and offline advertisements and in-app advertisements through ourShopee apps. Regulation The financial services industry is heavily regulated and we are required to obtain and maintain certain licenses in the jurisdictions in which we providefinancial services. As of the date of this annual report, we have, directly or through partnerships, obtained licenses and governmental approvals necessary to providepayment services in Indonesia, Vietnam, Thailand, the Philippines, Malaysia, Singapore and Brazil and to provide credit services in Indonesia, Thailand, thePhilippines and Malaysia. We have also obtained licenses and governmental approvals necessary to offer general and life insurance products in Indonesia and thePhilippines, to operate as a broker in Thailand and the Philippines and as an agent in Malaysia. As we expand our digital financial services business to additionalmarkets, we may need to obtain additional licenses and permits in order to comply with local laws. See “—Regulation” and “Item 3. Key Information—D. Risk Factors—Business and Operational Related Risks—Risks Applicable Across Multiple Businesses—We are subject to extensive and changing laws and governmentregulations across our business.” We have bank licenses in Indonesia and the Philippines. In addition, we have been granted a digital full bank license in Singapore. For further details, see“Item 3. Key Information—D. Risk Factors—Business and Operational Related Risks—Risks Related to Our Digital Financial Services Business—Our bankingbusiness may subject us to additional material business, operational, financial, legal and compliance requirements and risks.” Garena Digital Entertainment Business Garena, our digital entertainment business, primarily focuses on offering mobile and PC online games and developing mobile games for the global markets. We began our digital entertainment business at our inception in 2009. We offer our users easy access to highly engaging and localized content online that wedevelop or license, as well as organize and sponsor exciting game activities online and offline. We focus on game development, curation, localization, operation,distribution, monetization, and payments, as well as user community building and esports activities. Our Games Our games consist of self-developed games and games licensed from third-party developers. We offer immersive games covering some of the most popularand engaging genres, such as battle royale games; multiplayer online battle arenas, or MOBAs; role-playing games, or RPGs; massively multiplayer online role-playing games, or MMORPGs; racing games and sports games. In most of these games, users play online in a virtual environment existing on network game serversthat connect a large number of players simultaneously to interact with each other within the games. Mobile games have gained popularity in our markets. In December 2017, we launched the first game that we developed entirely in-house, Free Fire, a mobilegame of the battle royale genre. Free Fire has enabled us to grow globally beyond Southeast Asia and Taiwan where we initially launched our game business. It iscurrently available on the Google Play and iOS App Stores in more than 130 markets. We plan to continue to expand our game development capabilities and publishingbusiness. 53Table of ContentsGame Players We have a large and active user base for our online game business. The table below sets forth certain of our operating metrics for the periods indicated. For the Three Months Ended March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 Bookings (US$ in billions)(1) 0.5 0.4 0.4 0.5 Game QAUs (in millions) 491.6 544.5 544.1 528.7 Game QPUs (in millions) 37.6 43.1 40.5 39.7 (1)GAAP revenue for the digital entertainment segment plus change in digital entertainment deferred revenue. This operating metric is used as anapproximation of cash spent by our users in the applicable period that is attributable to our digital entertainment segment.Our large user base as well as the team and social aspects of our games keep our game players engaged and also create powerful network effects that furtherattract users to our games, resulting in a high barrier to entry for our competitors. In-House Game Development We develop mobile games that cater to the demands of highly diverse markets across the globe. Our game development capabilities are particularlystrengthened by our global experience in game publishing. We have a sizeable in-house game development team consisting of global developers focused onenhancing Free Fire gameplay and building out our pipeline of self-developed games. Third-Party Games Publishing We also curate top third-party game content globally for publishing in our markets. Our market leadership and success in operating and customizing gamesfor our local game players have helped us forge deep relationships with key international game developers in different parts of the world. Game developers choose usto operate their games in our markets because of our leading market position, strong reputation in the online game community, and successful track record ofoperating and popularizing games in our markets. We are therefore able to source high-quality games from world class developers, many of whom work with us as theirexclusive partner in our markets. We rely on our local knowledge and years of game operating experience to select games that will match user needs and genrepreferences. We also believe that our large user base contributes to a virtuous cycle. As we attract more high-quality game developers to partner with us, we are ableto attract more users with a larger volume of high-quality content. We provide our game developer-partners access to a large user base in highly diverse markets across the globe, enabling our games to quickly becomepopular. Our services to third-party game developers include game launch and hosting, localization, marketing, distribution, monetization, integrated paymentinfrastructure, including access to our SeaMoney mobile wallet services, and online and offline community building activities. In particular, we localize licensed games to adapt to each market. We work with game developers to translate game content into local languages, revise gamedesign to suit local preferences, and meet regulatory requirements for each jurisdiction. We also develop exclusive local content for particular markets to enhancegame attractiveness to local audiences. Our content localization efforts entail continuing feedback loops with developers throughout the life of the games we operate. Monetization and Payments Our game monetization model is a “freemium” model that allows our users to download and play fully functional games for free. We generate revenueprimarily by selling our game players in-game items, which include in-game virtual items such as digital representations of functional or decorative items, as well asseason passes. Digital representation of functional or decorative items includes in-game clothing, pets, weaponry or equipment, which players can purchase andutilize within the game environment to enhance their gameplay experience. Players that purchase season passes can receive additional in-game virtual items uponsatisfying certain conditions. Players who choose to purchase in-game items benefit from being able to accelerate progress, enhance social interactions, and enjoy amore personalized game playing experience. We offer multiple methods for users to purchase in-game items, including through the Google Play Store and the iOS App Store payment gateways, ourSeaMoney mobile wallet services, other online payment gateways, bank transfers, credit cards, debit cards, mobile phone billing, and prepaid cards, including our ownprepaid cards, which are sold through agents. 54Table of ContentsEsports and Community Building Garena organizes esports events annually and operates one of the largest mobile-game professional leagues in Southeast Asia, Taiwan and Latin America.We organize esports competitions that range in size from relatively small-scale local tournaments to widely publicized and promoted global esports events. Some of our users have become full-time professional esports athletes that compete for prize money in tournaments and sponsorships from largecorporations that often also sponsor professional sports. Free Fire’s large esports and streaming community is another key pillar of our user engagement strategy. Asa result, we believe our esports operations generate strong user engagement for our games as well as promote user acquisition and retention. Marketing We devise and execute marketing plans tailored for each market. We market our games through a combination of online advertisement, outdoor and printadvertisements, television commercials, influencer partnerships as well as social media platforms and other online forums. Our Technology Technology is key to our success as it enables us to operate our business more efficiently, improves the user experience and supports innovation. Our network infrastructure utilizes our private data centers and cloud services that are linked with high-speed networks. We have established local serversand infrastructure in many of our key markets to ensure faster connections and a seamless user experience. We operate at a scale that routinely delivers massiveamounts of content to tens of millions of users across our platforms. Our technology architecture has been designed to scale horizontally to accommodate the largeamounts of data our network generates. As our user base grows and the level of engagement and activities on our platforms increase, we will continue to expand ourtechnology infrastructure to maintain and improve the quality of our user experience. Our data science technology serves various types of data-intensivecomputational needs, including high-volume batch processing and multi-variable and multi-dimensional real-time analytics. Customer Service We have dedicated customer service teams. We believe our customer service team is well-trained in assisting our users with issues they encounter on ourplatforms, gathering feedback on how to improve our services and receiving user complaints and suggestions. Moreover, we have adopted systematic internalprocedures to quickly respond to and resolve customer complaints. Intellectual Property Our business is based significantly on the acquisition, creation, use, and protection of intellectual property. Free Fire, our self-developed game, is one of ourkey intellectual properties. Other forms of this intellectual property include the technology and know-how that we developed and use to operate our e-commerce,payment and other financial services products. We believe the protection of our trademarks, copyrights, domain names, trade names, trade secrets, patents, and other proprietary rights is critical to ourbusiness and we protect our intellectual property rights in various jurisdictions by relying on local laws and contractual restrictions. More specifically, we rely on acombination of trademark, fair trade practice, copyright, patent and trade secret protection laws, as well as confidentiality procedures and contractual provisions, toprotect our intellectual property rights. Moreover, we enter into confidentiality, proprietary rights assignment, non-compete, and non-assignment agreements with ouremployees, and have confidentiality arrangements with our business partners. We also actively engage in monitoring and enforcement activities with respect toinfringing uses of our intellectual property by third parties. 55Table of ContentsWhile we actively take steps to protect our proprietary rights, such steps may not be adequate to prevent the infringement or misappropriation of theintellectual property created by or licensed to us. See “Item 3. Key Information—D. Risk Factors—Business and Operational Related Risks—Risks Applicable AcrossMultiple Businesses—We may be subject to intellectual property-related risks.” Also, we cannot be certain that our intellectual property and/or the products andcontent on our platforms do not or will not infringe on the valid patents, copyrights or other intellectual property rights held by third parties. We may be subject tolegal proceedings and claims from time to time relating to our intellectual property and/or the intellectual property of others, as discussed in “Item 3. Key Information—D. Risk Factors—Business and Operational Related Risks—Other Operational Risks—We may be subject to risks related to litigation and regulatory proceedings.” Competition Each of the e-commerce, digital financial services and online games industries in our markets is highly fragmented. We face competition in each of our lines ofbusiness in each market where we operate. Some of our competitors may have greater access to capital markets, more financial and other resources, and a longeroperating history than we do. See “Item 3. Key Information—D. Risk Factors—Business and Operational Related Risks—Risks Applicable Across MultipleBusinesses—We may fail to compete effectively.” E-commerce We face competition from regional players that operate across several markets and global players that expand into our markets by building local platforms ormaking their existing platforms accessible to users in our markets and from single-market players and retailers. We compete with online and offline players to attract,engage, and retain buyers based on the variety and value of products and services listed on our marketplaces, overall user experience and convenience, onlinecommunication tools, social features, integration with mobile and networking applications and tools, mobile applications and availability, quality and costs of paymentand logistics services. We also compete with online and offline players to attract and retain sellers based on the number and the engagement of buyers, theeffectiveness and value of the services we offer to sellers, commission rates, and the availability of support services. We also compete to attract and retain contentcreators for e-commerce. In addition, we may face increasing competition from social media platforms, online and app-based search engines through which productsand services may be researched and sold, and other content-providing market players. Social media platforms with high levels of user engagement may be able toleverage content and user connections and traffic on their platform to increase the visibility and attractiveness of a wide variety of brands and products. Digital Financial Services SeaMoney competes with existing online and offline consumer and SME financial products and services, as well as banks and other larger financialinstitutions. SeaMoney competes with these companies primarily on network size, transaction processing speed, convenience, accessibility, reliability, and price. Webelieve that strengths across the e-commerce and digital entertainment businesses position us very well to grow our digital financial businesses and SeaMoney has asignificant competitive advantage with the strong demand in our markets for seamless and convenient forms of mobile payments as well as the continueddevelopment of the digital economy in our markets. Online Games We compete on the basis of a number of factors, including user base, game portfolio, quality of user experience, brand awareness, and reputation,relationships with game developers and access to distribution and payment channels. Our competitors for publishing primarily include companies with a presence injust one or a few of our markets, as well as other global platforms and self-publishing game developers. Our competitors for game development include globaldevelopers. Seasonality Our revenue and other operating results may vary significantly from quarter to quarter due to a variety of factors, many of which are outside our control. Fora discussion of the factors that may contribute to fluctuations of our quarterly results, see “Item 3. Key Information—D. Risk Factors—Business and OperationalRelated Risks—Risks Applicable Across Multiple Businesses—Our results of operations are subject to fluctuations.” 56Table of ContentsRegulation This section sets forth a summary of the significant regulations or requirements in the jurisdictions where we conduct our material business operations,namely Indonesia, Taiwan, Vietnam, Thailand, Singapore and Malaysia. The primary laws and regulations to which we are subject relate to foreign investment,dividend distributions, foreign exchange controls, e-commerce, mobile wallet, payment processing, game operating, data protection, intellectual property rights, anti-money laundering and terrorism financing and employment and labor.IndonesiaRegulations on Foreign InvestmentThe Law No. 25 of 2007 regarding Investment issued on April 26, 2007, as amended by Government Regulation In Lieu of Law No. 2 of 2022 regarding JobCreation (the “Indonesia Investment Law”), states that all business sectors or business types are open to foreign investment, except certain lines of business that theIndonesian government has expressly prohibited or restricted from foreign investment. Under the Indonesia Investment Law, foreign investors can own up to 100% ofthe equity in e-commerce marketplace and game distribution businesses in Indonesia. We have obtained the investment in-principle license and the business licenserequired for foreign investment companies engaging in e-commerce marketplace and game distribution businesses in Indonesia issued by the Indonesia InvestmentCoordinating Board. In addition, the Indonesia Investment Law renders void any agreements containing statements by Indonesian shareholders that they hold sharesin an Indonesian company for the benefit of a foreign beneficiary.Regulations on the Use of Indonesian RupiahOn January 12, 2023, the government of Indonesia enacted Law No. 4 of 2023 on Financial Sector Development and Reinforcement, which amends Law No. 7of 2011 on Currency (the “Indonesia Currency Law”). Notwithstanding this, Bank Indonesia Regulation No. 17/3/PBI/2015 on the Mandatory Use of IndonesianRupiah within the Territory of the Republic of Indonesia (the “Indonesia Currency Law Implementation Regulations”) and Bank Indonesia Circular Letter No.17/11/DKSP, the implementing guideline to the Indonesia Currency Law Implementation Regulations, remain applicable. Such rules require the use of Indonesianrupiah for all transactions conducted within Indonesia, including transactions for payment, settlement of obligations and other financial transactions, except forcertain exemptions provided under the Indonesia Currency Law Implementation Regulations. Failure to comply with any provisions under the Indonesia Currency LawImplementation Regulations may lead to administrative, criminal or monetary sanctions of 1% of the transaction value with a maximum amount of IDR1 billion(US$64,771).Regulations on Dividend DistributionsDividend distributions are regulated under Law No. 40 of 2007 on Limited Liability Companies, as amended by Government Regulation In Lieu of Law No. 2 of2022 regarding Job Creation (the “Indonesia Companies Law”). A decision to distribute a dividend needs to be made by a resolution of the shareholders at the annualor general meeting of shareholders upon the recommendation of the board of directors of a limited liability company. A limited liability company may only declaredividends if it has positive retained earnings at the end of a fiscal year. Furthermore, the Indonesia Companies Law allows a limited liability company to distributeinterim dividends prior to the end of a financial year so long as it is permitted by its articles of association and provided that the interim dividend does not result in thelimited liability company’s net assets becoming less than the total issued and paid-up capital and the compulsory reserves fund. Such distribution shall be determinedby the limited liability company’s board of directors after being first approved by the board of commissioners. If, after the end of the relevant financial year, the limitedliability company has suffered a loss, any distributed interim dividends must be returned by the shareholders, and the board of directors and board of commissionersof the limited liability company will be jointly and severally responsible if the interim dividend is not returned. A limited liability company is required to reserve acertain amount from its net profit each year as a reserve fund until such fund amounts to at least 20% of its issued and paid-up capital.57Table of ContentsRegulations on Foreign ExchangeIndonesia has limited foreign exchange controls. The Indonesian rupiah is generally freely convertible within or from Indonesia. The Indonesia InvestmentLaw stipulates that foreign investors are allowed to make capital contributions and repatriate dividends, profits and other income in foreign currency withoutobtaining prior approvals from governmental authorities and/or Bank Indonesia, the central bank of Indonesia. The conversion of foreign currency into Indonesianrupiah for capital contribution purposes does not require any governmental approvals.Bank Indonesia Regulation No. 24/7/PBI/2022 on Transactions on the Foreign Exchange Market and Board of Governors Regulation No. 24/10/PADG/2022 onImplementing Regulation on Transactions in the Foreign Exchange Market (collectively, the “Indonesia Foreign Exchange Regulations”), issued by Bank Indonesia,came into force on July 4, 2022. According to such regulations, a party wishing to convert Indonesian rupiah to foreign currency exceeding certain thresholds setforth in the Indonesia Foreign Exchange Regulations is required to submit certain supporting documents to the bank handling the foreign exchange conversion,including the underlying transaction documents and a duly stamped statement confirming that the underlying transaction documents are valid and that the foreigncurrency will only be used to settle the relevant payment obligations within the timeline specified under the underlying transaction, among other things. Forconversions not exceeding the threshold set forth in the Indonesia Foreign Exchange Regulations, the party only needs to declare in a duly stamped letter that itsaggregate foreign currency purchases have not exceeded the monthly threshold set forth in the Indonesian banking system.Regulations on E-commerceGeneral Regulation on E-CommerceOn November 25, 2019, the Indonesian government enacted Government Regulation No. 80 of 2019 on Commerce through Electronic Systems (the “E-commerce Regulation”). This regulation governs not only the restrictions and requirements for e-commerce sellers, but also e-commerce platform providers andintermediary service providers. See below for more details about the liability of platform providers and intermediary service providers under the E-commerceRegulation. Further, this regulation also regulates, among others, e-contracts, online advertisements and personal data protection in the e-commerce sector. Thisregulation governs local e-commerce sellers, as well as foreign e-commerce sellers if they actively provide their services to Indonesian consumers.On November 25, 2023, the Indonesian Ministry of Trade published Regulation No. 31 of 2023 on the Provisions of Business Licensing, Advertising,Development, and Supervision of Businesses Actors in Trading through Electronic Systems (“Regulation 31”).Regulation 31 introduced (a) new restrictions on interconnection between electronic systems used for e-commerce and those not used for e-commerce, (b)platform providers are now required to provide equal business opportunities to all merchants and maintain the prices of goods and/or services and ensure they arefree from any direct or indirect price manipulations, to supervise, prevent and mitigate any unfair business and/or price manipulation practices through theestablishment of adequate standard operating procedures, and (c) platform providers that engage in cross-border marketplace activities are required to apply minimumprices for merchants that sell imported finished goods within their system. Regulation 31 sets a minimum freight on board price of US$100 per unit of goods.Any failure to comply with these prohibitions may result in the imposition of administrative sanctions and/or other forms of sanctions, as set out underrelevant laws and regulations, including written reprimands and the revocation of business permits.Governance of Electronic Information and/or DocumentsGeneral obligation of the government to prevent the dissemination of prohibited content is explicitly provided under Law No. 11 of 2008 on ElectronicInformation and Transaction, as amended by Law No. 19 of 2016 and recently by Law No. 1 of 2024 (the “Electronic Information and Transaction Law”). On November24, 2020, the Indonesian government enacted MCI Regulation No. 5 of 2020 on Private Electronic Systems, as amended by MCI Regulation No. 10 of 2021 (the “PrivateElectronic Systems Regulation”). Under the Private Electronic Systems Regulation, all digital platforms that fall within the private electronic system provider category,including platforms that offer goods and/or services such as financial transaction services and paid content to users’ devices, are required to ensure that theirplatforms do not contain or facilitate the dissemination of prohibited content. Prohibited content includes those that violate the prevailing law, disturb members of thepublic and public order, and provide access to or information to access prohibited content. The digital platform operator must take down any prohibited contentidentified in a written notice from the Ministry of Communication and Informatics (“MCI”) no later than 24 hours upon receiving such notice. If the content is relatedto terrorism, child pornography, or any other content that may disturb public order, the take down request will be considered as urgent and must be concluded withinfour hours upon receiving notice from MCI. Furthermore, the Private Electronic Systems Regulation requires private electronic system operators to register theirplatform within six months from the effective implementation of the Risk-Based Approach OSS Portal, by July 20, 2022. We have completed the registration for ourrelevant platforms in Indonesia.58Table of ContentsFailure to take down prohibited content within the specified time period would, amongst others, cause MCI to block the public’s access to the platform. Uponremoval of the prohibited content, the digital platform operator or the relevant ministry or institution may submit a written request to MCI to lift the block on theplatform.Limitations and Liabilities of Platform Operators and E-commerce MerchantsThe E-commerce Regulation includes certain limitations of liability for e-commerce platform providers. E-commerce platform providers and intermediaryservice providers are discharged from liability for any illegal third-party content found on their platforms if the relevant provider has acted expeditiously to remove ordisable access to such content after being aware of its existence. However, the E-commerce Regulation does not provide any clear criteria on what constitutes anexpeditious response. As for an intermediary service provider, it will also be discharged from any liability for illegal content if such provider is acting as mere conduit,caching, hosting and search engine providers. More detailed guidelines are provided in the Private Electronic Systems Regulation, which specifically addresses thesteps to be taken by user-generated-content platforms (“UGC platforms”), to be discharged from liabilities arising from prohibited content uploaded by their users.First, UGC platform operators must maintain a governance policy governing the rights and obligations of the users and the operator as well as the division of liabilityarising from the users’ content. Subsequently, the UGC platform must include a reporting feature which can be accessed by members of the public to file a claim orreport on the existence of prohibited content on its platform. Further, UGC platform operators must provide the information relating to the uploader of the prohibitedcontent to the relevant law enforcement agencies and comply with the mandatory take down timeline.If we fail to employ the abovementioned measures or to act in a timely or effective manner in response to user reports relating to listings or sales of prohibitedcontent on the Shopee e-commerce marketplace, we may be subject to sanctions in the form of, amongst others, a temporary or permanent block.Regulations on Personal Data Protection and Information SecurityOn October 17, 2022, Law No. 27 of 2022 on Personal Data Protection (“PDP Law”) was enacted and effective, providing a new framework for personal dataprotection in Indonesia. To the extent provisions in existing and separate regulations relating to privacy and/or personal data protection in Indonesia such as MCIRegulation No. 20 of 2016 on Personal Data Protection in Electronic Systems and Government Regulation No. 71 of 2019 on the Provision of Electronic System andTransactions (collectively, “General Data Protection Regulations”), do not conflict with the PDP Law, the non-conflicting provisions in these General Data ProtectionRegulations remain valid. These General Data Protection Regulations set out the rules governing the protection of personal data that are stored in electronic formwhile PDP Law governs protection of personal data that are stored both in electronic and non-electronic forms. The PDP Law introduces the definitions of “PersonalData Controllers” and “Personal Data Processors,” which previously was limited to “electronic system provider” under the General Data Protection Regulations. ThePersonal Data Controllers, either individually or jointly with other parties, determine the purpose and control the processing of personal data, while the Personal DataProcessors, either individually or jointly with other parties, act on behalf of the Personal Data Controllers to process personal data. The PDP Law requires any actiontaken in relation to the processing of personal data by either Personal Data Controllers and Personal Data Processors, including acquisition and collection, processingand analysis, storage, correction and updates, display, announcement, transfer, dissemination, disclosure, and deletion or destruction, to be subject to provisions ofthe PDP Law, such as requiring prior consent of the owner of such personal data. Further, under the PDP Law, the Personal Data Controllers and Personal DataProcessors are imposed with a comprehensive set of obligations, including: (i) adoption of internal data protection and security policies, (ii) performing an impactassessment for any high-risk personal data processing, (iii) providing access to the personal data that is processed along with the track record of the processing inaccordance with the storage period, (iv) appointment of a data protection officer by Personal Data Controllers or Personal Data Processors to carry out personal dataprotection functions, and (v) for overseas transfer of personal data, ensuring the recipient country has an equal or higher personal data protection governance thanthe PDP Law, or otherwise, ensuring that there is adequate and binding protection, or if the foregoing is not available, consent from the personal data subjects.59Table of ContentsThe General Data Protection Regulations clarify the data localization requirement by specifying that such requirement applies only to “public electronicsystems providers” (i.e., central and regional executive, legislative, judicative bodies and any other bodies established pursuant to a statutory mandate, and entitiesappointed by the public bodies to operate electronic systems on their behalf). Meanwhile, a private provider can choose whether to process and/or host its electronicsystems and data onshore or offshore. Regardless of the location, such provider must ensure that its electronic systems and data are accessible to the authority.However, this flexibility does not apply to private operators in the banking and financial services sectors.The PDP Law and the General Data Protection Regulations also describe the right of a data subject to request the removal of any data pertaining to them thatare no longer relevant, which is popularly known as “the right to be forgotten.” There are two types of the right to be forgotten, which is the right to erasure and theright to delist. The latter can only be requested based on a court’s order.In the event of a data breach, the PDP Law requires the Personal Data Controllers to deliver written notification no later than 72 hours to the personal datasubjects and to the personal data protection authority. Given that the personal data protection authority has not yet been established, the notification should bedelivered to MCI.If the Personal Data Controllers or the Personal Data Processors fail to comply with the PDP Law, they may be subject to sanctions in the form of warnings orwritten reprimands, temporary suspensions of personal data processing activities, forced deletion or destruction of personal data, and administrative fines of up to 2%of annual revenue and income of the Personal Data Controller or the Personal Data Processor. If corporations fail to comply with PDP Law, they may be subject tocriminal fines as well as license revocation and liquidation.The PDP Law provides a transition period of two years for the Personal Data Controllers, Personal Data Processors, and other relevant parties to adjust andcomply with the PDP Law. However, this grace period does not apply to criminal sanctions for prohibited data processing activities under the PDP Law as they becameeffective immediately after October 17, 2022.Regulations on Consumer ProtectionConsumer protection in Indonesia is regulated under Law No. 8 of 1999 on Consumer Protection (the “Consumer Protection Law”), which became effective onApril 20, 2000. It is the first comprehensive law devoted to protecting the rights of and promoting the recourses available to users of both goods and services. The lawdetails activities and circumstances that are prohibited such as disclosing incorrect and unclear information regarding the services rendered or promoting falseadvertising. Violations of the Consumer Protection Law may result in an administrative and/or criminal sanction such as monetary compensation or an imprisonmentsanction.On December 22, 2023, the Financial Services Authority (Otoritas Jasa Keuangan/OJK) issued OJK Regulation No. 22 of 2023 on Consumer and GeneralPublic Protection in the Financial Services Sector (“OJK Regulation 22”). Under OJK Regulation 22, financial services entities are prohibited from carrying out actionswhich violate regulatory provisions or societal norms which cause physical and/or psychological disturbances towards potential and/or existing consumers and areprohibited from collaborating with parties who do not have the relevant license in the financial sector. OJK Regulation 22 also requires financial service institutions to,among others, have and implement consumer protection policies and procedures, have a consumer protection unit or function, and report the implementation ofconsumer protection to the OJK. Violations of this regulation may result in administrative sanctions, ranging from written warnings to revocation of license. On theother hand, OJK Regulation 22 protects financial services institutions from consumers with ill intentions such as consumers that provide information and/ordocuments that are unclear, inaccurate, false and misleading, consumers that refuse to carry out obligations as stated in the agreement and use threats or violence,consumers that transfer goods as collateral for credit or financing products without the approval from the relevant financial services institution, and consumers thatsubmit collateral originating from criminal acts.60Table of ContentsIn addition to the above, the E-commerce Regulation also requires an e-commerce business operator to provide certain customer service mechanism for itsconsumers, including contact number and email address, and resolve any report of damages by its consumers to the Ministry of Trade of Indonesia. Merchants and e-commerce platform providers are also required to give their consumers at least two days to return the purchased goods and/or services or to carry out a cancellation,starting from the time when the goods and/or service is received by the consumer. However, the return of goods and/or services or cancellation may only beconducted if such return or cancellation fulfils certain criteria, among others, if the goods and/or service is damaged or has expired. E-commerce platform providers arealso required to provide a refund mechanism for cancellation of a purchase. Failure to comply with the aforementioned requirements may result in administrativesanctions ranging from written reprimands to revocation of the business license.Regulations on Electronic Money and Electronic WalletOn July 1, 2021, Bank Indonesia enacted Bank Indonesia Regulation No. 23/6/PBI/2021 on Payment Service Providers (the “Payment Service ProvidersRegulation”), which regulates the requirements and restrictions for all payment service providers in Indonesia (“PSPs”). Previously, licenses for PSPs were determinedbased on whether a PSP provided their services on a front-end basis (e.g., e-money, e-wallet, and payment gateway providers) or a back-end basis (e.g., switching,clearing, and settlement providers). However, upon enactment of the Payment Service Providers Regulation, PSP licenses are reclassified so that they are based on thespecific activities provided by a PSP. The Payment Service Providers Regulation divides PSP licenses into three categories, category 1, category 2, and category 3.Category 1 license is required for PSPs that conduct the following activities: (i) administration of fund sources; (ii) provision of information on fund sources; (iii)payment initiation and/or acquiring services; and (iv) remittance services. Category 2 license is required for PSPs that conduct the activities under items (ii) and (iii)only, and category 3 license is required for PSPs that provide remittance services and/or other activities determined by Bank Indonesia.Under prevailing Indonesian laws and regulations, electronic money or e-money is defined as a payment instrument (i) issued on the basis of the source offunds being denominated in Indonesian rupiah that is deposited in advance to the e-money issuer, (ii) where the source of funds denominated in Indonesian rupiah isstored electronically in a server or a chip for purposes of transferring funds, and (iii) where the value of the e-money managed by the issuer is not considered assavings under the banking regulations. The Payment Service Providers Regulation also recognizes two types of e-money systems: (i) closed loop systems, where thee-money can only be used as a payment instrument for goods and/or services provided by the e-money issuer, and (ii) open loop systems, where the e-money can beused as a payment instrument for goods and/or services provided by third party providers. A closed loop e-money provider which issues floating funds less thanIDR1 billion (US$64,771) is exempted from the licensing requirement. An e-money provider may offer features such as user registration, deposit top-up, paymenttransaction for purchases and bills payment, while funds transfer and cash withdrawal and any additional features (upon approval from Bank Indonesia) are onlyavailable for open loop e-money for registered users and licensed e-money providers. Unregistered users can deposit up to IDR2 million (US$130) in e-money value,whilst registered users may deposit up to IDR20 million (US$1,295). The maximum amount of e-money transaction in one month is IDR20 million (US$1,295) forunregistered e-money, and IDR40 million (US$2,591) for registered e-money. We, through our local partnership, currently hold an e-money license in Indonesia.With respect to reporting obligations, both e-money and e-wallet providers are obliged to submit periodical and incidental reports to Bank Indonesia. Theperiodical reports consist of daily, monthly and annual reports, as well as a report on the result of independent audits on information systems and security testing.Incidental reports include report of data and information in documents submitted when applying for a license to Bank Indonesia, results of independent audit oninformation system in case of any significant changes, any problems in the payment transaction processing, change of capital, shareholding, control, and/ormanagement, and force majeure events. Any failure to comply with the regulations governing payment service providers may result in reprimands and monetary fines,and depending on the severity of the non-compliance, may also result in temporary suspension of activities and/or revocation of the relevant license.Regulations on Payment SystemsIn December 2020, Bank Indonesia issued Regulation No. 22/23/PBI/2020 of 2020 on Payment Systems (the “Payment Systems Regulation”), which becameeffective on July 1, 2021. The Payment Systems Regulation is intended to be an “umbrella” regulation that provides a regulatory framework for the Indonesianpayment systems industry.61Table of ContentsThe Payment Systems Regulation categorizes non-bank payment institutions into two categories, PSP and payment infrastructure providers (“PIP”). PSPsinclude most institutions providing front-end services to end-consumers such as e-money issuers, acquirers, payment gateway services providers, and fundtransfer/remittance services providers. PIPs are generally institutions which facilitate clearing and settlements or back-end services, between PSPs or between otherPIPs.PSPs and PIPs are classified based on transaction size, interconnectivity, complexity, and whether they are replaceable. Bank Indonesia assesses the existinglicensed players to: (i) reclassify the licensee, and (ii) ensure the capability of the licensee to fulfil the new requirements, particularly on capital and financial, riskmanagement, and IT system capability aspects. Based on the assessment, Bank Indonesia will convert the existing license into a new license. The licensee will need tomake a statement of commitment to comply and afterwards, the licensee will be given a transition period of two years to fulfil the requirements. We, through our localpartnership, are classified as a PSP.Foreign investors in a PSP are permitted to hold up to 85% economic interests and Bank Indonesia does not take into account economic interests indetermining control, and foreign investors are permitted to hold up to 49% shares with voting rights. A shareholder in a PSP will be deemed to have control if it holdsat least 51% voting rights in the PSP, have a right to appoint members of management in the PSP, or holds a veto right in the PSP’s general meeting of shareholders.Such control can only be held by domestic parties. Bank Indonesia does not differentiate between economic interests and voting right in a PIP where a foreigninvestor can only hold up to 15% economic interests. These restrictions are also applicable to existing providers if there is a change in the foreign shareholding insuch provider after July 1, 2021.The Payment Systems Regulation expressly prohibits PSPs from: (i) accepting cryptocurrency in a payment transaction processing, (ii) processing paymenttransactions with virtual currency as the source of funds, and/or (iii) linking virtual currency with payment transactions processing.Regulations on Online Lending / FinancingOnline lending/financing in Indonesia is regulated under two categories, namely off-balance sheet and on-balance sheet. Whilst online on-balance sheetlending businesses are subject to the financing company regulations that are applicable to its offline counterparts, online off-balance sheet lending, or peer-to-peerlending, is regulated specifically under the OJK Regulation No. 10 /POJK.05/2022 on Information Technology-Based Co-Funding Services. We have the requisitelicense for the financing business we currently conduct in Indonesia.Regulations on BankingBanking in Indonesia is regulated under Law No. 7 of 1992 regarding Banking issued on March 25, 1992, as amended by Law No. 4 of 2023 on Financial SectorDevelopment and Reinforcement (the “Banking Law”). The Banking Law governs banks’ types and businesses, licensing, legal form and ownership, managementstructure, and bank secrecy. In 2020, the Financial Services Authority issued Regulation No. 12/POJK.03/2020 TAHUN 2020 on Consolidation of Commercial Bankswhich requires all banks to fulfil a minimum core capital of at least IDR3 trillion (US$194 million) by December 31, 2022. Moreover, OJK enacted the Financial ServicesAuthority Regulation No. 12/POJK.03/2021 on Commercial Banks or the Commercial Banks Regulation on October 30, 2021. The Commercial Banks Regulation amendsthe four categories of banks called “Buku” to “Bank Categories Based on Core Capital (Kelompok Bank berdasarkan Modal Inti)” or “KBMI.” Banks are divided intofour KBMI categories, namely: (i) KBMI 1 with core capital equal or less than IDR6 trillion (US$389 million), (ii) KBMI 2 with core capital between IDR6 trillion (US$389million) and IDR14 trillion (US$907 million), (iii) KBMI 3 with core capital between IDR14 trillion (US$907 million) and IDR70 trillion (US$4.5 billion), and (iv) KBMI 4banks with core capital of more than IDR70 trillion (US$4.5 billion).Regulations Relating to Game BusinessOn January 24, 2024, MCI enacted the MCI Regulation No. 2 of 2024 on Game Classification (the “Game Classification Regulation”). Under the GameClassification Regulation, any individual, business entity and/or legal entity that markets gaming products (“Game Publisher”) must conduct an independentclassification on the gaming products that it intends to advertise and/or market in Indonesia. The Game Classification Regulation classifies games into five categorieswhich are intended to guide parents and users to choose games that are appropriate for the age group of the users. Based on the content of the games, games areclassified into the following age groups: (i) 3 years old and over, (ii) 7 years old and over, (iii) 13 years old and over, (iv) 15 years old and over, and (v) 18 years old andover. The content categories that are used to classify the games into the foregoing categories include alcohol use, cigarette and/or electronic cigarette, violence,language use, and online interaction.62Table of ContentsAfter a Game Publisher completes the classification process, the classification result must be assessed by a game classification examiner. The examinationresult must then be included in the game description, packaging, and advertisement. If the examination result is different from the independent classification result, theGame Publisher may raise an objection to MCI.Failure to comply with the classification requirement may subject a Game Publisher to administrative sanctions in the form of written reprimand, temporarysuspension of the game, or permanent suspension of the game. Game Publishers are given a 2-year grace period from January 24, 2024 to comply with the GameClassification Regulation. Games that are already classified or rated outside of Indonesia and marketed in Indonesia must also comply with the Game ClassificationRegulation within the 2-year grace period. Regulations on Intellectual Property RightsTrademark and Geographical Indication LawThe Law No. 20 of 2016 on Trademark and Geographical Indication (the “Trademark and Geographical Indication Law”) has expanded upon the scope oftrademark protection and adopted the Madrid Protocol provisions for trademark registration in Indonesia.The Government Regulation In Lieu of Law No. 2 of 2022 regarding Job Creation shortens the trademark registration process and inserts an additionalqualification/consideration for the trademark examiner in determining whether a trademark application can be registered. In addition, the Trademark and GeographicalIndication Law recognizes two types of international trademark registration application under the framework of Madrid Protocol: an application originating fromIndonesia to an International Bureau which is filed through the Directorate General of Intellectual Properties under the Minister of Law and Human Rights, or anapplication addressed to Indonesia as the receiving office from an International Bureau.Regulations Relating to CopyrightsCopyrights in Indonesia are regulated under Law No. 28 of 2014 on Copyrights (the “Indonesia Copyright Law”). Indonesia adopts the declarative system ofcopyright protection whereby a copyright is an exclusive right of a creator of content which arises automatically after a creation appears in a concrete form. TheIndonesia Copyright Law protects creations in the field of science, arts and literature, which includes, among others, computer programs, video games, photography,songs or music with or without lyrics, and all forms of art.Regulations on Anti-money Laundering and Prevention of Terrorism FinancingPrevention and Eradication of Money LaunderingLaw No. 8 of 2010 on Prevention and Eradication of Money Laundering regulates the types of transactions which are required to be reported to theIndonesian Financial Transaction Reports and Analysis Center (“PPATK”), and the entities responsible to report such transactions. Under this law, any party whoconceals or disguises the origin, source, location, allocation, assignment, or actual ownership or assets known or reasonably suspected to be proceeds of crimes maysubject to monetary sanction of up to IDR5 billion (US$323,855) or imprisonment of up to 20 years. Financial service providers must comply with know-your-customerprinciples and report suspicious financial transactions that it believes is related to money laundering to the PPATK. The reporting party is required to report to PPATKany suspicious financial transaction entered into with its customers having a minimum amount of IDR500 million (US$32,386), or an equivalent value in othercurrencies, and/or any financial transaction involving the transfer of funds from and to other countries, no later than 14 business days after the transaction isconducted.Failure to submit the report may subject the reporting party to administrative sanction(s) including warning letters, public announcements on the action or anadministrative penalty.63Table of ContentsPrevention and Eradication of Terrorism FinancingLaw No. 9 of 2013 on the Prevention and Eradication of Terrorism Financing was enacted in order to prevent the funding of terrorists. Under this regulation,an act of terrorism financing is defined as direct and/or indirect acts to provide, collect, grant, or loan funds to persons that would knowingly use the funds to conductterrorist acts. Companies that fund terrorism in Indonesia may face large monetary fines, have their assets seized and their permits revoked. Moreover, such companiesmay also be dismantled or expropriated by the government. Financial service providers must comply with know-your-customer principles and report suspiciousfinancial transactions that it believes is related to terrorism to the PPATK. Intentionally failing to do so will result in fines of up to IDR1 billion (US$64,771). Financialservice providers that provide fund transfer services must also request the sender of funds to present identification and information explaining the purpose of thefund transfer and must keep a record of all transactions for at least five years. Funds of the alleged financers of terrorism may be frozen upon the request of thePPATK, investigators, public prosecutors, a judge, and other legally designated parties. Regulations on LaborUnder Law No. 13 of 2003 on Manpower, as amended by Government Regulation In Lieu of Law No. 2 of 2022 regarding Job Creation (the “IndonesiaManpower Law”), we are not allowed to pay our employee wages below the minimum wage stipulated annually by the relevant provincial government. In certainconditions, a governor may set the minimum wage for regencies or municipalities in their respective provinces. The minimum wage is set in accordance with theeconomy and employment situation of the relevant province. If we fail to abide by requisite minimum wage regulations in the Indonesia Manpower Law, our directorsmay be liable to a term of imprisonment of no less than one year and up to four years. Moreover, we may also be subject to a fine of no less than IDR100 million(US$6,477) and up to IDR400 million (US$25,908).Indonesia has adopted social protection and social welfare programs for employees who are working in Indonesia under Law No. 24 of 2011 on the SocialSecurity Agency as amended by Government Regulation In Lieu of Law No. 2 of 2022 regarding Job Creation (the “Indonesia Social Security Agency Law”). TheIndonesia Social Security Agency Law establishes two social welfare programs, namely, the healthcare social security insurance and employment social security.Employment social security covers occupational accident security program, death security program, old-age security program, pension security program, and job-losssecurity program. Under the Indonesia Social Security Agency Law, an employer is required to register itself and its employees as employment social securityparticipants. If an employer fails to comply with this obligation, it will be subject to a written warning, fines and/or exclusion from certain public services, which relateto business-related licensing, license required to participate in project tenders, license to employ foreign workers, license to outsource company, and building permit.The Indonesia Social Security Agency Law further stipulates that an employer that violates its obligation to provide the requisite financial contributions to healthcaresocial security insurance and employment social security will be subject to up to eight years of imprisonment and fines of IDR1 billion (US$64,771). In addition, everyperson, including foreign nationals, who is employed for at least six months in Indonesia, must participate in the social security programs in Indonesia.Taiwan Regulations on Foreign Investment There have been and remain tensions surrounding the Taiwan Strait. If such tension intensifies, our business in Taiwan might not be able to operate normallyor at all. Due in large part to these tensions, Taiwan has imposed restrictions on investments by PRC investors. 64Table of ContentsInvestment in Taiwan by PRC investors is governed by the Measures Governing Investment Permits to the People of the Mainland Area, (the “Measures”),which was last amended on December 30, 2020, and promulgated by the Ministry of Economic Affairs of Taiwan, or the MOEA. PRC investors refer to PRCindividuals, juristic persons, organizations and other institutions and PRC invested companies from other jurisdictions (collectively, “PRC investors”). “PRC investedcompanies from other jurisdictions” refer to those entities incorporated outside of the PRC and invested by PRC individuals, juristic persons, organizations and otherinstitutions that (i) directly or indirectly hold more than 30% of the shares or capital of such entities (each intermediate holding company shall be separately assessedbased on this 30% test to determine whether it is deemed a PRC invested company from other jurisdictions), or (ii) have the ability to control such entities. Underapplicable regulatory guidance, “control” is defined to include: (i) having the ability to hold more than 50% of the voting shares under agreement with other investors;(ii) having the ability to control the financing, operation and personnel appointment and removal of the company according to laws or agreements; (iii) having theability to appoint or remove more than half of the members of the board of directors or more than half of the key members of the other organization that is able to directa company’s operation, and such company is controlled by the board of directors or such other organization mentioned above; (iv) having the ability to direct morethan 50% of the voting power in the board of directors or more than 50% of the voting power in the other organizations that is able to direct a company’s operation,and such company is controlled by the board of directors or such other organization mentioned above; or (v) other indicia of control as set forth in the InternationalFinancial Reporting Standards or Enterprise Accounting Standards promulgated by the Financial Accounting Standards Committee of the Accounting Research andDevelopment Foundation of the Republic of China. PRC investors are required to apply for an approval before engaging in the following investment activities: (i)holding the shares issued by or making capital contribution in a company, sole proprietorship, partnership or limited partnership in Taiwan, exclusive of a single oraccumulated investment that is less than 10% of the shares in a company that is listed on a stock exchange or traded on an over-the-counter market or emerging stockmarket in Taiwan; (ii) setting up a branch office, sole proprietorship, partnership or limited partnership in Taiwan; (iii) providing loans to invested companies investedby (i) and (ii) for more than one year; (iv) having the ability to control a sole proprietorship, partnership, limited partnership or company in Taiwan that is not listed andtraded on a Taiwanese stock exchange, an over-the-counter market or emerging stock market according to agreements or other methods; or (v) a PRC investedcompanies from other jurisdictions acquires business or assets of a Taiwanese company that is not list and traded on a Taiwanese stock exchange, an over-the-counter market or emerging stock market. In addition, if a PRC investor is a juristic person, organization, or other institution invested by (a) a “political party,” military,administrative or political agency of PRC, or (b) PRC invested companies from other jurisdictions invested by the agencies listed in item (a) above, the Taiwanauthorities may restrict or prohibit such PRC investor from investing in businesses in Taiwan. PRC investors are not allowed to invest in a Taiwan company thatoperates businesses in certain statutory business categories, such as computer recreational activities, software publication, third party payment and generaladvertising. Before investing in Taiwan in accordance with the Measures, PRC investors investing in a Taiwan company that operates businesses in certain permittedstatutory business categories are required to apply for prior approval from the MOEA. In case of being deemed non-compliant with the above-mentioned laws and regulations, the Taiwan authorities may take a range of actions, including: •imposing fines between NT$120,000 (US$3,919) to NT$25,000,000 (US$816,460) and further fines if the non-compliance is not rectified as ordered;•ordering the violator to reduce any direct or indirect ownership or control by PRC investors;•requesting the violator to divest some or all of its investment or control in its invested entities in Taiwan;•suspending the rights of shareholders; and•discontinuing the operations and revoking the business licenses of its invested entities in Taiwan.Foreign Investors Foreign investments in Taiwan are governed by the Statute for Investment by Foreign Nationals, last amended on November 19, 1997. Foreign investors mayinvest by holding shares issued by a Taiwanese company, contributing to its registered capital, establishing a branch office, a proprietary business or a partnership inTaiwan, or providing loans to the invested business for a period exceeding one year, provided that the business items of the invested Taiwanese company are not in anegative list promulgated by the MOEA from time to time. Financial Support Provided by Offshore Entities According to the Statute for Investment by Foreign Nationals, last amended on November 19, 1997, offshore entities can provide loans for a period less thanone year to any Taiwanese companies that such offshore entities do not hold any equity interest in without any approval from government authorities, subject tocertain foreign exchange approval requirements in connection with the remittance of foreign currency in excess of certain amount by Taiwanese entities. There is nomaximum limitation on the amount of loans a Taiwanese company may receive from an offshore entity. Moreover, based on current laws and regulations, there isgenerally no limitation on guarantees made by an offshore entity to a Taiwanese company. 65Table of ContentsRegulations on Foreign Exchange Foreign exchange matters are generally governed by Taiwan’s Foreign Exchange Regulation Act, last amended on April 29, 2009, and regulated by theMinistry of Finance of Taiwan, and the Central Bank of the Republic of China (Taiwan). Authorized by the Foreign Exchange Regulation Act, the Central Bank of theRepublic of China (Taiwan) has promulgated the Regulations Governing the Declaration of Foreign Exchange Receipts and Disbursements or Transactions, lastamended on December 26, 2022, in order to deal with the declaration of foreign exchange receipts, disbursements or transactions involving NT$500,000 (US$16,329) ormore or its equivalent in foreign currency. Under existing laws and regulations, foreign exchange approvals must be obtained from the Central Bank of the Republic of China (Taiwan) on a payment-by-payment basis. A single remittance by a company with an amount over US$1 million or its equivalent in foreign currency shall be reported and documents supportingthe accuracy of such report shall be provided to the bank handling such remittance before the remittance is conducted. In addition, remittances by a company whoseannual aggregate amount exceeds US$50 million or its equivalent in foreign currency may not be processed without the approval of the Central Bank of the Republicof China (Taiwan). Although such approvals have been routinely granted in the past, there can be no assurance that in the future any such approvals will be obtainedin a timely manner, or at all. Regulations on Dividend Distributions Dividend distributions by companies incorporated in Taiwan are governed by the Taiwan Company Act. Under the Taiwan Company Act, with respect to acorporate entity, dividends shall only be distributed after the 10% of annual net income (less prior years’ losses, if any, and applicable income taxes) is set aside as alegal reserve until the accumulated legal reserve equals the paid-in capital of such company. In addition, a foreign company’s Taiwan branch, such as our digitalentertainment business entity in Taiwan, is not entitled to distribute dividends or make other distributions and can only remit the profits to its holding company inaccordance with foreign exchange control regulations after satisfying the relevant income tax obligation in Taiwan. Regulations on Information Technology and Intellectual Property Rights Taiwan does not have a specific statute with respect to regulations governing information technology. The related regulations are mainly dispersed withinthe Electronic Signatures Act promulgated on November 14, 2001. The main purpose of the Electronic Signatures Act is to encourage the use of electronictransactions, ensure the security of electronic transactions, and facilitate the development of electronic commerce. According to the Electronic Signatures Act,documents may be maintained in electronic form, and an electronic signature may be used with the consent of the other party. In addition, a non-government agencyshall not collect or process specific personal information unless it has a legitimate specific purpose and complies with all of the conditions provided in the relevantlaws. Intellectual property rights are protected primarily through the Copyright Act (last amended on June 15, 2022), the Patent Act (last amended on May 4, 2022),the Trademark Act (last amended on May 24, 2023) and the Trade Secrets Act (last amended on January 15, 2020) in Taiwan. Regulations on E-commerce As there are no specific regulations in Taiwan governing e-commerce businesses, operation of e-commerce in Taiwan is regulated by a number of legislations,such as the Personal Data Protection Act, the Act Governing Electronic Payment Institutions, and the Consumer Protection Act. See “—Regulations on E-paymentServices” and “—Regulations on Data Protection and Information Security” below. The regulation on e-commerce by the Consumer Protection Act is generallyimplemented through the Matters to be included and Excluded in the Online Transaction Standard Form Contracts for Retailers and Others. According to thislegislation, last amended on July 15, 2016, online retail business is required to present certain information on their website, such as product information, deliverymethod and location, and mechanism for resolution of consumer disputes.66Table of ContentsRegulations on E-payment Services Under the Act Governing Electronic Payment Institutions promulgated on February 4, 2015, effective as of May 3, 2015 and last amended on January 19, 2023(such amendments effective as of March 1, 2023), an “electronic payment institution” means a company approved by the Financial Supervisory Commission tooperate the following businesses and certain ancillary or derivative businesses as prescribed under the Act Governing Electronic Payment Institutions: (i) collectingand making payments for real transactions as an agent, (ii) accepting deposits of funds as stored value funds, (iii) conducting small amount of domestic or foreignexchange, and (iv) conducting the purchase and sale of the foreign currencies and the currencies of PRC, Hong Kong or Macau. However, a company which (i) onlyengages in the business of collecting and making payments for real transactions as an agent; (ii) the total balance of funds it collects/pays and keeps does not exceedNT$2 billion (US$65 million) in the average daily amount of a year; and (iii) does not accept deposits of funds as stored value funds, or transfer funds between e-payment accounts, is not considered an electronic payment institution. If the total balance of funds such company collects/pays exceed NT$2 billion (US$65 million)in the average daily amount of a year, or if such company conducts either accepting deposits of funds as stored value funds, or transferring funds between e-paymentaccounts or by using a stored value card, then such company shall apply for a license to qualify as an electronic payment institution. Regulations on Imported Games and Game Operations Operations of online games are regulated by the Regulations on the Rating of Game Software. Game operating companies and agents of game software needto clearly label the rating and warning language on the packaging or webpages of the game according to the rating system under the regulations and register therating level and plot of such game software in the database of the competent authority to allow for rating level searches prior to the earliest date on which the game ismade available for public purchase. In the event the rating level of a game is not labeled properly according to the relevant regulations, the game operating companyor agent may be subject to fines, and may be subject to repeated penalties if such non-compliance is not rectified within the stipulated periods. In addition, according to the Recording of Matters in the Standard Contracts of Online Games, game operating companies need to label the followinginformation on their (a) game websites, log-in page of the game or checkout page; and (b) the packaging of their games: (i) the rating level and the age groups that areprohibited or suitable for the game, (ii) the minimum system requirements for running the game, (iii) payment information for safety systems provided within the onlinegames (if any) and whether such safety systems are free or not, and (iv) information and certain warning language regarding in-game activities, rewards, prizes andwinning percentage. Regulations on Data Protection and Information Security The main regulation governing the protection of personal data in Taiwan is the Personal Data Protection Act, last amended on May 31, 2023. The PersonalData Protection Act governs the collection, processing and use of personal information in order to prevent abuse of personal data by other parties. Companies thatseek to collect, process and use personal information need to disclose the name of the party collecting the personal information and the purpose of collecting thepersonal information subject to the user’s consent. Data subjects should also be informed of their rights under the Personal Data Protection Act and how they canexercise such rights. Our digital entertainment and e-commerce businesses are required to comply with the Personal Data Protection Act while collecting, processing,transferring, and using the personal information of our users. Failure to comply with the Personal Data Protection Act will give rise to fines and criminal liability. Regulations on Anti-money Laundering and the Prevention of Terrorism Financing According to the Money Laundering Control Act of Taiwan, last amended on June 14, 2023, money laundering includes the following behaviors: (i)knowingly disguises or conceals property or property interests obtained from a serious crime or transfers or changes the specific gain from criminal actions to assistothers to escape from criminal indictment; (ii) covers or hides the nature, source, flowing, location, ownership, disposition and other interest of gains of a particularcrime; and (iii) receives, possesses or uses the gain of a particular crime. We will continue to closely monitor regulatory developments in order to continue to complywith the anti-money laundering and prevention of terrorism financing regulations. 67Table of ContentsRegulations on Labor According to the Labor Standards Act of Taiwan, employers are not allowed to terminate employment contracts without cause. Further, the mere transfer ofownership of a company is not sufficient grounds for laying off employees. Only when the employer is to be dissolved due to transactions under the BusinessMergers and Acquisitions Act can such employer terminate the employment agreements with employees that are not offered employment by the surviving orassigned company. Under the Labor Standards Act and the Labor Pension Act of Taiwan, employers are required to contribute no less than 6% of an employee’smonthly salary into a specific account as part of the employee’s pension. Under the Labor Insurance Act of Taiwan, employers should withhold and pay for certainstatutory percentages of the labor insurance premiums for employees aged between 15 and 65. In addition, under the National Health Insurance Act of Taiwan,employers are required to pay a certain statutory percentage of the employees’ health insurance premium. Vietnam Regulations on Foreign Investment Foreign investment into Vietnam is regulated by both domestic legislation and international agreements, with the primary regulations being the Law onInvestment and Vietnam’s WTO commitments. Foreign investment is generally divided into three categories: unrestricted, restricted, and prohibited. With respect tothe “restricted” category, restrictions can take the form of a specific foreign ownership ceiling in a foreign-invested company, a general requirement to enter into a jointventure with a Vietnamese party with no mandated maximum foreign ownership ceiling, or the requirement to obtain certain government approvals for foreignownership with respect to the industries that the Vietnam government has not committed to opening to foreign investment. For example, foreign ownership incompanies engaging in online game business may not exceed 49% following Vietnam’s WTO commitments, and companies with foreign ownership engaging in e-payment or e-commerce business have to obtain certain government approvals. We have obtained approvals from competent authorities of Vietnam for directownership of equity interests in our e-commerce, e-payment and online game businesses as a foreign investor, including approval for 100% direct ownership in our e-commerce business. Under the Law on Investment 2020, the investment registration authority of Vietnam could terminate an investment project in whole or in part if the investorconducted investment activities on the basis of a false civil transaction, which is a transaction falsely entered into by transacting parties for the purpose of concealingother transactions or evading responsibilities to a third person. Such termination decisions may only be based on legally effective court judgments or decisions or thearbitration award under the Article 59 of Decree 31/2021/ND-CP regulating the implementation of Law on Investment. Financial Support Provided by Offshore Entities Financial support in the form of loans, direct cash injections and guarantees provided by an offshore entity to a Vietnam entity is permitted under Vietnameselaws, including Vietnam’s foreign exchange control regime. Loans provided by offshore lenders to Vietnam entities with a term of (i) more than 12 months, (ii) 12months or below but extended to more than 12 months and (iii) 12 months or below but with the outstanding principal loan amount and interest remaining outstandingone year from the first disbursement date, unless such principal amount is settled within 30 days, must be registered with the State Bank of Vietnam and must satisfycertain conditions with respect to, among others, the term, type, amount, currency and purpose of the loan. There is no other restriction imposed on any of theforegoing financial support mechanisms. Regulations on Foreign Exchange Vietnam does not possess a fully liberalized foreign exchange control regime, and the use, exchange and remittance of foreign currencies are regulated by theOrdinance on Foreign Exchange Control and its guiding instruments, along with miscellaneous regulations on inward investment. 68Table of ContentsThe use of, and exchange of foreign currencies for, Vietnamese dong, is broadly dependent on whether such foreign currencies are used for capitalinvestment purposes or general transactional purposes. Capital investment comprises both indirect investment and direct investment, with direct investment generallydefined as any foreign investment where (i) foreign investor(s) establish a corporate entity and is required to obtain an investment registration certificate, (ii) foreigninvestor(s) hold 51% or more of the charter capital following a merger, acquisition or restructuring, (iii) foreign investor(s) establish a project company to implementpublic-private partnership project(s), or (iv) foreign investor(s) hold 51% or more of the charter capital following the establishment of a corporate entity pursuant tospecialized laws without being required to obtain an investment registration certificate. Foreign currencies and Vietnamese dong are permitted to be used for directinvestments and only Vietnamese dong may be used for indirect investments. All capital investments into Vietnam, whether direct or indirect, must be made throughspecialized investment capital bank accounts, and any dividend distributions and returns of capital from such investments must be made through the same accounts.There are no foreign exchange control or remittance restrictions imposed on amounts held in such investment capital bank accounts, except for the requirement forsupporting documents evidencing valid remittances. Vietnamese dong held in current accounts can generally be freely exchanged for foreign currency and subsequently remitted offshore, provided that theorigin of such amounts and the reason for the exchange and remittance are legitimate. Contracts for the supply of goods or services entered into between aVietnamese individual or company and a foreign company are one of the valid bases for such foreign currency exchange transactions. Regulations on Dividend Distributions In Vietnam, a company is generally allowed to pay dividends or distribute profits after it has settled all of its outstanding tax or other financial obligations,and set off previous losses, provided that the payment of the dividends will not result in the company being unable to discharge its debts and other liabilities. Additionally, the distributed dividend or profit is allowed to be repatriated at the end of the financial year, after the audited financial statements and thecorporate income tax clearance have been submitted to the tax authority. Regulations on E-commerce E-commerce businesses are mainly governed by the Law on E-Transactions, Decree No. 52/2013/ND-CP, as amended and supplemented by Decree No.85/2021/ND-CP (“Decree 85”), Circular 47/2014/TT-BCT, and Circular No. 59/2015/TT-BCT, as amended and supplemented by Circular No. 01/2022/TT-BCT (“Circular59”). According to Decree 85, companies that own e-commerce direct sale websites must notify the Ministry of Industry and Trade of Vietnam (“MOIT”) of theirestablishment if such websites have an online ordering function. Companies that own e-commerce service provision websites, including e-commerce marketplace,online auction websites, and online promotion websites, must register with the MOIT for the establishment of such e-commerce platforms. In addition, under Decree85, an approval from the Ministry of Public Security, which examines any national security impacts, must also be obtained by any foreign investors who have“control” in a company under the MOIT’s list on the top five e-commerce companies in Vietnam. Such a list has not been released by MOIT as of the date of thisannual report. According to Circular 59, e-commerce mobile applications include (i) applications used for direct sale of goods and (ii) applications for provision of e-commerce services. Accordingly, a company with an application used for sale of goods, which includes an online ordering function must notify the MOIT; a companywith an application for the provision of e-commerce services must register with the MOIT. However, a company with an application for both sale of goods andprovision of e-commerce services must register to establish an e-commerce service provision website and register the e-commerce service provision application withthe MOIT. According to Decree No. 09/2018/ND-CP (“Decree 09”), foreign-owned entities that provide e-commerce services are also required to obtain a specificbusiness license from the Department of Industry and Trade (“DOIT”). The licensing authority must seek approval of the MOIT before granting the license. Our e-commerce business in Vietnam is currently in compliance with the business licensing requirements under Article 50.1 of Decree 09. As a continuing licensingrequirement under Decree 09, we have submitted the relevant application with the DOIT of Hanoi in November 2021, which is now in progress.69Table of Contents Regulations on E-payment Services According to Decree No. 101/2012/ND-CP, intermediary payment services include the provision of electronic payment facilities (such as financial switchservices, electronic clearing services and electronic payment gateway services), payment support services (such as cash collection and cash payment services,support services for wire transfers and digital wallet services), as well as other intermediary payment services prescribed by the State Bank of Vietnam. Non-financialcompanies that wish to provide intermediary payment services are required to obtain a license for intermediary payment services. To obtain this license, companiesmust satisfy certain conditions, such as meeting minimum equity capital thresholds (VND 50 billion, or approximately US$2.1 million) as well as receiving priorapproval for operating the intermediary payment services. Our digital financial services business in Vietnam has obtained the license for intermediary payment services for electronic payment gateway services, cashcollection and cash payment services and digital wallet services. Regulations on Imported Games and Game Operations According to Circular No. 34/2013/TT-BCT, games are permitted to be imported into Vietnam. With regard to the publication of games, including electronicgames, Vietnam’s WTO commitments allow foreign investors to provide electronic games only through a business cooperation contract or a joint venture companywith a Vietnamese partner which is licensed to provide electronic games. Foreign investment into the joint venture company generally shall not exceed 49% followingVietnam’s WTO commitments. See “—Regulations on Foreign Investment” above. The operation of electronic games is mainly governed by Decree No. 72/2013/ND-CP, which regulates the management, provision and use of internet servicesand online information, and Circular No. 24/2014/TT-BTTTT, as amended and supplemented by Decree No. 27/2018/ND-CP and Decree No. 150/2018/ND-CP, whichprovide further guidance to Decree No. 72/2013/ND-CP. These regulations divide electronic games into the following categories: G1 games (simultaneous interactionsamong various players via a game server), G2 games (simultaneous interactions only between players and a game server), G3 games (simultaneous interactions amongvarious players but no interactions between players and a game server), and G4 games (those downloaded from a network with no interaction among players orbetween players and the game server). Companies may operate G1 games after obtaining a License to Provide Game Services and, for each game the company offers, italso needs to obtain a Decision to Approve Game Content issued by the Ministry of Information and Communications of Vietnam. Companies may operate G2, G3 andG4 games after obtaining a Certificate of Registration of Game Service Provision and, for each game the company offers, it also needs to obtain an Acknowledgementof Announcement of Service Provision issued by the Agency of Broadcasting and Electronic Information. We have obtained the license to operate G1 games. Regulations on Data Protection and Information Security On June 12, 2018, the Vietnam National Assembly issued the Law on Cybersecurity which regulates that any foreign service provider in the fields of e-payment, e-commerce, online games, and certain other industries, is required to have a commercial presence in Vietnam (such as branch, representative office) and tolocalize the user’s data in Vietnam. The government issued Decree No. 53/2022/ND-CP on August 15, 2022 to provide further details on a number of articles of the Lawon Cybersecurity. On April 17, 2023, Vietnam government issued Decree No. 13/2023/ND-CP on personal data protection in which Vietnam government which for the first timedefined personal data as electronic information in the form of symbols, letters, numbers, images, sounds, or equivalences associated with an individual or used toidentify an individual. The personal data includes general personal data and sensitive personal data. This decree also classified personal data into types, including (i)general personal data such as name, date of birth, gender, nationality, etc. and (ii) sensitive personal data such as political and religious opinion, health condition,information on customers of credit institutions, etc. This decree also specifies the rights and obligations of personal data subject as well as the relevant partiesinvolved in collecting, processing personal data such as personal data controller, personal data controller-cum-processor, personal data processor. Regulations on Intellectual Property Rights Intellectual property rights in Vietnam are governed by the Law on Intellectual Property, together with certain international agreements to which Vietnam is asignatory (such as Vietnam’s WTO commitments on Trade-Related Aspects of Intellectual Property, and the Madrid Agreement Concerning the InternationalRegistration of Marks). 70Table of ContentsIn order for certain intellectual property rights to be recognized and enforceable in Vietnam, intellectual property owners must register those rights.Copyrights may be registered with the Department of Copyright of Vietnam but the registration is not compulsory. As a member of the Berne Convention, allcopyrights will be protected automatically. Industrial property, such as patents, trademarks (except for well-known trademarks) and industrial design, must beregistered with the National Office of Intellectual Property of Vietnam (“NOIP”) in order to be protected in Vietnam, although unregistered rights may be protectableunder the laws of unfair competition or passing off. A well-known trademark may be protected based on its use without registration and a trademark license is notrequired to be registered with NOIP in order to have validity against a third party. On June 16, 2022, the Vietnam National Assembly issued the law amendment to some articles of the Law on Intellectual Property, which came into effect as ofJanuary 1, 2023 (“2022 IP Law”). This law also sets forth regulations on protection of sound marks, with effect retroactively as of January 14, 2022. The 2022 IP Law include a safe harbor provision that exempted intermediary service providers (“ISP”) and online service providers (“OSP”) from liability forinfringement of copyright for (i) transmission of digital content or the provision of access to the digital content, (ii) transmission of telecommunication network ofinformation provided by a user characterized by the automatic storage, temporary, intermediate and for the sole purpose of making transmission of information moreeffectively to another user, and (iii) storage of digital content provided by service users at the request of service users if the ISP or OSP meet certain conditions suchas having take down mechanisms or restricting access to digital contents upon notice. Regulations on Anti-money Laundering and Prevention of Terrorism Financing Vietnam’s Law on the Prevention of Money Laundering 2022, effective as of March 1, 2023, contains the primary anti-money laundering and prevention ofterrorism financing regulations in Vietnam. It applies to all financial institutions (including intermediary payment service providers like us) and certain non-financialinstitutions engaged in specific business activities, which include offering games for prizes. Intermediary payment service providers are classified as one of thereporting entities under the Law on the Prevention of Money Laundering 2022. The Department of Anti-Money Laundering established under the State Bank of Vietnam monitors and regulates Vietnam’s anti-money laundering regime.Entities subject to the anti-money laundering regime must report certain transactions to the Department of Anti-Money Laundering, including high-value transactionsup to the amount prescribed, suspicious transactions, and transactions involving companies or individuals in the countries and territories on the “warning list”published by the State Bank of Vietnam, among others. Moreover, apart from the know-your-customer procedures required by Vietnamese law, entities subject to theanti-money laundering regime must conduct customer due diligence and assign a risk rating on its respective customers. If the customer has a high-risk rating, theentity subject to the anti-money laundering regime must perform an enhanced due diligence investigation on such customer, which includes increased collection,update, and verification of customer information as well as maintaining close supervision of such customer’s transactions. Regulations on Labor Vietnam’s Labor Code, along with a number of guiding instruments, regulates the relationship between employers and employees in Vietnam, including bothVietnamese nationals and expatriates. It specifies that an employment contract must generally be made in writing. In accordance with Labor Code 2019, effectiveJanuary 1, 2021, there are two types of labor contracts, indefinite term and definite term contracts. An employer is only permitted to offer two consecutive fixed termcontracts, subsequent to which the employment contract must be an indefinite term contract. Vietnam has an employee friendly labor law regime. Employees are entitled to statutory benefits payable by the employer, including health, social andunemployment insurance. Since 2009, unemployment insurance replaced the employer’s compensation of severance to an employee upon the termination ofemployment. Moreover, non-compete, non-solicitation and any other labor contract clauses which may be deemed to interfere with a person’s right to seekemployment are difficult, if not impossible, to enforce. 71Table of ContentsThailand Regulations on Foreign Investment Foreign investment in Thailand is regulated under the Thai Foreign Business Act, B.E. 2542 (1999), as amended, which states that a foreigner is restrictedfrom engaging in certain businesses in Thailand as described in the Thai Foreign Business Act, such as advertising business, sale of food and beverage, and otherservice businesses which include e-payment services, unless an approval is granted by the Cabinet of Thailand or a foreign business license or a foreign businesscertificate is granted by the Ministry of Commerce of Thailand, depending on the type of business specified under the Annexes to the Thai Foreign Business Act, orthere is an exemption under other specific laws. The term “foreigner” under the Thai Foreign Business Act covers the following definitions: (i)a natural person who is not a citizen of Thailand; (ii)a juristic person not established in Thailand; (iii)a juristic person established in Thailand with half or more of the shares constituting its capital held by (i) or (ii) or half or more of the total capital ofsuch juristic person invested by (i) or (ii); and (iv)a juristic person established in Thailand with half or more of the shares constituting its capital held by (i), (ii) or (iii), or half or more of the totalcapital of such juristic person invested by (i), (ii) or (iii). Under the Thai Foreign Business Act, the definition of “foreigner” does not include references to relative voting arrangements, control of the management ofa company or the economic interests of Thai and foreign nationals. The Thai Foreign Business Act only considers the immediate level of shareholding. As a result, nocumulative or look-through calculation is applied to determine the foreign status of a company when it has several levels of foreign shareholding. See “—C.Organizational Structure—Thailand Shareholding Structure” for more details about our shareholding structures in Thailand and “Item 3. Key Information—D. RiskFactors—Business and Operational Related Risks—Other Operational Risks—We rely on structural arrangements to establish control over certain entities andgovernment authorities may determine that these arrangements do not comply with existing laws and regulations. We are also subject to other risks relating to suchstructural arrangements.” Regulations on Foreign Exchange The legal basis for foreign exchange control in Thailand is derived from the Exchange Control Act, B.E. 2485 (1942), as amended, and the MinisterialRegulation No. 13 B.E. 2497 (1954), as amended. In order to control the volume of foreign currency in Thailand and promote the stability of the Thai baht, foreign exchange regulations in Thailand state thatall foreign exchange transactions, including those involving purchases, sales, exchanges and transfers, shall be conducted through commercial banks and throughauthorized non-banks, namely authorized money changers, money transfer agents, and companies, that are granted foreign exchange licenses from the Minister ofFinance of Thailand. There is no limit on the remittance of foreign currency into Thailand; nevertheless, the remittance of foreign currency to outside of Thailand isprimarily limited to the value of the underlying transaction. Prior approval from the Bank of Thailand may be necessary if the transaction is beyond what is allowedunder the regulations. Failure to comply with the laws and regulations will lead to a fine and/or imprisonment. We only remit foreign currency out of our Thailandoperations through commercial banks and authorized non-banks with the requisite licenses and obtain separate approval from the Bank of Thailand for suchtransactions (if required). Regulations on Dividend Distributions Dividend distributions by private companies incorporated in Thailand are governed by the Civil Commercial Code and the Thai Revenue Code. Dividendsshall only be distributed out of a company’s profit. A company looking to distribute dividends is required to set aside at least 5% of its retained earnings into a legalreserve fund at the time the dividend is paid until and unless the legal reserve fund reaches 10% of the company’s registered capital. 72Table of ContentsThe dividend distributed to a company’s shareholders is subject to a 10% withholding tax. The withholding tax may be exempt or reduced depending on therules and regulations of the Thai Revenue Code and the double taxation agreements that Thailand has entered into with other countries. Regulations on E-commerce Pursuant to the Commercial Registration Act, B.E. 2499 (1956), (as amended, the “Commercial Registration Act”), and the Notification Regarding RequiringBusiness Operators to Register their Businesses No. 11, issued by the Ministry of Commerce in 2010, e-commerce business operators, including companies engagingin the sale and purchase of goods or services using electronic devices via the internet and e-marketplace, are required to register their business with the Ministry ofCommerce of Thailand. We have registered our Shopee e-commerce marketplace business. Pursuant to the Direct Sale and Direct Marketing Act B.E. 2545 (2002), (as amended, the “Direct Sale and Direct Marketing Act”), companies engaging indirect sales or direct marketing are required to register their business with the Secretariat General of the Office of Consumer Protection or the officer appointed by theSecretariat General of the Office of Consumer Protection. We have made the required registration for our Shopee e-commerce marketplace in Thailand. Under the DirectSale and Direct Marketing Act, companies that operate an online marketplace are direct marketing companies and are required to ensure that documentationevidencing sales and purchases of goods and services on its online marketplace are provided and delivered to consumers. Such documentation shall be in the Thailanguage and contain information including due date, place and method of payment, place and method of delivery of goods or services, termination of contract,product return method, product warranty and exchange policy in case of damage or defect. Moreover, consumers have the right to cancel their purchases made on anonline marketplace within seven days from the date of receipt of the purchased goods or services. In addition, direct marketing companies must comply with the relevant ministerial regulations and any applicable laws on consumer protection regarding theiradvertisements. The e-commerce platform business is also subject to the Royal Decree on Digital Platforms published in the Government Gazette on December 22, 2022,effective on August 20, 2023. The decree mandates certain notification obligations for digital platform service providers with (i) annual revenue (before expenses)higher than THB50,000,000 (US$1.5 million) or (ii) more than 5,000 users (on monthly average). Information required to be submitted to Electronic TransactionsDevelopment Agency (“ETDA”) include details about the company, the platform, users and top complaint matters. Service providers are also required to submit theannual report to ETDA within 60 days following the end of its fiscal year. The Royal Decree on Digital Platforms also sets various platform-related requirements, depending on the size and type of the digital platform. Theserequirements apply to notifications to the ETDA, conditions for provision, suspension, or cessation of service (including fees, remuneration, and expenses),criteria/algorithm used to rank, recommend, or advertise goods or services, criteria/algorithm for advertising display, criteria / algorithm for satisfaction ratings andfeedback from users, access and usage of data shared with business operators on the digital platform, inquiries, complaints, dispute settlement, and timeframe fordispute settlement and responses to unlawful or sensitive content (including content rating practices). Large size digital platforms (e.g., annual revenue beforeexpenses that exceed THB300 million (US$8.7 million) for each service or THB1 billion (US$29.1 million) in total or having total users more than 10% of the Thaipopulation) will be subject to additional requirements, including those related to risk assessment, risk management, security measure, crisis management and externalaudit.Regulations on Consumer Protection Thailand’s consumer protection laws include the Consumer Protection Act B.E. 2522 (1979), as amended, the Unfair Contract Terms Act, B.E. 2540 (1997), theProduct Liability Act B.E. 2551 (2008) and the Consumer Case Procedure Act B.E. 2551 (2008). Such laws aim to promote greater transparency and more accuratedisclosures regarding products and services, adequate compensation if consumers are harmed by a product or service and fair transaction terms between sellers andbuyers. 73Table of ContentsRegulations on E-payment Services In Thailand, electronic transactions and e-payment services are governed by several governmental authorities and regulations including the ElectronicTransaction Commission, the Governor of the Bank of Thailand or his or her designee, the Electronic Transactions Act, B.E. 2544 (2011), as amended, and the PaymentSystems Act, B.E. 2560 (2017). Regulated e-payment services businesses include: (i) credit card, debit card, or ATM card services, (ii) electronic money services, (iii) service of receivingelectronic payment for and on behalf of sellers, service providers or creditors, (iv) service of transferring money by an electronic means, and (v) other paymentservices which may affect the financial system or public interest. Our digital financial services business in Thailand has obtained e-payment service business licenses for (i) electronic money services, (ii) payment facilitatingservices, (iii) receiving electronic payments for and on behalf of sellers, service providers or creditors, and (iv) services for transferring money by electronic means. Under the Payment Systems Act, an operator seeking to operate a regulated payment system or regulated payment service, which includes e-paymentservices, is required to have a license before operating such business. Under the Payment Systems Act, a business operator who has been granted e-paymentbusiness licenses under prior regulations must have filed its application for a license or the application for registration with the Bank of Thailand before August 13,2018. Upon filing such applications within the prescribed period, the operator is entitled to operate the businesses indefinitely until the Minister of the Ministry ofFinance or the Bank of Thailand instruct otherwise. In this regard, the Bank of Thailand has issued several regulations regulating businesses operating regulatedpayment systems and services. As an existing license holder, we filed our application within the prescribed period and have obtained the new license under thePayment Systems Act to operate e-payment services. Any non-compliance with the regulations regarding the regulated payment system or the regulated payment services will be subject to penalties, includingmonetary fines and criminal liabilities (imprisonment), and, depending on the severity of the non-compliance, may result in the suspension or revocation of therelevant licenses obtained under such regulations. In addition, on January 18, 2021, the Bank of Thailand issued the Notification of the Bank of Thailand No. SorNorChor 1/2564 (2021) Regarding the Guidelineon Supervision of Information Technology Risk in accordance with the Laws on Payment System requiring the designated payment services providers to arrangeappropriate IT governance, IT security controls, and IT risk management. Under the Notification, the provisions regarding cyber hygiene became effective on April 29,2021 and provisions regarding IT risk management became effective on January 29, 2022. On March 16, 2023, The Royal Decree on Measures for Protection and Suppression of Technology Crimes B.E. 2566 (2023) was published in the GovernmentGazette and entered into force the following day. The key obligations under this new legislation require financial institutions and e-payment services operators to (i)share information of accounts and transactions that could be related to cybercrime to other financial institutions and e-payment services operators via a designatedsystem, (ii) temporarily freeze suspicious transactions that could be related to cybercrime (either it has been notified by account holder or can be identified by financialinstitutions or e-payment services operators itself), (iii) notify other financial institutions and operators that would be a transferee of the transaction in (ii), and (iv)report the information to the relevant authority and share such information through the designated system in accordance with (i). Regulations on Nano Financing The Ministry of Finance promulgated the Notification Regarding Businesses that Require a Permit According to Section 5 of the Notification of theRevolution Council No. 58 (Nano Finance), (the “Nano Finance Notification”), which requires a nano finance business operator to obtain approval from the Ministerof Finance through the Bank of Thailand. The Nano Finance Notification also stipulates that loan proceeds from nano financing may only be used for business-relatedpurposes in order to boost opportunities to small business owners. Our subsidiary engaging in digital financial services business in Thailand has obtained the nanofinance license from the Ministry of Finance in accordance with the Nano Finance Notification. 74Table of ContentsWe have approval to operate nano finance business in Thailand, which allows us to provide nano financing to Shopee buyers and sellers in Thailand. Ournano finance business is subject to certain restrictions imposed by the Bank of Thailand, the government authority overseeing nano finance businesses. The Bank ofThailand promulgated the Notification No. SorNorSor 13/2563 (2020) Regarding the Rules, Procedures and Conditions for the Operation of Nano Finance Businesses.Under such notification, operators of nano finance businesses should take into account the borrower’s ability to repay the loan (which is unsecured) and consider acredit limit for each borrower. The maximum credit limit shall not exceed THB100,000 (US$2,911), and the interest rate, together with fees and penalties, shall not exceed33% per annum. In addition, the nano finance business operator shall maintain a debt-to-equity ratio of seven times or less throughout its operation. The Bank of Thailand has issued Notification No. SorNorSor 14/2566 (2023), to amend the Notification No. SorNorSor 13/2563 (2020) effective from December27, 2023. Nano finance business operators are now prohibited from charging interest, fines, penalties, fees, or any other charges in the case where customer redeem orrepay the loan before the scheduled due date (prepayment fee), whether in full or in part. The Bank of Thailand has issued Notification No. SorGorChor. 7/2566 (2023) regarding Responsible Lending to establish market conduct and provide legalcompliance obligations for nano finance business operators. Under such notification, nano finance business operators are required to adopt principles in businessoperation such as to: (i) ensure accurate and clear advertising and provide complete and accurate information to customers; (ii) consider customers’ affordability andrepayment ability; and (iii) give advance notifications to debtors. Regulations on Personal Loans Personal loan operators are subject to the Notification regarding Businesses that Require a Permit According to Section 5 of the Notification of theRevolution Council No. 58 (Supervised Personal Loan), as amended, and its implementation rules promulgated by the Bank of Thailand, (collectively, the “SupervisedPersonal Loan Notification”). According to the Supervised Personal Loan Notification, a company providing uncollateralized personal loans for no specific purpose toindividuals is required to obtain a supervised personal loan business license. Our subsidiary engaging in the digital financial services business in Thailand hasobtained a supervised personal loan business license from the Ministry of Finance in accordance with the Supervised Personal Loan Notification. The Bank of Thailand’s Notification No. SorNorSor 12/2563 (2020) requires that the credit limit for personal loans (not including for occupational purposes)should not exceed one and a half or five times the average monthly income of the borrower or the average monthly balance in the borrower’s deposit account, in thecase where the average income is below or over THB30,000 (US$873) a month, respectively, at a financial institution for the six month period immediately before thedate on which the personal loan is granted. Moreover, the interest rate for personal loans, together with fees and penalties, shall not exceed 25% effective rate perannum. Adhering to the same approach as in nano finance business, the Bank of Thailand’s Notification No. SorNorSor 13/2566 (2023) amended the Notification No.SorNorSor 12/2563 (2020), personal loan business operators are now also prohibited from imposing interest, fines, penalties, fees, or any charges when customersredeem or repay the loan before the scheduled due date (prepayment fee), whether in full or in part. Additionally, the Bank of Thailand’s Notification No. SorGorChor. 7/2566 (2023) (Responsible Lending) also include personal loan business operatorsrequiring personal loan business operators to adopt the eight principles outlined in the notification to their business legal compliance requirements. Regulations on Digital Lending Any personal loan operators under the Supervised Personal Loan Notification, who use digital technology and alternative data to facilitate provision of loansin regard to the assessment of the ability or willingness to repay the loan, disbursement and repayment, and disclosure of information, are subject to the Bank ofThailand’s Notification No. TorPorTor.ForGorSor.(01)Vor. 977/2563 (2020) Regarding the Rules, Procedures and Conditions for the Undertaking of Digital Personal LoanBusiness (the “Digital Personal Loan Notification”). Pursuant to the Digital Personal Loan Notification, the personal loan operators intending to undertake the digitalpersonal loan business must notify the Bank of Thailand before commencing its business. The maximum credit limit for digital personal loans granted to each borrowershall not exceed THB20,000 (US$582) with the repayment period not exceeding six months, regardless of financial condition, income or balance in the deposit accountof the borrower. 75Table of ContentsRegulations on Game Businesses Digital game and game distributing businesses, either for personal computers or mobile phones, are governed by the Film and Video Act B.E. 2551 (2008), (asamended, the “Film and Video Act”). Digital games are treated as videos under the Film and Video Act. Digital games to be exhibited, exchanged or distributed inThailand shall be reviewed and approved by the Thailand Film and Video Censorship Committee. Updates and amendments to previously approved digital games willbe regarded as new games and subject to review and approval by the Film and Video Censorship Committee. Companies engaging in the game distributing businessare required to obtain a game distributing license under the Film and Video Act unless the games are offered for free. We regularly arrange to obtain approvals of thegames we exhibit and any updated versions from the Film and Video Censorship Committee. Regulations on Intellectual Property Rights Intellectual property laws in Thailand are comprised of the Copyrights Act, B.E. 2537 (1994), as amended, Trademark Act B.E. 2534 (1991), as amended, PatentAct B.E. 2522 (1979), as amended, Trade Secret Act, B.E. 2545 (2002), as amended, and Optical Disc Production Act, B.E. 2548 (2005). Trademarks registered outside of Thailand are not automatically protected under Thai laws. Protection will be granted to trademarks registered with theDepartment of Intellectual Property of the Ministry of Commerce of Thailand. In contrast, original works of authorship will receive copyright protection the momentthey are created. Computer software will be protected under the Thailand Copyright Act. An infringement of intellectual property rights may lead to civil and/orcriminal liabilities. The amended Copyrights Act, B.E. 2537 (1994) became effective on August 23, 2022. Notable changes introduced by the amended act are (i) an extension ofthe term of protection for photographic works to be the author’s lifetime plus an additional 50 years after the author’s death; (ii) general and specific requirements forservice providers to be exempted from liability for copyright infringement; and (iii) the steps for notice-and-takedown procedure. Regulations on Anti-Money Laundering and Prevention of Terrorism Financing The key regulations for anti-money laundering and counter-terrorist financing are the Money Laundering Prevention and Suppression Act, B.E. 2542 (1999),as amended, which imposes reporting obligations on persons designated by the Anti-Money Laundering Office and certain types of business operations for (i) anytransactions that reach certain thresholds which vary depending on the type of transactions involved; and (ii) suspicious transactions. Personal loan businessoperators and e-payment business operators are required to apply the know-your-client measures when the value of transaction(s) is (i) THB500,000 (US$14,556) ormore for any single bill payment; (ii) THB50,000 (US$1,456) or more for any e-money or electronic money transfer; or (iii) THB100,000 (US$2,911) or more for othersingle or cumulative transactions. In addition, personal loan operators and e-payment service business operators need to have procedures relating to customer duediligence in place to ensure that its services are not being used by members of groups identified as terrorists by the United Nations Security Council Resolutions orthe Anti-Money Laundering Office. Regulations on Labor Labor matters are mainly governed by the Thai Civil and Commercial Code and the Thai Labor Protection Act, B.E. 2541 (1998), as amended, and itssubsequent notifications. The laws stipulate the relationship between the employer and the employees in essential aspects, including working hours, leaves, wages,entitlements, employment termination and severance payment, etc. The employment arrangement can be made verbally and is not required in writing. Under the Thai Labor Protection Act, it is mandatory for employers to establish work rules when 10 or more employees are hired and it shall cover thefollowing issues: (i) working days, normal working hours and rest period; (ii) holidays and rules governing the taking of holidays; (iii) rules governing overtime andholiday work; (iv) the day and place where wages, overtime pay, holiday pay and holiday overtime pay are to be made; (v) leave and rules governing the taking ofleave; (vi) discipline and disciplinary measures; (vii) lodging of grievances; and (viii) termination of employment, severance pay and special severance pay. 76Table of ContentsRegulations on Personal Data Protection On May 28, 2019, the Personal Data Protection Act B.E. 2562 (2019) became effective, while Chapter 2 (Personal Data Protection), Chapter 3 (Rights of theData Subject), Chapter 5 (Complaints), Chapter 6 (Civil Liability) and Chapter 8 (Penalties) of such law, collectively, the Delayed Provisions, took effect from June 1,2022 pursuant to the Royal Decree on Agencies and Businesses Not Subject to the Personal Data Protection Act, B.E. 2562 (2019) (No. 2), B.E. 2564 (2021). Personaldata collected from our conduct of businesses fall within the scope of the Personal Data Protection Act. The Personal Data Protection Act applies to the collection and processing of personal data, including but not limited to the collection, use, disclosure ortransfer by a data controller or a data processor. As the law has extraterritorial enforcement, data controllers and data processors both in and outside of Thailand maybe subject to this regulation. In addition, data controllers are required to inform data subjects of the purpose of their collection and subsequent processing of the personal data collected,and obtain consent for such collection or processing, unless otherwise provided in the Personal Data Protection Act or the regulations or announcements issued bythe Personal Data Protection Commission. From March 25, 2024, cross-border transfer of personal data is subject to those criteria and methods as prescribed by the Personal Data CommitteeNotifications pursuant to Section 28 and Section 29 of the Personal Data Protection Act. However, the notifications do not apply to sending or transferring of personaldata through cloud computing service provider, data transit, or data storage whereby no third party can access the personal data. Singapore Regulations on Dividend Distributions The governing legislation for the distribution of dividends in Singapore is the Companies Act 1967 of Singapore (the “Companies Act”). Under Section 403of the Companies Act, a Singapore company is only allowed to pay dividends out of profits and there are certain restrictions on the use of profits for the purposes ofdividend declaration. Firstly, any profits of a company applied towards the purchase of its shares pursuant to the share buyback provisions under the Companies Actcannot be payable as dividends to the shareholders. However, the foregoing restriction does not apply to any part of the proceeds received by the company from asale or disposal of its treasury shares where the sums that were utilized to purchase those treasury shares initially came out of profits in the first place. Finally, anygains derived from the sale of treasury shares cannot be payable as dividends to the shareholders of the company. In addition to complying with the Companies Act, the payment of dividends must also be in accordance with the company’s constitution and the generallyacceptable accounting principles in Singapore. Regulations on Information Technology Regulation of Internet Content The Broadcasting Act 1994 of Singapore prohibits the provision of certain broadcasting services, including internet content, in or from Singapore without alicense issued by the Infocomm Media Development Authority (“IMDA”). The IMDA is the regulator of the information, communications and media sectors inSingapore. The Broadcasting Act 1994 sets out an automatic class licensing scheme for computer online services provided by internet content providers. An internetcontent provider includes a corporation which provides any program for business purposes on the internet. Internet content providers are in general mandated to be automatically class licensed without any need to make specific applications to the IMDA, and arerequired to comply with the conditions of the class license and the Internet Code of Practice. As an internet content provider, we are obliged to use our best efforts toensure that prohibited material (which refers to material that is objectionable on the grounds of public interest, public morality, public security, national harmony,offends good taste or decency, or is otherwise prohibited by applicable Singapore laws) is not broadcast via the internet to users in Singapore, and we are alsorequired to deny access to any prohibited material if directed to do so by the IMDA. If we contravene the class license conditions or the Internet Code of Practice, wemay face administrative sanctions such as suspension or cancelation of our license, or fines. 77Table of ContentsIn addition, to the extent that our platforms or services enable our users to transmit online content to each other or access third party online content, wewould be an internet intermediary under the Protection from Online Falsehoods and Manipulation Act 2019 of Singapore (“POFMA”). POFMA empowers anySingapore government minister to direct the POFMA Office to issue certain directions to internet intermediaries whose internet intermediary service had been used tocommunicate a false statement of fact in Singapore, if the minister is of the opinion that it would be in the public interest to do so. Such directions would include: (a)targeted correction directions, which require the internet intermediary to communicate a correction notice on its service to all end-users in Singapore who accessed theoffending false statement of fact after a specified time; and (b) disabling directions, which require the internet intermediary to disable access by end-users inSingapore to the offending false statement of fact being communicated on or through its service. Companies may be fined if they fail to comply with directions issuedunder POFMA without reasonable excuse. Further, as our platforms or services enable us to provide online services to users, we would be an online service provider under the Online Criminal HarmsAct 2023 (“OCHA”). The OCHA empowers designated government officers with the ability to issue directions to an online service provider (“OSP”) if there issuspicion of possible offences under the OCHA, or online activity connected to scam or malicious cyber activity offence. Such directions include: (a) a disablingdirection, which requires an OSP to disable access by Singapore persons to (i) any relevant material stored, posted, provided or transmitted on or through its onlineservice; (ii) any identical copies of the relevant material stored, posted, provided or transmitted on or through its online service; and/or (iii) any relevant location on itsonline service; and (b) an account restriction direction, which requires an OSP to take all reasonable steps to disallow or restrict interaction between any relevantaccount on its online service and Singapore persons. Non-compliance with directions received may result in a service restriction order requiring the OSP to take allreasonable steps to suspend or stop the supply or provision of its online service to Singapore persons by a specified time. OSPs may be fined if they fail to complywith the directions and orders without reasonable excuse. Regulations on E-commerce Consumer Protection There are various general consumer protection laws in place in Singapore, which apply generally to all relevant transactions including electronic transactionsbut are not specifically targeted at regulating e-commerce operations. One or more of these laws would be relevant in the context of online game operations or e-commerce operations. The Consumer Protection (Fair Trading) Act 2003 of Singapore sets out a legislative framework to allow consumers aggrieved by unfair practices to haverecourse to civil remedies before the Singapore courts. The definition of supplier under the Consumer Protection (Fair Trading) Act 2003 includes persons whopromote the use or purchase of goods or services which we do through our digital entertainment and e-commerce platforms. Suppliers may be held liable for engagingin unfair practices in relation to consumer transactions. Unfair practices include, among other things: (i) doing or saying anything which would reasonably deceive ormislead consumers, (ii) making a false claim, (iii) taking unreasonable advantage of a consumer, or (iv) making various forms of misrepresentations to the consumer. The Consumer Protection (Trade Descriptions and Safety Requirements) Act 1975 of Singapore prohibits the use of false trade descriptions on goodssupplied in the course of trade. Trade descriptions include any description, statement or indication that directly or indirectly relates to the fitness for purpose,strength, performance, behavior or accuracy of any goods. This prohibition applies to all persons in the course of business and would be applicable in an e-commercemarketplace. Violations of the Consumer Protection (Trade Descriptions and Safety Requirements) Act 1975 are subject to criminal liability. While we have, among other things, policies in place which require users of our e-commerce platform not to promote or sell any products which are illegal orprohibited for sale under Singapore law, there remains a residual risk that we may be liable for abetting the sale and distribution of such illegal products in breach ofSingapore law if we knew of or had reason to suspect the listing and sale of illegal products on our e-commerce platform but failed to take action to remove suchlistings. 78Table of ContentsRegulations on E-payment The Monetary Authority of Singapore (“MAS”) regulates payment service providers and payment systems in Singapore under the Payment Services Act2019 of Singapore which came into effect on January 28, 2020. Under the Payment Services Act 2019, a license from the MAS is required for providing any type ofpayment service in Singapore unless such service is exempted under the law. The payment services regulated under the Payment Services Act 2019 are “accountissuance service,” “domestic money transfer service,” “cross-border money transfer service,” “merchant acquisition service,” “e-money issuance service,” “digitalpayment token service” and “money-changing service.” In particular, “e-money issuance service” means the service of issuing e-money to any person for the purposeof allowing a person to make payment transactions and “account issuance service” includes the service of issuing a payment account to any person in Singapore.Pursuant to the Payment Services (Exemption for Specified Period) Regulations 2019, certain entities who satisfied the relevant criteria and submitted a notification tothe MAS within the specified timeframe were exempt from holding a license under the Payment Services Act 2019 for the specific payment service(s) for a specifiedperiod. Our subsidiary engaging in providing various payment services obtained its major payment institution license in April 2022. A licensee under the Payment Services Act 2019 is required to comply with the requirements under the Act and its subsidiary legislations, as well as allapplicable notices and guidelines issued by the MAS (including but not limited to Notice PSN01 Prevention of Money Laundering and Countering the Financing ofTerrorism – Holders of Payment Services Licence (Specified Payment Services) and/or Notice PSN02 Prevention of Money Laundering and Countering the Financingof Terrorism – Holders of Payment Service Licence (Digital Payment Token Service)). One such requirement imposed upon a licensee under the Payment Services Act2019 is to provide the MAS with all such information relating to its business of providing any payment service as the MAS may specify by notice in writing. Further,pursuant to Notice PSN01 Prevention of Money Laundering and Countering the Financing of Terrorism – Holders of Payment Services Licence (Specified PaymentServices), unless otherwise exempted, the holder of a license under the Payment Services Act 2019 to provide a specified payment service (i.e., “account issuanceservice,” “domestic money transfer service,” “cross-border money transfer service” or “money-changing service”) must, amongst various things, perform duediligence measures to establish and verify the identity of each customer; maintain data, documents and information relating to transactions; submit reports onsuspicious transactions to the Suspicious Transactions Reporting Office; and implement internal policies, procedures and controls to help prevent money launderingand terrorism financing. A licensee under the Payment Services Act 2019 will also need to comply with the directions and/or regulations issued by the MAS underSection 15 of the Financial Services and Markets Act 2022 in relation to dealing with assets of and/or imposing sanctions on designated persons. In addition to the above, the Payment Services (Amendment) Bill was passed in parliament in 2021 and came into effect on April 4, 2024. The amendmentsinclude but are not limited to widening the definition of “cross-border money transfer service” to include transmission of money between two countries, arranged by apayment service provider in Singapore; and widening the definition of “domestic money transfer service” such that the definition applies except where both the payerand payee of a transaction executed under the service are financial institutions. Transitional arrangements are in place for entities (which are not already licensed toprovide domestic money transfer services and cross-border money transfer services) conducting such activities under the expanded scope. Regulations on Digital Banking Our wholly-owned subsidiary in Singapore (“Singapore DFB”) has been granted a digital full bank (“DFB”) license in Singapore. As the holder of a DFBlicense, our Singapore DFB is required to comply with certain licensing conditions and other prudential and regulatory requirements which include additional conductof business, operational, financial and legal requirements. The Singapore DFB is allowed to conduct banking business in Singapore on a phased basis, which mayinclude the taking of deposits from, the making of advances to and providing banking services to retail and non-retail customer segments. The MAS regulates DFBs under the Banking Act 1970 of Singapore and its subsidiary legislation as well as all applicable notices and other instrumentsissued by the MAS, subject to certain modifications (as set out in the publication “Eligibility Criteria and Requirements for Digital Banks” issued by the MAS).Generally, a fully functioning DFB will be able to conduct all banking business as existing qualifying full banks and will be subject to the full range of laws, regulationsand prudential rules that apply to such banks. This includes complying with the notices and regulations surrounding ongoing risk-based capital and liquidityrequirements, unsecured lending, anti-money laundering and countering the financing of terrorism, economic sanctions, corporate governance, risk management,technology risk and the conduct of non-financial businesses. However, it should be noted that DFBs are (i) only allowed to operate one physical “place of business”(being a place where a bank conducts banking business or other regulated businesses), (ii) not allowed to access the automatic teller machine or cash deposit machinenetwork, but will be able to offer cashback services through EFTPOS terminals at retail merchants, and (iii) will be required to comply with same risk based capitalrequirements applicable to domestic systemically important banks. 79Table of ContentsA DFB will commence operations as a restricted DFB before becoming a fully functioning DFB. Whilst a DFB will eventually be expected to comply with theminimum paid-up capital requirement set by the MAS of S$1.5 billion (US$1.1 billion) which is applicable to all existing qualifying full banks, prior to it becoming a fullyfunctioning DFB, the minimum paid up capital requirement applicable to a restricted DFB will initially be reduced to S$15 million (US$11.4 million). This minimum paidup capital requirement will progressively increase as the restricted DFB grows. Unless otherwise agreed with MAS, a restricted DFB will also be subject to variousrestrictions on its business, including but not limited to (i) deposit caps of S$75,000 (US$56,848) per individual depositor and S$50 million (US$37.9 million) inaggregate deposits, (ii) restrictions on who the DFB may take deposits from, (iii) restrictions on unsecured lending, (iv) restrictions on the safeguarding of “relevantmoney” as defined under the Payment Services Act 2019, and (v) restrictions on the types of investment products the DFB may offer, as well as (vi) restrictions onproprietary trading. These restrictions will progressively be lifted as the DFB grows. The pace of growth of a restricted DFB will depend on its ability to meet itscommitments as well as MAS’ supervisory considerations. Once a restricted DFB has met all relevant milestones and has been assessed by the MAS to pose nosignificant supervisory concerns, the MAS will lift all restrictions and the restricted DFB will become a fully functioning DFB. The MAS generally expects a DFB to befully functioning and to meet the minimum paid-up capital requirement of S$1.5 billion (US$1.1 billion) within three to five years from commencement of business. Regulations on buy-now-pay-later services In Singapore, the Buy Now, Pay Later (“BNPL”) Working Group, formed by the Singapore FinTech Association and industry players under the guidance ofMAS, introduced a self-governing Code of Conduct (“BNPL CoC”) for BNPL operators in Singapore. The BNPL CoC is aimed at the safeguarding of consumersagainst over-indebtedness, ensuring that BNPL offerings will have a positive impact on Singaporean consumers and to benefit the BNPL ecosystem. It signifies theindustry’s commitment to abide by a fixed set of standards by crystallizing industry best practices and formalizes safeguards such as the suspension of accounts ondefault, no compounding of interest or fees and no initiation of bankruptcy proceedings as against the consumer. The requirement for BNPL operators to participate ina BNPL credit bureau is also enshrined in the BNPL CoC. All new and existing BNPL operators are expected to comply with the BNPL CoC from November 1, 2023.MAS will monitor the BNPL sector and continue to engage the industry as part of subsequent reviews of the BNPL CoC as necessary. Regulations on debt collection services The Debt Collection Act 2022 of Singapore governs debt collection activities in Singapore and came into effect on December 1, 2023. Under the DebtCollection Act 2022, a license is required for a debt collection business or any debt collection in the course of business, and a class license is required for anyone witha regulated business and has debt collection in the course of the regulated business. As a holder of a DFB license, our Singapore DFB is authorized by the classlicense to carry out debt collection activities under the Debt Collection Act 2022, to collect any debt owed to it in the course of its regulated business, subject tocertain conditions relating to the conduct of its debt collection activities. A licensee is further prohibited from deploying an individual as a debt collector unless thelicensing officer has granted approval for the individual to be deployed as a debt collector, or in the case of a class licensee, the individual is employed by the classlicensee and meets certain other prescribed eligibility requirements. A person who carries on a debt collection business or carries out any debt collection activity inSingapore in the course of its business without a valid license on or after March 1, 2024 will be guilty of an offence which will attract a fine of up to S$20,000(US$15,160) or imprisonment for a term not exceeding two years, or both. 80Table of ContentsRegulations on Imported Games and Game Operating Video Game Classification Pursuant to the Films Act 1981 of Singapore, the IMDA is responsible for classifying films, videos and video games distributed in Singapore. In particular, itadministers the video game classification system under the Films Act 1981, which requires businesses importing or distributing physical copies of video games inSingapore to submit the video games to the IMDA for rating and classification. However, the video game classification system does not apply to games which areonly available via internet download. Since the online games that we offer are available only through online platforms, we in general are not subject to the video gameclassification system. However, the IMDA retains the right to issue a rating and/or classification of any of the online games we offer, should it choose to do so. Films Regulation The Films Act 1981 imposes a regulatory requirement for an organization to hold a license for importing, distributing or publicly exhibiting films in the courseof any business. A film is defined to include a video game. However, the definition of a video game under the Films Act 1981 expressly excludes a video game madeavailable by means of a computer online service that is a broadcasting service and is played on a mobile device or other device onto which the video game has beeninstalled, or while the player is using a broadcasting service that enables end-users to access the Internet. Since the online games that we offer are available onlythrough online platforms, we are exempted from having to comply with the abovementioned requirement to obtain a license. Regulations on Data Protection and Information Security Personal Data Protection The Personal Data Protection Act 2012 of Singapore governs the collection, use and disclosure of the personal data of individuals by organizations, and isadministered and enforced by the regulator, the Personal Data Protection Commission. It sets out data protection obligations which all organizations are required tocomply with in undertaking activities relating to the collection, use or disclosure of personal data. A failure to comply with any of the above can subject anorganization to a fine per breach of up to S$1 million (US$757,978) or 10% of the organization’s annual turnover in Singapore, whichever is higher. An online game operator or e-commerce company is required to comply with the Personal Data Protection Act. Among other things, such company isrequired to obtain consent from its customers and inform them of the applicable purposes before collecting, using or disclosing their personal data. Moreover, it isalso required to put in place sufficient measures to protect the personal data in its possession or control from unauthorized access, loss or damage. Pursuant to the Personal Data Protection Commission’s Advisory Guidelines on the Personal Data Protection Act for NRIC and other National IdentificationNumbers, an organization such as an online game operator or e-commerce company is not permitted to collect, use or disclose an individual’s identification numberunless under certain exceptions. In the event of a data breach involving any personal data in an organization’s possession or control, the Personal Data Protection Act 2012 requires theorganization to reasonably and expeditiously assess the data breach, and notify the Personal Data Protection Commission of the data breach if it is assessed to be onethat: (a) is likely to result in significant harm or impact to the individuals to whom the information relates, or (b) involves personal data of 500 or more individuals. Inaddition to notifying the Personal Data Protection Commission, organizations are also required to notify the affected individuals if the data breach is one that is likelyto result in significant harm or impact to the affected individuals. Regulations on Intellectual Property Rights The Intellectual Property Office of Singapore administers the intellectual property legislative framework in Singapore, which includes copyrights, trademarksand patents. Singapore is a member of the main international conventions regulating intellectual property matters, and the WTO’s Agreement on Trade RelatedAspects of Intellectual Property Rights. 81Table of ContentsCopyright Pursuant to the Copyright Act 2021 of Singapore, authors of protected works enjoy various exclusive rights, including the rights of reproduction andcommunication to the public. Generally, an author will automatically enjoy copyright protection as soon as he creates and expresses an original work in a tangibleform. Authors and performers also have a distinct right to be identified whenever their works or performances are used in public unless exceptions apply. Forcommissioned works, the copyright will be owned by the author by default, unless otherwise agreed by contract. On the other hand, employers by default own thecopyright in all content created by their employees in the course of the employees’ employment, unless otherwise agreed by contract. There is no need to file for registration to obtain copyright protection. Copyright works sent over the internet or stored on web servers are treated in thesame manner as copyright material in other media. Online games and computer programs would qualify for copyright protection, for example, as literary works, artisticworks and/or cinematograph films. Trademarks Singapore operates a first-to-file system in respect of registered trademarks under the Trade Marks Act 1988 of Singapore, and the registered proprietor isgranted a statutory monopoly of the trademark in Singapore in relation to the product or service for which it is registered. In the event of any trademark infringement,the registered proprietor will be able to rely on the registered trademark as proof of his right to the mark, and the infringement of a trademark may give rise to civil andcriminal liabilities. Statutory protection of a registered trademark can last indefinitely, as long as the registration is renewed every 10 years. Patents The Patents Act 1994 of Singapore confers protection on patentable inventions on a first-to-file basis in Singapore, provided that the invention satisfies therequirements of novelty, having an inventive step and industrial applicability. Patents are valid for 20 years from the date of filing, subject to the payment of annualrenewal fees. During the life of the patent, the owner will have the exclusive right to exploit the invention that is the subject of the patent. Regulations on Anti-Money Laundering and Prevention of Terrorism Financing The primary anti-money laundering legislation in Singapore is the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act 1992of Singapore (“CDSA”), provides for the confiscation of benefits derived from, and to combat, corruption, drug dealing and other serious crimes. Generally, the CDSAcriminalizes the concealment or transfer of the benefits of criminal conduct as well as the knowing assistance of the concealment, transfer or retention of such benefits. The Terrorism (Suppression of Financing) Act 2002 of Singapore (“TSOFA”), is the primary legislation for the combating of terrorism financing. It wasenacted to give effect to the International Convention for the Suppression of the Financing of Terrorism. Besides criminalizing the laundering of proceeds derived fromdrug dealing and other serious crimes and terrorism financing, the CDSA also requires suspicious transaction reports to be lodged with the Suspicious TransactionReporting Office and the TSOFA requires information about any property belonging to any terrorist or terrorist entity to be reported to the Commissioner of Police. Ifany person fails to lodge the requisite reports under the CDSA and the TSOFA, it may be subject to criminal liability. Regulations on Labor The Employment Act 1968 of Singapore generally extends to all employees regardless of their designation, salary level or type of work performed, with theexception of certain groups of employees. It provides employees falling within its ambit certain protections such as minimum notice periods, maximum working hours,maximum amount of deductions from wages, minimum holidays and rest days, maternity/paternity leave, paid childcare leave, sick leave, etc. The SingaporeEmployment Act also applies to employees who are foreigners so long as they fall within the definition of “employee” under the Employment Act. In addition, theemployment of foreign manpower in Singapore is also governed by the Employment of Foreign Manpower Act 1990 of Singapore. Aside from minimum benefits inrespect of the aforesaid terms of employment in the Employment Act and CDCSA, employees in Singapore are entitled to contributions to the central provident fundby the employer as prescribed under the Singapore Central Provident Fund Act 1953 (the “Singapore Central Provident Fund Act”). The specific contribution rate tobe made by employers varies depending on whether the employee is a Singapore citizen or permanent resident in the private or public sector and the age group andwage band of the employee. Generally, for employees who are Singapore citizens in the private sector or non-pensionable employees in the public sector, 55 years oldor below and that earn more than S$750 (US$568) a month, the employer’s contribution rate is 17% of the employee’s wages. 82Table of ContentsMalaysia Regulations on Foreign Investment There are no overarching foreign investment laws in Malaysia, but there may be restrictions on the direct and/or indirect foreign shareholding in a companydepending on the types of licenses or permits that the company may hold to carry out its business activities in Malaysia. Regulations on Dividend Distributions The governing legislation for the distribution of dividends in Malaysia is the Companies Act 2016 (“CA 2016”). Under Section 131 of the CA 2016, aMalaysian company may only distribute dividends out of profits available if the company is solvent. Under the CA 2016, the company is regarded as solvent if it isable to pay its debts as and when they become due within 12 months immediately after the distribution is made. Further, the distribution of dividend must be incompliance with the relevant provisions of the CA 2016 (e.g., where any distribution of dividend must be authorized by the directors of the company before suchdistribution is made) and the company’s constitution. Regulations on Foreign Exchange Ringgit is the lawful currency of Malaysia. Payments between persons in Malaysia should be in ringgit, unless foreign currency is permitted under theforeign exchange policy (the “FEP”). The BNM, has a policy against the internationalization of ringgit, therefore ringgit exchange rates must be determined onshore inMalaysia, and there are restrictions on the outflow of ringgit under the FEP. Malaysia has FEP restrictions based on provisions in the Financial Services Act 2013 (“FSA”). Pursuant thereto, a wide range of transactions (these includepayments and receipts, exchange of currency) set out in Schedule 14 to the FSA are subject to the prior written approval of BNM. BNM issues FEP Notices setting outits general approval on the terms therein. Where a transaction comprises different aspects which require BNM approval under Schedule 14 to the FSA, BNM approvalhas to be obtained (either a general approval granted in the FEP Notices or approval applied for on an ad hoc basis) for each such aspect requiring approval, and BNMhas discretion whether to grant or not to grant the ad hoc approval subject to conditions. The FEP restrictions principally apply to transactions between “residents” and “non-residents” as defined in the FSA. Foreign investors are generallypermitted to invest in ringgit denominated assets and repatriate dividends, profits and other income in foreign currency with certain limited exceptions. Under the FEP,the conversion of ringgit into foreign currency may be freely effected onshore with licensed banks or money-changers with certain limited exceptions. Regulations on E-commerce The relevant laws governing Malaysia’s e-commerce include Electronic Commerce Act 2006, Digital Signature Act 1997, Consumer Protection Act 1999(“CPA”), Consumer Protection (Electronic Trade Transactions) Regulations 2012 (“CPR 2012”), Sale of Goods Act 1957, Contracts Act 1950, and Personal DataProtection Act 2010 (“PDPA”). 83Table of ContentsLimitations and Liabilities of Platform Operators and E-commerce Sellers There is no specific Malaysian legislative framework setting out the limitations and liabilities of online platform operators and e-commerce sellers. Consumerrights are protected under the CPA, which requires sellers offering goods and services by electronic means to comply with certain standards. The CPA implieswarranties among others as to reasonable care and skill, fitness for a particular purpose, reasonable time of completion and reasonable price, and prohibits misleadingand deceptive conduct, the making of false or misleading representations and the imposition of unfair contract terms. Sellers are prohibited from applying false tradedescription under the Trade Descriptions Act 2011. Specific products such as sale of price-controlled products, drugs, medical devices, food and cosmetic productsare subject to additional regulatory requirements. E-commerce sellers are required to provide appropriate means to enable the buyer to rectify any errors prior to theconfirmation of the order and shall acknowledge receipt of the order to the buyer without undue delay under CPR 2012. E-commerce sellers are also required todisclose the following information on the website or online marketplace: (i) the name, (ii) registration number of businesses or company, (iii) email address and phonenumber, (iv) a description of the main characteristics of the goods supplied, (v) full price of the goods, (vi) method of payment, (vii) terms and conditions and (viii) theestimated time of delivery of the goods to the buyer. Online marketplace operators, on the other hand, are required to take reasonable steps to keep and maintain arecord of the names, telephone numbers and the address of the person who supplies goods or services in the online marketplace, for a period of two years. With respect to user generated content (“UGC”), the concept of innocent carrier embedded in the Malaysian Communications and Multimedia Content Code(3rd edition, 2022) (the “Content Code”), which provides that any service providers providing access to any content but have neither control over the composition ofsuch content nor any knowledge of such content is deemed an innocent carrier for the purpose of the Content Code. An innocent carrier is generally not responsiblefor the content provided. UGC platforms must have a clear notice and take-down policy implemented to ensure that potentially infringing UGC can be reported byplatform users and that rights holder can request the withdrawal of specific content with ease. Further, UGC platform operators should have a filtering system toremove offensive or defamatory content because there is a presumption that the platform or portal provider must assume responsibility for taking the risk offacilitating a platform. Regulations on Personal Data Protection and Information Security The PDPA regulates the processing of personal data in commercial transactions. The PDPA applies insofar as personal data of customer is processed (forexample, name, identification card number, address, phone number, email address). The definition of “personal data” under the PDPA includes any information inrespect of commercial transactions, which relates directly or indirectly to a data subject, who is identified or identifiable from that information or from that and otherinformation in the possession of a data user, including any sensitive personal data and expression of opinion about the data subject. The PDPA sets out sevenpersonal data protection principles to be complied with: General Principle, Notice and Choice Principle, Disclosure Principle, Security Principle, Retention Principle,Data Integrity Principle, and Access Principle. Additionally, the Personal Data Protection Regulations 2013 and the Personal Data Protection Standard 2015 set out indetail the requirements to be complied with in respect of the seven principles. Regulations on Electronic Money Electronic money (e-money) is a designated payment instrument under the FSA. It is defined as a payment instrument, whether tangible or intangible thatstores funds electronically in exchange of funds paid to the issuer, and can be used as a means of making payment to any person other than the issuer. The approval of BNM under the FSA is required before a person may carry on an issuance of e-money business. An issuer of e-money must comply withobligations in the FSA and subsidiary legislation issued thereunder on approved persons which include, without limitation, maintaining minimum capital funds at alltimes, complying with applicable standards issued by BNM and submission of information to BNM. The Electronic money (e-money) policy document prescribes broad principles (relating to, among others, having adequate governance and operationalrequirements, proper risk management, transparency of terms, timely refund of stored value, and prevention of the use of e-money for financial crimes) and minimumstandards to be observed by an issuer. A large e-money scheme operator must place users’ funds in a trust account with a licensed institution and apply them in themanner prescribed. As a financial services provider, an issuer of e-money may not engage in prohibited business conduct set out in Schedule 7 of the FSA, assupplemented by policy documents of BNM and must maintain secrecy of customer information unless an exemption applies. BNM may revoke its approval of an approved person on the grounds set out in section 20 of the FSA, which include, without limitation, it has provided BNMwith false, misleading or incomplete information in its application for approval, it ceases to carry on its approved business, it has breached the FSA, the Central Bankof Malaysia Act 2009 or any standard or directive under those Acts applicable to it, BNM is of the opinion that it has ceased to be viable, it is in the interests ofconsumers of financial services to do so or it is wound-up or dissolved. 84Table of ContentsRegulations on Merchant Acquiring Services BNM regulates an operator of a payment system that enters into a contract with a merchant for the purpose of accepting payment instruments for payment ofgoods and services as conducting merchant acquiring services under the FSA. Each such operator must be registered with BNM as a merchant acquirer and mustcomply with standards specified by BNM at all times. The merchant acquiring services policy document primarily sets out requirements on governance and oversight, operational risk management andinformation technology management of registered merchant acquirers, including the roles and responsibilities of directors and senior managers, minimum capitalrequirements for non-bank acquirers, and minimum checks and procedures to be conducted when on-boarding/ recruiting new merchants. As a financial servicesprovider, a merchant acquirer may not engage in prohibited business conduct set out in Schedule 7 of the FSA, as supplemented by policy documents of BNM. Regulations on Lending Moneylending is regulated under the Moneylenders Act 1951 in Malaysia (unless any of the limited exceptions apply) principally by the requirement thatany person who carries on or advertise or announces itself or hold itself in any way as carrying on the business of moneylending (defined as the lending of money atinterest, with or without security to a borrower) must be licensed and the moneylending agreement must be in the prescribed form. The Ministry of Housing and LocalGovernment of Malaysia (“KPKT”) is the regulator administering the provisions of the Moneylenders Act 1951 and have also issued guidelines in connection withthe Moneylenders Act 1951 including its Guidelines on Online Moneylending applicable to licensed online moneylenders. Compounding of interest is prohibited and the moneylending agreement must be attested by any of the specified persons who must explain the terms thereofto the borrower. Any moneylending agreement entered into by an unlicensed moneylender is unenforceable. A licensed moneylender must apply for an advertisementpermit to advertise its moneylending business, and also observe the operational requirements set out in the Moneylenders Act. Regulations on Buy Now Pay Later Products In July 2021, the Malaysian Government announced the formulation of a new legislation called the Consumer Credit Act (“CCA”) aimed at consolidation ofthe credit industry regulatory framework in Malaysia. The CCA will establish an independent authority, known as the Consumer Credit Oversight Board (“CCOB”),which will focus on regulating currently unregulated credit businesses such as BNPL businesses, factoring and leasing, impaired loan buyers and debt collectionagencies. Existing regulatory and supervisory authorities of the credit industry will continue to regulate their respective credit sectors in accordance with existinglegislation. The Consumer Credit Bill is targeted for tabling to Parliament in the second quarter of 2024. Regulations Relating to Game Business Content moderation Multimedia and communications activities are under the purview of the Malaysian Communications and Multimedia Commission, a statutory bodyestablished under the Malaysian Communications and Multimedia Commission Act 1998. Section 211 of the Communications and Multimedia Act 1998 (“CMA”) provides that no content applications service provider, or other person using acontent applications service, shall provide content which is indecent, obscene, false, menacing, or offensive in character with intent to annoy, abuse, threaten orharass any person. To the extent an online game falls within the definition of “content” and that the provision thereof through the Internet can be considered as“Internet content applications service,” such provision will apply. Pursuant to the CMA, the Content Code was issued to set out the guidelines and procedures forgood practice and standards of content disseminated to audiences. This Content Code is enforced by the Malaysian Communications and Multimedia Content Forumand it sets out the guidelines and procedures for good practice and standards of content disseminated to audiences over the electronic network medium by serviceproviders in the communications and multimedia industry. Compliance with the Content Code is voluntary but can be relied upon as a defense against anyprosecution, action or proceeding of any nature whether in court or otherwise. Under the Content Code, the material disseminated must not include anything whichoffends good taste or decency, is offensive to public feeling, is likely to encourage crime or lead to disorder, or is abusive or threatening in nature. 85Table of ContentsRegulations on Intellectual Property Rights The intellectual property laws of Malaysia comprise the following main legislation: the Patents Act 1983, Copyright Act 1987, Industrial Designs Act 1996,Layout-Designs of Integrated Circuits Act 2000, Trademarks Act 2019, and Geographical Indications Act 2022. The administration and practice of these laws comeunder the purview of the Intellectual Property Corporation of Malaysia (“MyIPO”). There are other areas of intellectual property law that may be governed by commonlaw rights including the tort of passing off and the law of confidence. Malaysia is a signatory to the main international conventions regulating intellectual propertymatters, the Agreement on Trade-Related Aspects of Intellectual Property Rights, and has acceded to the Madrid Protocol. Trademark Trademarks in Malaysia are governed by the Trademarks Act 2019, and the Trademarks Regulations 2019. Once a trademark is registered, the registeredproprietor of trademark has the exclusive rights to use the trademark and authorize other persons to use the trademark, in relation to the goods or services for whichthe trademark is registered. Upon registration, the registered trademark is valid for 10 years from the date of filing of the application and is renewable for furtherperiods of 10 years each thereafter. Subject to limited exceptions, no person or enterprise other than the registered proprietor or persons authorized by the registeredproprietor may use the trademark, otherwise infringement actions may be taken against such person or enterprise. Copyrights The main governing legislation for copyright law in Malaysia is the Copyright Act 1987 (“CA 1987”). Pursuant to the CA 1987, authors of protected worksenjoy various exclusive rights, including the rights of reproduction in any material form of the works, communication to the public, performance, showing or playing tothe public of the works, and distribution of copies to the public by sale or other transfer of ownership. Literary works, musical works and artistic works will be eligiblefor copyright if sufficient effort has been made to make the works original in character; and the works have been written down, recorded or otherwise reduced to amaterial form. There is no formal system for registration of copyright in Malaysia. Copyright is conferred on a work once all the statutory requirements for eligibilityand qualification are met. The ownership of copyright in Malaysia can however be recorded formally with the Director General of MyIPO through the CopyrightVoluntary Notification System or evidenced by way of a statutory declaration under section 42 of the CA 1987. Online games and computer programs would qualify forsuch copyright protection. Patents In Malaysia, the Patents Act 1983 (“PA”), and the Patents Regulations 1986 govern the protection of an invention that is new, involves an inventive step, isindustrially applicable and must not be explicitly excluded by the PA. An invention may relate to a product or process, but specifically does not include, amongstothers, discoveries, rules or methods for doing business, playing games, etc. Subject to yearly renewal, the period of patent protection (for patent applications filed onor after August 1, 2001) is a maximum of 20 years from the date of filing. The PA grants the owner of a patent the exclusive rights to exploit the patented invention,assign or transmit the patent, conclude licensee contracts, and to deal with the patent as the subject of a security interest. Any person seeking to deal with a patentwhere the rights are exclusive to the owner will need to get prior consent from the latter. A patent is infringed when, without authorization of the owner, a personperforms any of the acts under the exclusive control of the patent owner, including the manufacture, importation, offer for sale, sale, or use of the patented product orprocess. Regulations on Anti-money Laundering and Prevention of Terrorism Financing Prevention and Eradication of Money Laundering Malaysia is a member of the Financial Action Task Force (“FATF”). The Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of UnlawfulActivities Act 2001 (“AMLA”) is the statute that imposes obligations on prevention of money-laundering and terrorism financing based on the FATF’s 40recommendations. BNM is the competent authority under the AMLA. 86Table of ContentsEntities conducting any activity listed in the First Schedule to the AMLA, including amongst others issuer of e-money, are designated as reportinginstitutions which have specific obligations set out in Part IV of the AMLA to, among others, conduct customer due diligence, maintain records thereof, appoint acompliance officer, conduct audit on its compliance with the AMLA and guidelines issued by BNM and submit suspicious transaction reports to BNM. Therequirement on cash threshold reports for certain reporting institutions is also applicable to customers and person conducting single or multiple cash transactionswithin the same account on the same day for an amount equivalent to RM25,000 (US$5,446) and above. Such reports must be filed within the time prescribed by BNMand are in addition to the obligation to file a suspicious transaction report where applicable. Prevention and Eradication of Terrorism Financing and Proliferation Financing The prevention of terrorism financing in the AMLA is through the obligations in Part VIA thereof to maintain and update a sanctions database based onUnited Nations Security Council Resolutions (UNSCR) list and domestic list by the Minister of Home Affairs, and to screen the names of customers and any beneficialowners, beneficiaries (new, existing and potential) and related parties against the sanctions lists. A person on a sanctions list is referred to as a specified entity.Periodic reporting of positive name matches must be made to BNM. Regulations on Labor Employment and industrial relations in Malaysia are mainly governed by the Employment Act 1955 (“EA”). The requirements under the EA of Malaysia applies to all employees that entered into a contract of service regardless of wages, with certain exceptions forprescribed categories of employees such as employees earning more than RM4,000 (US$871) per month wherein provisions in the EA relating to among others,overtime payments and termination benefits do not apply to such employees. The EA provides for the minimum terms and conditions of employment, while theNational Wages Consultative Council Act 2011 and Minimum Wages Order 2022 provide for the minimum salary to be paid to prescribed employees. The EA also applies to employees who are foreigners so long as they fall within the definition of “employee” under the EA. Aside from minimum benefitsunder the EA, both employees and employers in Malaysia are required to contribute towards: the Employees Provident Fund, the Employment Insurance System aswell as the Employees Social Security Fund. The contributions are premised on the statutorily prescribed rates under the Employees Provident Fund Act 1991,Employment Insurance System Act 2017 and Employees’ Social Security Fund Act 1969. C.Organizational Structure Sea Limited is a holding company that does not have substantive operations. We conduct our business operations through our subsidiaries, branch offices,and consolidated affiliated entities. Our significant subsidiaries, as that term is defined in Rule 1-02(w) of Regulation S-X, include the following entities (inchronological order based on their dates of incorporation): •Garena Online Private Limited, our wholly-owned subsidiary established in Singapore operating our digital entertainment business; •Shopee Limited, our wholly-owned subsidiary established in the Cayman Islands holding certain of our e-commerce subsidiaries; •Shopee Singapore Private Limited, our wholly-owned subsidiary established in Singapore operating our e-commerce business in Singapore; •PT Shopee International Indonesia, our wholly-owned subsidiary established in Indonesia operating our e-commerce business in Indonesia; 87Table of Contents•Sea Services Limited, our wholly-owned subsidiary established in the Cayman Islands which is an investment holding company for certain of oursubsidiaries used mainly for holding treasury investments such as available-for-sale sovereign bonds and corporate bonds; and •Sea Services Holdings Limited, our wholly-owned subsidiary established in the Cayman Islands which is an investment holding company primarilyholding treasury investments such as available-for-sale sovereign bonds and corporate bonds. Contractual Arrangements among Our VIEs, Their Shareholders and Us The laws and regulations in some of our markets place restrictions on foreign investment in and ownership of entities engaged in a number of businessactivities. To comply with the relevant laws and regulations, we and certain of our wholly-owned subsidiaries in the Cayman Islands and Singapore have entered intoa series of contractual arrangements with certain VIEs and their shareholders who are local citizens. For the year ended December 31, 2023, revenue from all our VIEs(which excludes entities for which we have majority direct equity ownership) accounted for less than 5% of our total revenue. None of our VIEs is individually asignificant subsidiary as defined in Rule 1-02(w) of Regulation S-X. The contractual arrangements allow us to: •exercise effective control over our VIEs, including the ability to direct the VIE shareholders to vote at our direction and have the ability to replace each ofthem as a VIE shareholder; •receive substantially all of the economic benefits and absorb losses of our VIEs; and •have an exclusive call option to purchase all or part of the equity interests in and/or assets of our VIEs when and to the extent permitted by the relevantlaws. As a result of these contractual arrangements, we are the primary beneficiary of these VIEs and have consolidated their financial results in our consolidatedfinancial statements in accordance with U.S. GAAP. However, these contractual arrangements may not be as effective in providing operational control as directownership and the use of the contractual arrangements in some jurisdictions where we operate exposes us to certain risks. See “Item 3. Key Information—D. RiskFactors—Business and Operational Related Risks—Other Operational Risks—We rely on structural arrangements to establish control over certain entities andgovernment authorities may determine that these arrangements do not comply with existing laws and regulations. We are also subject to other risks relating to suchstructural arrangements.” The following is a summary of the currently effective contractual arrangements by and among us, our VIEs and their respective shareholders. Contracts that Give Us Effective Control of the VIEs Loan Agreements In order to ensure that the shareholders of our VIEs are able to provide capital to each of these entities in order to develop its business, we have entered intoloan agreements with each shareholder. Pursuant to the loan agreements, we have granted loans to the shareholders that may only be used for the purpose ofacquiring equity interests in or contributing to the registered capital of these entities. The time and manner for repayment of the loans are at the sole discretion of ourlending entity. The loans may be repaid only by the shareholders transferring all of their equity interests in the VIE to us or our designee upon our exercise of theoptions under the exclusive option agreements. The loan agreements also prohibit the shareholders from assigning or transferring to any third party, or from creatingor causing any security interest to be created on, any part of their equity interests in these entities. In the event that the shareholders sell their equity interests to usor our designee at a price which is equal to or lower than the principal amount of the loan, the loan will be interest-free. If the price is higher than the principal amountof the loans, the excess amount will be deemed to be interest on the loans payable by the shareholders to us. 88Table of ContentsExclusive Option Agreements In order to ensure that we are able to acquire all of the equity interests in our VIEs at our discretion, we have entered into exclusive option agreements withthe respective shareholders of these VIEs. Each option is exercisable by us at any time, provided that doing so is not prohibited by law. The exercise price under eachoption is the minimum amount required by law and any proceeds obtained by the respective shareholders through the transfer of their equity interests in these entitiesshall be used for the repayment of the loan provided by us in accordance with the loan agreements. During the terms of the exclusive option agreements, theshareholders will not grant a similar right or transfer any of the equity interests in these entities to any party other than us or our designee, nor will such shareholderpledge, create or permit any security interest or similar encumbrance to be created on any of the equity interests. According to the exclusive option agreements, theVIEs cannot declare any profit distributions or grant loans in any form without our prior consent. The shareholders must remit to us or our designee in full any fundssuch shareholders receive from the VIEs in the event any distributions are made by the VIEs. The exclusive option agreements will remain in effect until the respectiveshareholder has transferred all of such shareholder’s equity interests in the VIE entity to us or our designee. Powers of Attorney In order to ensure that we are able to make all of the decisions concerning our VIEs, we have entered into powers of attorney with the shareholders of theseVIEs. Pursuant to the powers of attorney, each shareholder of our VIEs has irrevocably appointed us as such shareholder’s attorney-in-fact to act for all matterspertaining to such shareholder’s shareholding in the VIE entities and to exercise all of their rights as shareholders, including but not limited to attending shareholders’meetings and designating and appointing directors, supervisors, the chief executive officer and other senior management members of these entities, and selling,transferring, pledging or disposing the shares of these entities. We may authorize or assign our rights under this appointment to any other person or entity at our solediscretion without prior notice to or prior consent from the shareholders of these entities. Each power of attorney will remain in effect until these shareholders cease tohold any equity interest in the relevant VIE. Equity Interest Pledge Agreements In order to secure the performance of our VIEs and their shareholders under the contractual arrangements, each of the shareholders of our VIEs has pledgedall of their shares to us. These pledges secure the contractual obligations and indebtedness of such VIE shareholders, including all penalties, damages and expensesincurred by us in connection with the contractual arrangements, and all other payments due and payable to us by the relevant VIE under the exclusive businesscooperation agreements, and by the VIE shareholders under the loan agreements, exclusive option agreements, and powers of attorney. Should the VIE or the VIEshareholder breach or default under any of the contractual arrangements, we have the right to require the transfer of such VIE shareholders’ pledged equity interestsin the relevant VIE to us or our designee, to the extent permitted by laws, or require a sale of the pledged equity interest and have priority in any proceeds from theauction or sale of such pledged interests. Moreover, we have the right to collect any and all dividends in respect of the pledged equity interests during the term of thepledge. Unless the relevant VIEs have fully performed all of their obligations in accordance with the exclusive business cooperation agreements and the pledgedequity interests have been fully transferred to us or our designee in accordance with the exclusive option agreements and the loan agreements, the equity interestpledge agreements will continue to remain in effect. Spousal Consent Letters Under the spousal consent letters, each spouse of the married shareholders of our VIEs unconditionally and irrevocably agreed that the equity interest in therelevant entity held by and registered in the name of their spouse will be disposed of pursuant to the contractual arrangements. Each spouse agreed not to assert anyrights over the equity interest in these entities held by their spouse. In addition, in the event that the spouses obtain any equity interest in these entities held by theirspouse for any reason, they agree to be bound by the contractual arrangements. All of the contractual arrangements as described above will be terminated once the respective shareholder has transferred all of such shareholder’s equityinterests in the VIE entity to us or our designee. 89Table of ContentsContracts that Enable Us to Receive Economic Benefits or Absorb Losses from the VIEs Exclusive Business Cooperation Agreements In order to ensure that we receive the economic benefits of our VIEs, we have entered into exclusive business cooperation agreements with these entitiesunder which we have the exclusive right to provide or to designate any third party to provide, among other things, technical support, consulting services, intellectualproperty licenses and other services to these entities, and these entities agree to accept all the services provided by us or our designee. Without our prior writtenconsent, our VIEs are prohibited from directly or indirectly engaging any third party to provide the same or any similar services under these agreements orestablishing similar cooperative relationships with any third party regarding the matters contemplated by these agreements. In addition, we have exclusive andproprietary ownership, rights and interests in any and all intellectual properties arising out of or created during the performance of these agreements. Our VIEs agree to pay a monthly fee to us at an amount determined at our sole discretion after taking into account factors including the complexity anddifficulty of the services provided, the level of and time consumed by our employees or our designee for providing the services, the content and value of services andlicenses provided and the market price of the same type of services or licenses. These agreements will remain effective unless terminated in accordance with theirprovisions or terminated in writing by us. Unless otherwise required by applicable laws, these entities do not have any right to terminate these agreements in anyevent. We have the right to terminate the exclusive business cooperation agreements and/or require these entities to indemnify all damages in the event of anymaterial breach of any term of these agreements by them. These entities agree to indemnify and hold us harmless from any losses, injuries, obligations or expensescaused by any lawsuits, claims or other demands against us arising from or caused by the services that we provide to these entities pursuant to the exclusivebusiness cooperation agreements, except where such losses, injuries, obligations or expenses arise from our own gross negligence or willful misconduct. Financial Support Confirmation Letters In order to ensure that our VIEs have sufficient cash flow to fund their daily operations and/or to set off any losses incurred in such operations, we haveentered into financial support confirmation letters with each of these entities. Under the financial support confirmation letters, we pledge to provide continuousfinancial support to these entities by ourselves or through our designees and agreed to forego our right to seek repayment in the event these entities are unable torepay such financial support or we become liable for the liabilities of these entities. These entities agree to accept such financial support and pledge to only use suchsupport to develop their respective businesses. To the extent permitted by law, the financial support we provide to these entities may take the form of loans,borrowings or guarantees. Based on opinions from our external legal counsels, we believe the ownership structure of our VIEs are generally in compliance with the local laws orregulations that are currently in effect, and each of the agreements among us, our VIEs and/or the local shareholders is valid, binding and enforceable, and do not andwill not result in any violation of such laws or regulations that are currently in effect. However, uncertainties in the relevant legal system could cause the relevant regulatory authorities to find the current contractual arrangements andbusinesses to be in violation of any existing or future relevant laws or regulations. In addition, if the VIEs or the shareholders of the VIEs fail to perform theirobligations under the contractual arrangements, we may have to incur substantial costs and expend resources to enforce our rights as the primary beneficiary underthe contracts. See “Item 3. Key Information—D. Risk Factors—Business and Operational Related Risks—Other Operational Risks—We rely on structuralarrangements to establish control over certain entities and government authorities may determine that these arrangements do not comply with existing laws andregulations. We are also subject to other risks relating to such structural arrangements.” 90Table of ContentsThailand Shareholding Structure Our operating entities in Thailand are established using a tiered structure that maximizes our equity interests in the entity while also complying with the Thailaw requirement that each Thai company has the minimum number of required shareholders and, without approval from Thai authorities, direct foreign ownership ofshare capital of each entity operating the restricted business under the Thai Foreign Business Act is limited to less than 50%. As Thai laws only consider theimmediate level of shareholding, no cumulative or look-through calculation is applied to determine the foreign ownership status of a company when it has severallevels of foreign shareholding. Under this shareholding structure, our Thai operating entities are each owned by (i) a Thai entity, or Thai Holdco 1, holding slightlymore than half of the shares and (ii) one of our Cayman Islands or Singapore subsidiaries holding slightly less than half of the shares. Thai Holdco 1 is then owned by(i) another Thai entity, or Thai Holdco 2, and (ii) our Cayman Islands or Singapore subsidiary in the same shareholding proportions that our Thai operating entities areheld. Thai Holdco 2 is in turn held by (i) one of our employees, who is a Thai citizen, holding preference shares equivalent to slightly more than half of the totalnumber of shares, and (ii) our Cayman Islands or Singapore subsidiary holding ordinary shares equivalent to slightly less than half of the total number of shares. Thepreference shares have limited voting rights and the right to receive a fixed, non-cumulative dividend of an immaterial amount in the event a dividend is declared. Thisstructure allows us to effectively control nearly 100% of our Thai operating entities. In the opinion of Kudun and Partners Company Limited, our counsel as to Thai law, the shareholding structure of our Thai operating entities is in compliancewith applicable Thai law. See “Item 3. Key Information—D. Risk Factors—Business and Operational Related Risks—Other Operational Risks—We rely on structuralarrangements to establish control over certain entities and government authorities may determine that these arrangements do not comply with existing laws andregulations. We are also subject to other risks relating to such structural arrangements.” D.Property, Plants and Equipment Our headquarters and our principal technical development facilities are located in Singapore, where we have leased approximately 76,600 square meters ofoffice space, as of December 31, 2023. We also have local offices in other parts of Asia and Latin America. The servers we currently use are hosted in leased data centers in different areas across our markets, as well as on cloud services. The data centers in ournetwork are owned and maintained for us by major domestic and international data center providers. We generally enter into leasing and hosting service agreementswith renewal terms. We believe that our existing facilities are sufficient for our current needs, and we may need to obtain, usually by lease, adequate facilities toaccommodate any future expansion plans. ITEM 4A.UNRESOLVED STAFF COMMENTS None. 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 financialstatements and the related notes included elsewhere in this annual report. This discussion contains forward-looking statements that involve risks anduncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result ofvarious factors, including those set forth under “Item 3. Key Information—D. Risk Factors” and elsewhere in this annual report. A.Operating Results Overview Sea operates three key businesses—Shopee, SeaMoney and Garena. Each of our businesses provides a distinct and compelling value proposition to ourusers, and we believe each exhibits strong virtuous cycle dynamics. We develop, curate and localize the content and services on our platforms to serve a highlydiverse population across multiple markets and regulatory regimes. Since our founding, we have achieved significant scale and growth. Our total revenue increased from US$10.0 billion in 2021 to US$13.1 billion in 2023, aCAGR of 14.6%. We had gross profit of US$3.9 billion, US$5.2 billion and US$5.8 billion in 2021, 2022 and 2023, respectively. We incurred net losses of US$2.0 billionand US$1.7 billion in 2021 and 2022 and net income of US$162.7 million in 2023, respectively. 91Table of ContentsMajor Factors Affecting Our Results of Operations Our results of operations and financial condition are affected by general factors driving the e-commerce, digital financial services, digital entertainment andother industries in our markets, including demographic and macro-economic growth, technology adoption trends, and the digital transformation of industries. Our results of operations are also directly affected by certain factors specific to us, including the following: Size of Our User Base Our revenue is largely driven by the number of users and the level of user engagement across our three businesses, subject to other factors such as macro-economics, geopolitics and consumer spending power. In our e-commerce business, the larger the number of sellers and buyers on the platform, the larger the numberand value of transactions which over time will drive advertising and transaction-based fee revenue for us. In our digital financial services business, the larger thenumber of users, the greater the potential to generate revenue. In our digital entertainment business, due to our freemium business model, the higher the number ofactive users in our games, the larger the number of users likely to make in-game purchases. User Engagement and Monetization As our level of user engagement increases, the potential for user spending and consequently our revenue also increases. A critical component of maximizingthe monetization potential of each of our businesses is providing high-quality content and services and pricing our content and services correctly. Monetization isalso dependent upon our ability to convert active users into paying users, and then increase revenue per paying user. For example: •In our e-commerce business, we closely monitor the number of transactions per active buyer. We optimize the assortment of our product categories on ourmarketplace and build convenient tools to attract sellers. We monetize our e-commerce business mainly by offering sellers paid advertising services,charging transaction-based fees, and charging for certain value-added services, including logistics. We may consider other monetization methods in orderto capture additional revenue streams. We also purchase products from manufacturers and third parties and sell them directly to buyers on our Shopeeplatform. •In our digital financial services business, we mainly monetize by earning interest and fees from our credit and banking businesses, charging fees from ourmobile wallet services and by earning premium or commission from our insurance business. •In our digital entertainment business, our primary source of revenue is the sale of in-game items. We focus on developing and curating the best contentand localizing that content to cater to the tastes and preferences of each of our unique markets. We maximize the in-game user experience to keep our usershighly engaged and increase the likelihood of in-game spending so as to maximize revenue. To do so, we provide a high-quality entertainment experience,adopt effective pricing strategies for each market and game, and leverage our platform’s cross-selling tools to support long-term user engagement with ourgames. Benefits of Our Platforms Our platforms benefit from internal dynamics that allow us to increase our scale and user engagement quickly and in a cost-effective manner. Our businessesenjoy network effects, virtuous cycles and synergies across our platforms. We benefit from the network effects resulting from the significant social aspects of our platforms. For example, because game players find it highly beneficialto join a platform with a large number of other game players, each new player that joins creates value for the existing community. This encourages current users toinvite new users to our platforms, which allows us to grow our user base with moderate acquisition cost and increases the likelihood that users will remain active andengaged and therefore spend on our platforms. 92Table of ContentsEach of our three businesses is a multi-sided platform which benefits from virtuous cycle dynamics. Thus, as our platforms grow, they become more valuableto each of our users and this increases their potential spending opportunities. For example, as the number of buyers on our Shopee platform increases, Shopee attractsan increasing number of sellers, resulting in increases in the volume and variety of products available on the platform, which increases the purchasing opportunitiesfor each of those buyers. In addition, other platform services and support services such as payment and logistics services benefit and improve the user experience forboth buyers and sellers. This results in greater monetization potential as the size of each platform grows. Finally, synergies among our digital financial services business and each of our e-commerce and digital entertainment businesses allow us to increase ouruser base and monetization quickly and cost-effectively. Further, as our Shopee buyers and Garena game players increasingly complete transactions using our mobilewallet services, our mobile wallet user base grows, which in turn may attract more merchants to join the mobile wallet network. At the same time, the large user base onShopee may also increasingly explore other services and product offerings available on our digital financial services platform, such as our credit, banking andinsurtech services. Optimization of Our Cost and Expense Structure Our cost and expense structure has several broad components: sales and marketing expenses, consisting primarily of customer acquisition and retentionexpenses for all our business segments; costs of logistics, including expenses for warehousing, for our e-commerce business; funding costs as well as credit anddefault costs, for our consumer and SME credit business; payment channel costs, royalties, amortized license fees and hosting costs for our digital entertainmentbusiness; staff compensation and welfare costs and expenses, which are spread among different functions; research and development expenses; and other costs andexpenses across our businesses that are mainly fixed in nature. By offering our own mobile wallet and payment processing services, we strive to effectively reduce ourpayment channel costs and capture value that may otherwise go to third-party payment service providers. Our scale in our digital entertainment business has enabledus to optimize our variable costs, as has our operating scale for e-commerce and digital financial services. Foreign Exchange Rates Our reporting currency is the U.S. dollar and changes in currency exchange rates may materially affect our reported results and consolidated trends. We earnrevenue denominated in local currencies of our markets in Southeast Asia, Taiwan and Brazil, among other currencies, while some of our costs and expenses are paidin other foreign currencies. We do not rely on any single currency as we earn revenue in different local currencies across our markets and keep a significant cashposition in U.S. dollars. Our expenses may become higher and our revenue and operating metrics may become lower than would be the case if exchange rates were stable or if wewere operating and reporting in one currency. For example, if the U.S. dollar weakens relative to currencies in our local markets, our revenue and operating expenseswill be higher than if currencies had remained constant. Likewise, if the U.S. dollar strengthens relative to currencies in our local markets, our revenue and operatingexpenses will be lower than if currencies had remained constant. Movements in foreign currency exchange rates may have a material adverse effect on our results ofoperations, which may cause our financial and operational metrics reported in the U.S. dollar to be not fully representative of the underlying business performance.We believe that our diversification in geographic coverage benefits our shareholders over the long-term. We may also enter into foreign currency derivativetransactions to hedge potential foreign exchange risks. See “Item 3. Key Information—D. Risk Factors—Business and Operational Related Risks—Risks ApplicableAcross Multiple Businesses—Fluctuations in foreign currency exchange rates may adversely affect our operational and financial results, which we report in U.S.dollars.” Description of Certain Statement of Operations Items Revenue We currently generate revenue primarily from our e-commerce business, digital financial services business and digital entertainment business. The tablebelow sets forth our revenue breakdown. 93Table of Contents For the Year Ended December 31, 2021 2022 2023 US$ Percentageof TotalRevenue US$ Percentageof Total Revenue US$ Percentageof TotalRevenue (thousands, except for percentages) Service revenue E-commerce 4,071,856 40.9 6,187,620 49.7 7,885,185 60.3 Digital Financial Services 469,747 4.7 1,221,996 9.8 1,759,422 13.5 Digital Entertainment 4,320,013 43.4 3,877,163 31.1 2,172,009 16.6 Other Services(1) 23,014 0.2 53,557 0.5 125,769 1.0 Sales of goods(2) 1,070,560 10.8 1,109,369 8.9 1,121,175 8.6 Total revenue 9,955,190 100.0 12,449,705 100.0 13,063,560 100.0 (1)Other services are a combination of multiple business activities that do not meet the quantitative threshold to qualify as reportable segments.(2)Sales of goods revenue mainly comes from our e-commerce business.The table below sets forth the revenue from external customers based on the geographical locations where the services were provided or goods were sold,both in absolute amount and as a percentage of total revenue for the periods indicated. For the Year Ended December 31, 2021 2022 2023 US$ Percentageof TotalRevenue US$ Percentage of TotalRevenue US$ Percentageof TotalRevenue (thousands, except for percentages) Southeast Asia 6,316,782 63.5 8,321,249 66.8 9,179,527 70.3 Latin America 1,850,861 18.6 2,043,918 16.4 2,193,758 16.8 Rest of Asia 1,394,342 14.0 1,727,187 13.9 1,496,433 11.4 Rest of the world 393,205 3.9 357,351 2.9 193,842 1.5 Total revenue 9,955,190 100.0 12,449,705 100.0 13,063,560 100.0 E-commerce E-commerce service revenue consists of revenue generated from our e-commerce marketplace services and logistics services. Revenue from products ownedand sold by us on our Shopee platform was recorded under sales of goods revenue as discussed below. Our e-commerce service revenue constituted 40.9%, 49.7%and 60.3% of our total revenue during 2021, 2022 and 2023, respectively. We monetize Shopee’s marketplace model mainly by offering sellers paid advertising services, charging transaction-based fees, and charging for certainvalue-added services, including logistics. We may also roll out other means of generating revenue to broaden our monetization avenues in the future. Digital Financial Services We generate revenue from our digital financial services business primarily from earning interest and fees from our credit and banking businesses, chargingfees from our mobile wallet services and by earning premium or commission from our insurance business. For loans receivable, interest and fees earned are recognizedover the period of the loan based on the effective interest method. Our digital financial services revenue constituted 4.7%, 9.8% and 13.5% of our total revenue during2021, 2022 and 2023, respectively. 94Table of ContentsDigital Entertainment We generate revenue from our digital entertainment business primarily by selling in-game items to our game players. We recognize revenue ratably over theestimated service period. Our revenue generated from digital entertainment accounted for 43.4%, 31.1% and 16.6% of our total revenue in 2021, 2022 and 2023,respectively. The primary driver for revenue in our digital entertainment business is the size of our active user base and the level of user engagement. Due to the freemiumbusiness model of our immersive games, the higher the number of active users on our games, the greater the likelihood of such users to make in-game purchases.Therefore, we believe Game QAU is a key metric to help us understand both the active user base and user engagement on our games. Sales of Goods Sales of goods revenue mainly comes from our e-commerce business. While we primarily operate as a marketplace, we also purchase products frommanufacturers or third parties directly and sell on our Shopee platform under our official store to meet buyers’ demand for such products. Bulk purchasing and directproduct sales for specific product categories also enable us to offer better product assortment and more competitive prices to our buyers. Cost of Revenue Our cost of revenue primarily consists of direct expenses in generating revenue from our businesses. The table below sets forth our cost of revenuebreakdown. For the Year Ended December 31, 2021 2022 2023 US$ Percentageof TotalRevenue US$ Percentageof TotalRevenue US$ Percentageof TotalRevenue (thousands, except for percentages) Cost of service E-commerce 3,690,026 37.1 4,885,586 39.3 5,171,361 39.6 Digital Financial Services 105,274 1.0 254,138 2.0 279,745 2.1 Digital Entertainment 1,230,082 12.4 1,077,017 8.7 672,481 5.1 Other Services(1) 30,526 0.3 54,341 0.4 78,937 0.6 Cost of goods sold 1,003,547 10.1 993,346 8.0 1,027,389 7.9 Total cost of revenue 6,059,455 60.9 7,264,428 58.4 7,229,913 55.3 (1)Other services are a combination of multiple business activities that do not meet the quantitative threshold to qualify as reportable segments.E-commerce Our cost of revenue for e-commerce services primarily consists of expenses associated with our logistics and other value-added services, bank transactionfees for transactions conducted through our Shopee platform, server and hosting costs, and staff compensation and welfare costs, which include share-basedcompensation. 95Table of ContentsDigital Financial Services Our cost of revenue for digital financial services primarily consists of server and hosting costs, interest expenses for customer deposits under our bankingbusiness, interest expenses related to our credit business, bank transaction fees, amortization costs for internally developed software, commissions we pay to counteroperators, and staff compensation and welfare costs, which include share-based compensation. Digital Entertainment Our cost of revenue for digital entertainment primarily consists of payment channel costs, recognized as expenses over the performance obligation period,royalties, and other fees relating to our use of various third-party intellectual properties. Other costs include server and hosting costs, upfront licensing fees, whichare fixed and amortized over the shorter of estimated useful life or game licensing period, and staff compensation and welfare costs, which include the share-basedcompensation. Sales of Goods Our cost of revenue for sales of goods is mainly attributable to the goods we purchase from manufacturers and third parties and sell directly to buyers on ourShopee platform. Gross Profit Our gross profit is defined as total revenue minus total cost of revenue. Gross Margin Our gross margin is defined as total gross profit, as a percentage of total revenue. The basis for gross margin for each of our business segments and thereason for the variations in the gross margins are mainly due to the different nature of our businesses. For example, gross margins in our digital entertainment segmentare relatively high mainly because of the digital nature of the production and sale of the virtual items in our games. By comparison, e-commerce involves moresignificant physical operations, including logistics which includes costs associated with the storage and delivery of the goods sold by sellers on Shopee. As such,our e-commerce has lower gross margins compared to our digital entertainment business. Operating Income and Expenses Our operating expenses consist of sales and marketing expenses, general and administrative expenses, provision for credit losses, research and developmentexpenses and impairment of goodwill, net of other operating income. The table below sets forth our operating expenses, both in absolute amount and as a percentageof total revenue, for the periods indicated. For the Year Ended December 31, 2021 2022 2023 US$ Percentageof TotalRevenue US$ Percentageof TotalRevenue US$ Percentageof TotalRevenue (thousands, except for percentages) Other operating income (287,946) (2.9) (279,184) (2.2) (221,021) (1.7)Sales and marketing expenses 3,829,743 38.5 3,269,223 26.3 2,779,223 21.3 General and administrative expenses 987,868 9.9 1,437,612 11.5 1,134,724 8.7 Provision for credit losses 117,427 1.2 513,690 4.1 633,942 4.8 Research and development expenses 831,703 8.4 1,376,501 11.0 1,164,126 8.9 Impairment of goodwill – – 354,943 2.9 117,875 0.9 Total operating expenses 5,478,795 55.1 6,672,785 53.6 5,608,869 42.9 96Table of ContentsOther Operating Income Our other operating income consists primarily of rebates from e-commerce related logistic services provided by third parties. Sales and Marketing Expenses Our sales and marketing expenses consist primarily of online and offline advertising expenses, sales incentives, and staff compensation and welfareexpenses, which include share-based compensation for our employees engaged in sales and marketing functions. Our excess sales incentive, representing the salesincentive given exceeding the revenue we expect to receive on a transaction-by-transaction basis, was less than 10% of total revenue in 2023. General and Administrative Expenses Our general and administrative expenses consist primarily of facilities and other overhead expenses, depreciation and amortization expenses, impairmentlosses, external professional service expenses, and staff compensation and welfare expenses, which include share-based compensation for our employees engaged ingeneral and administrative functions. Provision for Credit Losses Our provision for credit losses relates primarily to our credit business. Our provision for credit losses could increase with the growth of our lending activityand loans receivable or if the credit environment worsens. As our loan cycle is generally less than one year for the past years, an increase in our lending activityduring the year therefore tends to increase our annual credit loss provisioning expense during the year at a higher rate than our outstanding gross loans receivablebalance at year-end. Research and Development Expenses Our research and development expenses consist primarily of staff compensation and welfare expenses, which include share-based compensation for ouremployees engaged in product development functions. We believe developing our platforms and content is extremely important to achieving our strategic objectives. Impairment of Goodwill We test goodwill for impairment at least annually and evaluate whether it is more likely than not that the fair value of a reporting unit is less than its carryingamount. Goodwill impairment is recognized as the excess of goodwill allocated to the reporting unit’s carrying amount over its fair value, not to exceed the totalamount of goodwill allocated to the reporting unit. Results of Operations The table below sets forth a summary of our consolidated results of operations for the periods indicated, both in absolute amounts and as percentages of ourtotal revenue. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. Theoperating results in any period are not necessarily indicative of the results that may be expected for any future period. 97Table of Contents For the Year Ended December 31, 2021 2022 2023 US$ Percentageof TotalRevenue US$ Percentageof TotalRevenue US$ Percentageof TotalRevenue (thousands, except for percentages) Selected Consolidated Statements ofOperations Data: Revenue: Service revenue Digital Entertainment 4,320,013 43.4 3,877,163 31.1 2,172,009 16.6 E-commerce and other services 4,564,617 45.8 7,463,173 60.0 9,770,376 74.8 Sales of goods 1,070,560 10.8 1,109,369 8.9 1,121,175 8.6 Total revenue 9,955,190 100.0 12,449,705 100.0 13,063,560 100.0 Cost of revenue: Cost of service Digital Entertainment (1,230,082) (12.4) (1,077,017) (8.7) (672,481) (5.1)E-commerce and other services (3,825,826) (38.4) (5,194,065) (41.7) (5,530,043) (42.3)Cost of goods sold (1,003,547) (10.1) (993,346) (8.0) (1,027,389) (7.9)Total cost of revenue (6,059,455) (60.9) (7,264,428) (58.4) (7,229,913) (55.3)Gross profit 3,895,735 39.1 5,185,277 41.6 5,833,647 44.7 Operating income (expenses): Other operating income 287,946 2.9 279,184 2.2 221,021 1.7 Sales and marketing expenses (3,829,743) (38.5) (3,269,223) (26.3) (2,779,223) (21.3)General and administrative expenses (987,868) (9.9) (1,437,612) (11.5) (1,134,724) (8.7)Provision for credit losses (117,427) (1.2) (513,690) (4.1) (633,942) (4.8)Research and development expenses (831,703) (8.4) (1,376,501) (11.0) (1,164,126) (8.9)Impairment of goodwill – – (354,943) (2.9) (117,875) (0.9)Total operating expenses (5,478,795) (55.1) (6,672,785) (53.6) (5,608,869) (42.9)Operating (loss) income (1,583,060) (15.9) (1,487,508) (11.9) 224,778 1.7 Interest income 36,082 0.4 115,515 0.9 331,310 2.6 Interest expense (136,876) (1.4) (45,396) (0.4) (41,075) (0.3)Net investment loss (43,502) (0.4) (207,331) (1.7) (125,656) (1.0)Net (loss) gain on debt extinguishment (2,069) (0.0) 199,697 1.6 38,550 0.3 Foreign exchange gain (loss) 14,241 0.1 (75,510) (0.6) 4,487 0.0 (Loss) Income before income tax and share ofresults of equity investees (1,715,184) (17.2) (1,500,533) (12.1) 432,394 3.3 Income tax expense (332,865) (3.3) (168,395) (1.4) (262,680) (2.0)Share of results of equity investees 5,019 0.1 11,156 0.1 (7,032) (0.1)Net (loss) income (2,043,030) (20.5) (1,657,772) (13.3) 162,682 1.2 98Table of Contents For the Year Ended December 31, 2021 2022 2023 (US$ thousands) Gross profit/(loss): Services E-commerce 381,830 1,302,034 2,713,824 Digital Financial Services 364,473 967,858 1,479,677 Digital Entertainment 3,089,931 2,800,146 1,499,528 Other Services (7,512) (784) 46,832 Sales of goods 67,013 116,023 93,786 Total gross profit 3,895,735 5,185,277 5,833,647 For the Year Ended December 31, 2021 2022 2023 (Percentage) Gross margin: Services E-commerce 9.4 21.0 34.4 Digital Financial Services 77.6 79.2 84.1 Digital Entertainment 71.5 72.2 69.0 Other Services (32.6) (1.5) 37.2 Sales of goods 6.3 10.5 8.4 Total gross margin 39.1 41.6 44.7 Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Revenue Our total revenue increased by 4.9% from US$12.4 billion in 2022 to US$13.1 billion in 2023. •E-commerce: Our e-commerce service revenue increased by 27.4% from US$6.2 billion in 2022 to US$7.9 billion in 2023. This is mainly due to improvedmonetization, as e-commerce service revenue over GMV improved from 8.4% in 2022 to 10.0% in 2023, as set forth in the table below. Average order valueon Shopee remained stable year-on-year, at approximately US$10. For the Year Ended December 31, 2022 2023 (US$ billions, except for percentages) E-commerce service revenue 6.2 7.9 GMV 73.5 78.5 E-commerce service revenue / GMV 8.4% 10.0%99Table of Contents•Digital Financial Services: Our digital financial services revenue increased by 44.0% from US$1.2 billion in 2022 to US$1.8 billion in 2023. This is mainlydue to growth of our credit business as our lending activities increased and our loans receivable grew from US$2.1 billion for the year ended December 31,2022 to US$2.5 billion for the year ended December 31, 2023. •Digital Entertainment: Our digital entertainment revenue decreased by 44.0% from US$3.9 billion in 2022 to US$2.2 billion in 2023. This decrease wasprimarily attributable to the moderation in active and paying user base. Average Game QAUs decreased by 7.9% from 572.2 million in 2022 to 527.2 millionin 2023, while average Game QPUs decreased by 24.3% from 53.1 million in 2022 to 40.2 million in 2023. •Sales of goods: Revenue was relatively stable at US$1.1 billion for 2022 and 2023. Cost of Revenue Our total cost of revenue remained relatively stable at US$7.2 billion in 2023 as increases in cost of revenue for our e-commerce and digital financial servicesbusinesses were offset by decrease in cost of revenue for our digital entertainment business. •E-commerce: Cost of revenue increased by 5.8% from US$4.9 billion in 2022 to US$5.2 billion in 2023. The increase was primarily driven by the increase inlogistics costs as orders volume grew 8.8% from 7.6 billion in 2022 to 8.2 billion in 2023. •Digital Financial Services: Cost of revenue increased by 10.1% from US$254.1 million in 2022 to US$279.7 million in 2023, primarily driven by interestexpenses in line with the growth of our loan book and increases in customer deposits under our banking business, amortization costs of internallydeveloped software, and server and hosting expenses. •Digital Entertainment: Cost of revenue dropped by 37.6% from US$1.1 billion in 2022 to US$672.5 million in 2023, primarily from payment channel costs,which was largely in line with the decrease in digital entertainment revenue. •Cost of goods sold: Cost of goods sold was relatively stable at US$1.0 billion for 2022 and 2023. Gross Profit As a result of the foregoing, our gross profit grew 12.5% from US$5.2 billion in 2022 to US$5.8 billion in 2023. Our gross margins improved from 41.6% in 2022to 44.7% in 2023. Other Operating Income Our other operating income decreased by 20.8% from US$279.2 million in 2022 to US$221.0 million in 2023 primarily due to lower rebates from e-commercerelated logistics services providers. Sales and Marketing Expenses Our sales and marketing expenses decreased by 15.0% from US$3.3 billion in 2022 to US$2.8 billion in 2023 due to our efforts to optimize operating costs andachieve higher cost efficiencies in our digital financial services and digital entertainment businesses. General and Administrative Expenses Our general and administrative expenses decreased by 21.1% from US$1.4 billion in 2022 to US$1.1 billion in 2023. The decrease was primarily due to adecrease in staff compensation and welfare expenses from lower staff headcount, as well as lower cost of office facilities and related expenses driven by cost savinginitiatives in our business operations. In addition, in 2022, we incurred certain one-time impairment costs due to exits from non-core markets and certain divestments. 100Table of ContentsProvision for Credit Losses Our provision for credit losses increased by 23.4% from US$513.7 million in 2022 to US$633.9 million in 2023, primarily driven by an increase in lendingactivity during the year, in line with the growth in our loan book as our loans receivable increased by 21.3%, growing from US$2.1 billion for the year ended December31, 2022 to US$2.5 billion for the year ended December 31, 2023. As our loan cycle was generally less than one year in the past two years, an increase in our lendingactivity during the year therefore tended to increase our annual credit loss provisioning expense during the year at a higher rate than our outstanding gross loansreceivable balance at year-end. Research and Development Expenses Our research and development expenses decreased by 15.4% from US$1.4 billion in 2022 to US$1.2 billion in 2023. The decrease was primarily due to thedecrease in staff compensation and welfare expenses from lower headcount driven by cost saving initiatives in our business operation. Impairment of Goodwill We recorded an impairment of goodwill of US$117.9 million in 2023, compared to US$354.9 million in 2022. The goodwill impairment in 2023 was primarily dueto the change in carrying amount of goodwill associated with our prior acquisition. Other Income, Expenses, Gains and Losses Our interest income, interest expense, net investment loss, net (loss) gain on debt extinguishment, and foreign exchange gain (loss) was a net loss of US$13.0million in 2022, compared to a net income of US$207.6 million in 2023. The improvement was mainly due to higher interest income, lower investment loss, and a netforeign exchange gain of US$4.5 million in 2023, as compared to net foreign exchange loss of US$75.5 million in 2022. The improvement was partially offset by lowergain on debt extinguishment of US$38.6 million recognized in 2023, as compared to gain on debt extinguishment of US$199.7 million recognized in 2022 as werepurchased our 2026 convertible notes in both periods. Loss or Income before Income Tax and Share of Results of Equity Investees As a result of the foregoing, we had loss before income tax and share of results of equity investees of US$1.5 billion in 2022, compared to income beforeincome tax and share of results of equity investees of US$432.4 million in 2023. Income Tax Expense We had an income tax expense of US$168.4 million in 2022 and US$262.7 million in 2023. The higher income tax expense was primarily due to higher income taxcredit recognized in 2022 as a result of recognition of deferred tax assets from carried forward losses for our e-commerce business, partially offset by lower income taxexpense incurred by our digital entertainment business. Share of Results of Equity Investees We had share of profit of equity investees of US$11.2 million in 2022, compared to share of loss of equity investees of US$7.0 million in 2023. Net Loss or Income As a result of the foregoing, we had net loss of US$1.7 billion in 2022, compared to net income of US$162.7 million in 2023. 101Table of ContentsYear Ended December 31, 2022 Compared to Year Ended December 31, 2021 Revenue Our total revenue increased by 25.1% from US$10.0 billion in 2021 to US$12.4 billion in 2022. •E-commerce and other services: Our e-commerce and other services revenue increased by 63.5% from US$4.6 billion in 2021 to US$7.5 billion in 2022. Thisincrease was primarily driven by the improved monetization in our e-commerce business and the growth of our credit business. •Digital Entertainment: Our digital entertainment revenue decreased by 10.3% from US$4.3 billion in 2021 to US$3.9 billion in 2022. This decrease wasprimarily attributable to the ongoing moderation in user engagement and monetization. •Sales of goods: Revenue was relatively stable at US$1.1 billion for 2021 and 2022. Cost of Revenue Our total cost of revenue increased by 19.9% from US$6.1 billion in 2021 to US$7.3 billion in 2022. •E-commerce and other services: Cost of revenue for our e-commerce and other services combined increased by 35.8% from US$3.8 billion in 2021 to US$5.2billion in 2022. The increase was primarily driven by higher costs of logistics from order growth and other costs related to the growth of e-commercemarketplace. The improvement in gross profit margins was mainly due to the growth of core marketplace revenue with higher gross profit margin. •Digital Entertainment: Cost of revenue decreased by 12.4% from US$1.2 billion in 2021 to US$1.1 billion in 2022, which was largely in line with thedecrease in digital entertainment revenue. •Cost of goods sold: Cost of goods sold was relatively stable at US$1.0 billion for 2021 and 2022. Gross Profit As a result of the foregoing, our gross profit was US$3.9 billion in 2021 and US$5.2 billion in 2022. We had gross margins of 39.1% and 41.6% in 2021 and2022, respectively. Service revenue pertaining to our e-commerce and other services segment had gross margins of 16.2% and 30.4% in 2021 and 2022, respectively.Our digital entertainment segment had gross margins of 71.5% and 72.2% in 2021 and 2022, respectively. Sales of goods had gross margins of 6.3% and 10.5% in 2021and 2022, respectively. Other Operating Income Our other operating income decreased by 3.0% from US$287.9 million in 2021 to US$279.2 million in 2022. Other operating income mainly consists of rebatesfrom e-commerce related logistics services providers. Sales and Marketing Expenses Our sales and marketing expenses decreased by 14.6% from US$3.8 billion in 2021 to US$3.3 billion in 2022. The decrease in sales and marketing expensesacross all major reporting segments was mainly attributable to our efforts to continue optimizing operating costs and achieving higher cost efficiencies. General and Administrative Expenses Our general and administrative expenses increased by 45.5% from US$1.0 billion in 2021 to US$1.4 billion in 2022. The increase was primarily due to the higherstaff cost from higher average staff headcount over the year, as well as higher cost of office facilities and related expenses to support the headcount growth. Generaland administrative expenses described here exclude provision for credit losses. See “—Provision for Credit Losses” below for further details. 102Table of ContentsProvision for Credit Losses Our provision for credit losses increased by 337.5% from US$117.4 million in 2021 to US$513.7 million in 2022, primarily driven by the growth in our loan book. Research and Development Expenses Our research and development expenses increased by 65.5% from US$831.7 million in 2021 to US$1.4 billion in 2022. The increase was primarily due to theincrease in research and development staff costs from higher average staff headcount over the year. Impairment of Goodwill We recorded an impairment of goodwill of US$354.9 million in 2022, compared to nil in 2021. The goodwill impairment was primarily due to the change incarrying amount of goodwill associated with our prior acquisitions, mainly driven by the lower valuations amid the market uncertainties, and our strategic decision todispose of or shut down certain historical investments for the digital entertainment business. Other Income, Expenses, Gains and Losses Our interest income, interest expense, net investment loss, net (loss) gain on debt extinguishment, and foreign exchange (loss) gain was a net loss ofUS$132.1 million in 2021 compared to a net loss of US$13.0 million in 2022. Loss before Income Tax and Share of Results of Equity Investees As a result of the foregoing, we had loss before income tax and share of results of equity investees of US$1.7 billion in 2021, compared to loss before incometax and share of results of equity investees of US$1.5 billion in 2022. Income Tax Expense We had an income tax expense of US$332.9 million in 2021 and US$168.4 million in 2022. The lower income tax expense was primarily due to recognition ofdeferred tax assets from carried forward losses for our e-commerce business, as well as lower income tax expense incurred by our digital entertainment business. Share of Results of Equity Investees We had share of profit of equity investees of US$5.0 million in 2021 and US$11.2 million in 2022. Net Loss As a result of the foregoing, we had net loss of US$2.0 billion in 2021 and US$1.7 billion in 2022. Segment Reporting We have three reportable segments, namely, e-commerce, digital financial services and digital entertainment. The chief operating decision maker reviews theperformance of each segment based on revenue and certain key operating metrics of the operations and uses these results for the purposes of allocating resources toand evaluating the financial performance of each segment. 103Table of ContentsInformation about segments during the years ended December 31, 2021, 2022 and 2023 presented were as follows: For the Year ended December 31, 2023 E-commerce DigitalFinancialServices DigitalEntertainment OtherServices(1) Unallocatedexpenses(2) Consolidated (US$ thousands) Revenue 9,000,848 1,759,422 2,172,009 131,281 – 13,063,560 Operating (loss) income (550,470) 490,209 1,177,871 (56,728) (836,104) 224,778 Non-operating income, net 207,616 Income tax expense (262,680)Share of results of equity investees (7,032)Net income 162,682 For the Year ended December 31, 2022 E-commerce DigitalFinancialServices DigitalEntertainment OtherServices(1) Unallocatedexpenses(2) Consolidated (US$ thousands) Revenue 7,288,677 1,221,996 3,877,163 61,869 – 12,449,705 Operating (loss) income (2,013,360) (277,264) 1,971,416 (252,162) (916,138) (1,487,508)Non-operating loss, net (13,025)Income tax expense (168,395)Share of results of equity investees 11,156 Net loss (1,657,772) For the Year ended December 31, 2021 E-commerce DigitalFinancialServices DigitalEntertainment OtherServices(1) Unallocatedexpenses(2) Consolidated (US$ thousands) Revenue 5,122,959 469,774 4,320,013 42,444 – 9,955,190 Operating (loss) income (2,766,566) (640,422) 2,500,081 (177,633) (498,520) (1,583,060)Non-operating loss, net (132,124)Income tax expense (332,865)Share of results of equity investees 5,019 Net loss (2,043,030)(1)A combination of multiple business activities that does not meet the quantitative thresholds to qualify as reportable segments are grouped together as“Other Services.”(2)Unallocated expenses are mainly related to share-based compensation, impairment of goodwill of prior acquisitions that are not under our reportablesegments, and general and corporate administrative costs such as professional fees and other miscellaneous items that are not allocated to segments. Theseexpenses are excluded from segment results as they are not reviewed by the chief operating decision maker as part of segment performance.Taxation Cayman Islands We are incorporated in the Cayman Islands and our primary business operations are conducted through our subsidiaries, branch offices and consolidatedaffiliated entities. Under the current laws of the Cayman Islands, we are not subject to tax on income or capital gains. 104Table of ContentsSingapore Our subsidiaries incorporated in Singapore are subject to the Singapore corporate tax of 17% in 2021, 2022 and 2023. Garena Online Private Limited wasgranted an additional five-year development and expansion incentive by the Singapore Economic Development Board, or the EDB, commencing from January 1, 2017,with another five-year extension commencing from January 1, 2022, which grant a concessionary tax rate of 10% from January 1, 2017 to December 31, 2021 and 10.5%from January 1, 2022 to December 31, 2026 on qualifying income, subject to certain terms and conditions imposed by the EDB. Others Subsidiaries incorporated in other jurisdictions are subject to the respective applicable corporate income tax rates of the jurisdictions where they are resident. Domestic statutory corporate income tax rate in Indonesia was reduced from 25% to 22% with effect from the financial year 2020. In March 2021, the Philippines reduced its corporate income tax rate from 30% to 25%, effective retroactively from July 1, 2020. B.Liquidity and Capital Resources Cash Flows and Working Capital Our principal sources of liquidity have historically been cash generated from operating activities and financing activities including customer deposits underour banking business. The principal driver of our operating cash flows is cash received from sales of our services and products, including proceeds from our sales ofin-game virtual items in our digital entertainment business, fees from paid advertising services, transaction-based fees, value-added services and proceeds from directsales of goods in our e-commerce business, interest and fees received from our credit and banking businesses, fees from our mobile wallet services and premium orcommissions from our insurance business, offset by operating expenses. As of December 31, 2021, 2022 and 2023, we had US$10.8 billion, US$7.6 billion and US$4.2 billion, respectively, in cash, cash equivalents and restricted cash.Cash and cash equivalents consist of cash on hand, demand deposits and money market funds placed with banks and other financial institutions which areunrestricted as to withdrawal and use and have original maturities of three months or less. Restricted cash mainly comprise monies received that are held in escrow inconnection with our e-commerce business and mobile wallet in connection with our digital financial services business. Our cash, cash equivalents and restricted cashare primarily denominated in U.S. dollars as well as in local currencies of the markets where we operate. We believe that our cash and cash equivalents, together withcash generated from operating and short-term investments, will be sufficient to meet our anticipated cash needs and obligations for the next 12 months. We may alsoaccess capital markets or credit facilities should we require additional working capital.The following table sets forth a summary of our cash flows for the periods indicated: For the Year Ended December 31, 2021 2022 2023 (US$ thousands) Net cash generated from (used in) operating activities 208,649 (1,055,692) 2,079,688 Net cash used in investing activities (3,767,273) (2,428,809) (5,804,462)Net cash generated from financing activities 7,401,589 400,256 366,011 Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash (58,218) (143,511) (7,964)Net increase (decrease) in cash, cash equivalents and restricted cash 3,784,747 (3,227,756) (3,366,727)Cash, cash equivalents and restricted cash at beginning of year 7,053,393 10,838,140 7,610,384 Cash, cash equivalents and restricted cash at end of year(1) 10,838,140 7,610,384 4,243,657 (1)As of December 31, 2022, cash and cash equivalents of US$13.2 million was included in assets held for sale within prepaid expenses and other assets.105Table of ContentsOperating Activities Net cash generated from operating activities amounted to US$2.1 billion in 2023 compared to net cash used in operating activities of US$1.1 billion in 2022.The difference was mainly due to increase in net income of US$1.8 billion, increase in change in deferred revenue of US$768.1 million and increase in change inaccrued expenses and other payables of US$494.2 million in 2023 compared to 2022.The main drivers for the increase in net income and increase in change in deferred revenue are:•higher e-commerce and digital financial services gross profits in 2023 due to improved monetization of our e-commerce business and growth of the creditbusiness;•lower sales and marketing expenses in 2023 due to our efforts to optimize operating costs and achieve higher cost efficiencies in our digital financialservices and digital entertainment businesses; and•lower general and administrative expenses in 2023 due to a decrease in staff compensation and welfare expenses from lower staff headcount, and lowercost of office facilities and related expenses driven by cost saving initiatives in our business operations and certain one-time impairment costs incurredin 2022 due to the exits from non-core markets and certain divestments;•partially offset by the decline in bookings in 2023 for our digital entertainment business due to the moderation in active and paying user base. Bookingsrefer to GAAP revenue for the digital entertainment segment plus change in digital entertainment deferred revenue and are used as an approximation ofcash spent by our users.The increase in change in accrued expenses and other payables is due to:•a general increase in 2023 in payables to our logistics providers in our e-commerce business in line with orders volume growth; and•a general increase in sales and marketing expenses payable by our e-commerce business in the second half of 2023, as compared to that of the secondhalf in 2022, which is in line with the increase in investments in growing the e-commerce business in 2023 as opposed to the focus on cost savinginitiatives in our business operations in 2022.Net cash used in operating activities amounted to US$1.1 billion for the year ended December 31, 2022 compared to net cash generated from operatingactivities of US$208.6 million for the year ended December 31, 2021. The decrease in net cash generated from operating activities was primarily attributable to thedecrease in the change in deferred revenue by US$1.4 billion, decrease in the change in accrued expenses and other payables by US$584.8 million, and decrease in thechange in escrow payables and advances from customers by US$487.3 million. The decrease in the change in deferred revenue was mainly due to the impact fromongoing moderation in user engagement and monetization and softer discretionary spending from gamers in our digital entertainment business. The decrease in thechange in accrued expenses and other payables was mainly due to lower accrued sales and marketing expenses, accrued payroll and welfare expenses, and lowerpayables to our logistics providers in our e-commerce business. The decrease in the change in escrow payables and advances from customers was in line with GMVgrowth. The decrease in operating cash flows was partially offset by the improvement of net loss / profit position from US$1.1 billion net loss (after adjusting for non-cash items) for the year ended December 31, 2021 to US$314 million net profit (after adjusting for non-cash items) for the year ended December 31, 2022. Investing Activities Net cash used in investing activities amounted to US$5.8 billion in 2023. This was primarily attributable to purchase of investments of US$8.3 billion mainlyconsisting of time deposits and liquid investment products, an increase in loans receivable of our credit business of US$1.0 billion and purchase of property andequipment of US$241.6 million. These were partially offset by proceeds from maturity and disposal of investments of US$3.5 billion. 106Table of ContentsNet cash used in investing activities amounted to US$2.4 billion in 2022. This was primarily attributable to purchase of investments of US$2.6 billion mainlyconsisting of time deposits and liquid investment products, an increase in loans receivable of our credit business of US$1.2 billion and purchase of property andequipment of US$924.2 million. These were partially offset by proceeds from maturity and disposal of investments of US$2.3 billion. Net cash used in investing activities amounted to US$3.8 billion in 2021. This was primarily attributable to our time deposits and long-term investments suchas equity investments of US$2.5 billion, an increase in loans receivable of US$1.2 billion and purchase of property and equipment of US$772.2 million. These werepartially offset by proceeds from maturity and disposal of investments of US$798.2 million. Financing Activities Net cash generated from financing activities amounted to US$366.0 million in 2023. This was primarily attributable to an increase in bank customer deposits ofUS$389.3 million, as well as net proceeds from other funding sources related to the credit business of US$223.8 million, partially offset by the cash used in repurchaseof convertible notes of US$204.6 million and repayment of bank borrowings of US$49.0 million. Net cash generated from financing activities amounted to US$400.3 million in 2022, primarily attributable to an increase in bank customer deposits of US$942.6million, partially offset by the repurchase of convertible notes of US$611.3 million. Net cash generated from financing activities amounted to US$7.4 billion in 2021, primarily attributable to net proceeds from issuance of convertible notes ofUS$2.8 billion and net proceeds from issuance of ordinary shares of US$4.1 billion. Material Cash Requirements Our material cash requirements as of December 31, 2023 and any subsequent interim period mainly include our convertible notes obligations, capitalexpenditures, other short-term working capital commitments, bank customer deposits, and other contractual cash obligations. We believe that our cash and cashequivalents, together with cash generated from operating and short-term investments, will be sufficient to meet our anticipated cash needs and obligations for the next12 months. Convertible Notes Our convertible notes obligations, including scheduled interest, were approximately US$3.2 billion as of December 31, 2023, based on the contractual maturityassuming no conversion subsequent to December 31, 2023. In June 2018, we completed an offering of 2.25% convertible senior notes in an aggregate principal amount of US$575 million, or the 2023 convertible notes.These 2023 convertible notes were offered to qualified institutional buyers pursuant to Rule 144A under the Securities Act, and certain non-U.S. persons incompliance with Regulation S under the Securities Act. Between May and October 2020, we entered into separate privately negotiated agreements with certain holdersof our 2023 convertible notes to exchange approximately US$378.5 million principal amount of our then outstanding 2023 convertible notes for a combination ofapproximately US$50.0 million (plus accrued and unpaid interest to the exchange date, if any) in cash and approximately 18.5 million ADSs as consideration. Theremaining US$31.3 million in principal amount of outstanding notes in 2023 were converted to 1,581,165 ADSs prior to their maturity in July 2023. In November 2019, we completed an offering of 1.00% convertible senior notes in an aggregate principal amount of US$1.15 billion, or the 2024 convertiblenotes. These 2024 convertible notes were offered to qualified institutional buyers pursuant to Rule 144A under the Securities Act, and certain non-U.S. persons incompliance with Regulation S under the Securities Act. The notes will mature in December 2024. Note holders have the right, at their option, to convert theoutstanding principal amount in whole or in part in integral multiples of US$1,000 principal amount (i) upon satisfaction of one or more of the conversion conditions asdefined in the indenture prior to the close of business on the business day immediately preceding June 1, 2024; or (ii) anytime on or after June 1, 2024 until the close ofbusiness on the second scheduled trading day immediately preceding the maturity date. On or after December 2, 2022, we may redeem for cash all or any part of thenotes, if certain conditions are met, at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest. We mayalso redeem for cash all but not part of the notes at any time if less than US$75 million aggregate principal amount of notes remains outstanding at such time. Unlessotherwise converted or redeemed, we will repay the full outstanding and unpaid principal amounts in full on the maturity date. The notes may be converted, in wholeor in part, into our ADSs at an initial conversion rate of 19.9475 ADSs per US$1,000 principal amount (equivalent to approximately US$50.13 per ADS), subject tocertain anti-dilution and make-whole fundamental change adjustments. Upon conversion, we have the right, at our option, to pay or deliver, either cash, ADSs, or acombination of cash and ADSs to converting holders. As of March 31, 2024, holders of an aggregate of US$998.0 million principal amount of our 2024 convertiblenotes have elected to convert, and approximately US$152.0 million principal amount of our 2024 convertible notes remained outstanding. 107Table of ContentsIn connection with the pricing of the 2024 convertible notes, we have entered into capped call transactions with certain financial institutions. These cappedcall transactions are generally expected to reduce the potential dilution with respect to our ADSs and Class A ordinary shares upon conversion of the 2024 convertiblenotes and/or offset any cash payments we are required to make in excess of the principal amount of converted notes, as the case may be, upon any conversion of thenotes, with such reduction of potential dilution or offset of cash payments, as the case may be, subject to a cap based on the cap price of the capped call transactions.The cap price of the capped call transactions will initially be US$70.36 per ADS, and is subject to certain adjustments under the terms of the capped call transactions. In May 2020, we completed an offering of 2.375% convertible senior notes in an aggregate principal amount of US$1.15 billion, or the 2025 convertible notes.These 2025 convertible notes were offered to qualified institutional buyers pursuant to Rule 144A under the Securities Act, and certain non-U.S. persons incompliance with Regulation S under the Securities Act. The notes will mature in December 2025. Note holders have the right, at their option, to convert theoutstanding principal amount in whole or in part in integral multiples of US$1,000 principal amount (i) upon satisfaction of one or more of the conversion conditions asdefined in the indenture prior to the close of business on the business day immediately preceding September 1, 2025; or (ii) anytime on or after September 1, 2025 untilthe close of business on the second scheduled trading day immediately preceding the maturity date. On or after May 19, 2023, we may redeem for cash all or any partof the notes, if certain conditions are met, at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest.We may also redeem for cash all but not part of the notes at any time if less than US$100 million aggregate principal amount of notes remains outstanding at such time.Unless otherwise converted or redeemed, we will repay the full outstanding and unpaid principal amounts in full on the maturity date. The notes may be converted, inwhole or in part, into our ADSs at an initial conversion rate of 11.0549 ADSs per US$1,000 principal amount (equivalent to approximately US$90.46 per ADS), subjectto certain anti-dilution and make-whole fundamental change adjustments. Upon conversion, we have the right, at our option, to pay or deliver, either cash, ADSs, or acombination of cash and ADSs to converting holders. As of March 31, 2024, holders of an aggregate of US$0.5 million principal amount of our 2025 convertible noteshave elected to convert, and approximately US$1.1 billion principal amount of our 2025 convertible notes remained outstanding. In connection with the pricing of the 2025 convertible notes, we have entered into capped call transactions with certain financial institutions. These cappedcall transactions are generally expected to reduce the potential dilution with respect to our ADSs and Class A ordinary shares upon conversion of the 2025 convertiblenotes and/or offset any cash payments we are required to make in excess of the principal amount of converted notes, as the case may be, upon any conversion of thenotes, with such reduction of potential dilution or offset of cash payments, as the case may be, subject to a cap based on the cap price of the capped call transactions.The cap price of the capped call transactions will initially be US$136.54 per ADS, and is subject to certain adjustments under the terms of the capped call transactions. In September 2021, we completed a registered offering of 0.25% convertible senior notes in an aggregate principal amount of US$2.875 billion, or the 2026convertible notes. The notes will mature in September 2026. Note holders have the right, at their option, to convert the outstanding principal amount in whole or inpart in integral multiples of US$1,000 principal amount (i) upon satisfaction of one or more of the conversion conditions as defined in the indenture prior to the closeof business on the business day immediately preceding June 15, 2026; or (ii) anytime on or after June 15, 2026 until the close of business on the second scheduledtrading day immediately preceding the maturity date. On or after September 15, 2024, we may redeem for cash all or any part of the notes, if certain conditions are met,at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest. We may also redeem for cash all but notpart of the notes at any time if less than US$250 million aggregate principal amount of notes remains outstanding at such time. Unless otherwise converted orredeemed, we will repay the full outstanding and unpaid principal amounts in full on the maturity date. The notes may be converted, in whole or in part, into our ADSsat an initial conversion rate of 2.0964 ADSs per US$1,000 principal amount (equivalent to approximately US$477.01 per ADS), subject to certain anti-dilution and make-whole fundamental change adjustments. Upon conversion, we have the right, at our option, to pay or deliver, either cash, ADSs, or a combination of cash and ADSsto converting holders. During fiscal year 2023, we repurchased US$244.5 million aggregate of principal amount of our 2026 convertible notes. As of March 31, 2024,approximately US$1.6 billion aggregate of principal amount of our 2026 convertible notes remained outstanding. 108Table of ContentsFor the years ended December 31, 2021, 2022 and 2023, we recognized total interest expense for coupon interest of US$36.2 million, US$36.5 million andUS$34.3 million and amortization of discount on the liability component of US$100.1 million, US$7.5 million and US$6.0 million, respectively, on our then outstandingconvertible notes. For further information, refer to Note 13 – Convertible Notes in the accompanying notes to consolidated financial statements included in “Item 17.Financial Statements.” Capital Expenditures Our capital expenditures amounted to US$807.2 million, US$976.3 million and US$258.3 million in 2021, 2022 and 2023, respectively. Capital expenditure wasincurred for purchases of property and equipment and software, and costs for developing software for internal use. We will continue to make capital expenditures tomeet the needs of our business and expect that our cash and cash equivalents, together with cash generated from operating and short-term investments will meet ourcapital expenditure needs in the foreseeable future. Deposits Payable As of December 31, 2023, our consolidated balance sheets had deposits payable of US$1.7 billion, which are customer deposits from our banking business. Other Contractual Cash Obligations Our operating lease obligations, including imputed interest, were US$1.4 billion as of December 31, 2023, of which US$298.1 million is payable within the next12 months. Our obligations for leases that have not yet commenced, including imputed interest, were US$518.3 million as of December 31, 2023, of which US$10.8million is payable within the next 12 months. For further information on our leases, refer to Note 9 – Leases in the accompanying notes to consolidated financialstatements included in “Item 17. Financial Statements.” We have purchase commitments of US$137.8 million as of December 31, 2023, including US$40.9 million to purchase property and equipment and hostingservices, US$6.8 million committed licensing fee payable for the licensing of game titles, and US$90.1 million commitment to invest in certain companies. The aggregateof our purchase commitments payable within the next 12 months is US$130.4 million. For further information, refer to Note 23 – Commitments and Contingencies in theaccompanying notes to consolidated financial statements included in “Item 17. Financial Statements.” We have commitments to pay a minimum guarantee of royalty fees to game developers for certain online games we licensed. As of December 31, 2023, theminimum guarantee commitment amounted to US$10.4 million for launched games as well as licensed but yet to be launched games, of which the full amount is payablewithin the next 12 months. For further information, refer to Note 23 – Commitments and Contingencies in the accompanying notes to consolidated financial statementsincluded in “Item 17. Financial Statements.” Our banking business in Singapore, Indonesia and the Philippines have commitments to extend credit to our respective customers under committed facilities.As of December 31, 2023, bank customers can draw down on a total undrawn credit limit of US$11.0 million under such committed facilities. Holding Company Structure Sea Limited is a holding company that does not have substantive operations. We conduct our operations primarily through our subsidiaries, branch officesand our consolidated affiliated entities. As a result, our ability to pay dividends depends upon, among others, dividends paid by our subsidiaries. If our subsidiariesor any newly formed subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. 109Table of ContentsIn addition, as determined in accordance with local regulations, our subsidiaries and VIEs in certain of our markets may be restricted from paying usdividends offshore or from transferring a portion of their assets to us, either in the form of dividends, loans or advances, unless certain requirements are met, andregulatory approvals are obtained. See “Item 3. Key Information—D. Risk Factors—Markets Related Risks—The ability of our subsidiaries to distribute dividends tous may be subject to restrictions under the laws of their respective jurisdictions.” Even though we currently do not require any such dividends, loans or advancesfrom our entities for working capital and other funding purposes, we may in the future require additional cash resources from them due to changes in businessconditions, to fund future acquisitions and development, or merely to declare and pay dividends or distributions to our shareholders. Certain of the markets in which we have significant subsidiaries or principal operating entities, including Indonesia, Thailand and Taiwan, require thosesubsidiaries to establish and fund statutory reserves. Indonesian laws require a limited liability company to reserve a certain amount from its net profit each year as areserve fund until such fund amounts to at least 20% of its issued and paid-up capital. Thailand regulations require a private limited liability company to allocate atleast 5% of its retained earnings into a legal reserve fund at the time the dividend is paid until and unless the legal reserve fund reaches 10% of the company’sregistered capital. The legal reserve is not available for dividend distribution. Taiwan laws require a limited liability company to set aside 10% of annual net income(less prior years’ losses, if any, and applicable income taxes) as legal reserve until the accumulated legal reserve equals the paid-in capital of such company beforesuch company can distribute any dividend. C.Research and Development, Patents and Licenses, etc. Research and Development Costs incurred in connection with the planning and post-implementation phases of the development of software for internal use are expensed. Costs incurredin the application development phase are capitalized when certain criteria are met. Capitalization ceases and the costs are amortized over the software’s estimateduseful life when the software is ready for its intended use. Costs incurred internally in researching and developing a software product are charged to expense as research and development costs prior to technologicalfeasibility being established for the product. Once technological feasibility is established, all software costs are capitalized until the product is available for generalrelease to customers. Technological feasibility is established upon completion of all the activities that are necessary to substantiate that the software product can beproduced in accordance with its design specifications, including functions, features, and technical performance requirements. None of such costs were capitalized forany of the periods presented.Intellectual Property See “Item 4. Information on the Company—B. Business Overview—Intellectual Property.” D.Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year endedDecember 31, 2023 that are reasonably likely to have a material adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that wouldcause reported financial information not necessarily to be indicative of future operating results or financial conditions. E.Critical Accounting Estimates We prepare our consolidated financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affectour reporting of, among other things, assets and liabilities, disclosure of contingent assets and liabilities and revenue and expenses. We regularly evaluate theseestimates and assumptions based on the most recently available information, our own historical experiences and other factors that we believe to be relevant under thecircumstances. Since our financial reporting process inherently relies on the use of judgments, estimates and assumptions, our actual results could differ from what weexpect. 110Table of ContentsWe believe that the following accounting policies reflect the significant judgments, estimates and assumptions used in the preparation of our consolidatedfinancial statements. For additional information, see the disclosure included in Note 2 – Summary of Significant Accounting Policies in the accompanying notes toconsolidated financial statements included in “Item 17. Financial Statements.” Recognition of Digital Entertainment Revenue We distribute online games, including self-developed games and licensed games from game developers, through our PC and mobile based applications andcertain app stores. We offer many ways for users to purchase in-game items, including through online payment gateways, bank transfers, credit cards, mobile phonebilling and prepaid cards (including our own prepaid cards which are sold through agents). As we control the service of providing games to the users and have adirect contractual arrangement with our paying users and have the right to determine the price to be paid by such users, the gross proceeds collected from thesechannels represent revenue to be recognized, and the amounts retained by these channels based on a predetermined percentage represent our cost of revenue to berecognized. Revenue is recognized over the performance obligation period. We recognize an implied obligation to the paying users to continue to provide hostingservices and access to the purchased virtual items within the online games over an estimated performance obligation period. Such performance obligation period isdetermined in accordance with the estimated average lifespan of the paying user or virtual items sold. •Item-based revenue model. Virtual items have different lifespan patterns: time-based, consumable and durable. •Time-based virtual items are items with a stated expiration time. Revenue attributable to a time-based virtual item is recognized ratably over the periodbased on the time unit of the item. •Consumable virtual items are items that can be consumed by a specific user action and have limitations on repeated use. Revenue attributable to aconsumable virtual item is recognized upon consumption. •Durable virtual items are items that provide the user with continuing benefits over an extended period of time. Revenue attributable to a durable virtualitem is recognized ratably over its average lifespan. •User-based revenue model. We track paying users’ activeness within each game where the user-based revenue model is used to estimate paying users’average lifespan. Paying users are defined as inactive when they have reached a period of inactivity such that it is reasonable to believe that these userswill not return to a specific game. Determining the estimated performance obligation period requires management’s judgment and thus involves uncertainty. Future users’ usage patterns andplaying behaviors may change and differ from the historical usage patterns and playing behaviors, leading to a change in the estimated performance obligation period. Our weighted-average performance obligation period for our paying users used for the purposes of revenue recognition was 14 months as of December 31,2023. Based on the deferred revenue and payment channel costs amounts as at December 31, 2023, a one-month decrease in the average paying user lifespan for eachof our online games would result in an approximately US$42.1 million decrease in deferred revenue balance and US$7.8 million decrease in deferred payment channelcosts. Conversely, a one-month increase in the average paying user lifespan for each of our games would result in an approximately US$32.4 million increase indeferred revenue balance and US$6.0 million increase in deferred payment channel costs balance. Investment in Equity Securities Our investments in equity securities for which (1) we do not have the ability to exercise significant influence and (2) are without readily determinable fairvalue, are carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similarinvestment in the same investee. 111Table of ContentsWe evaluate these securities at each reporting period to determine whether there are indicators that the investment may be impaired (i.e. whether the fairvalue of these equity securities is less than the current carrying value). Such evaluation includes reviewing the investee’s cash position, recent financings, projectedand historical financial performance, cash flow forecasts and current and future financing needs. If, based on this evaluation, we have a reason to believe that the fairvalue of the investment is less than the carrying value, we then estimate the fair value and record an impairment loss equal to the difference between the fair value ofthe investment and its carrying amount. In such circumstances, the fair value of the investment is measured using the Market Adjusted Option Pricing Model Backsolve, which is determined byusing information including but not limited to the pricing of recent rounds of financing of the investees, liquidity factors and a selection of comparable companies.The most significant unobservable input used in this model is the market adjustment. Market adjustment represents the estimated range of changes in industryvaluations since the investee’s last external valuation. As at December 31, 2023, a 5 percentage points increase in the market adjustment input would have resulted in adecrease in the impairment charges by approximately US$19.4 million. Conversely, a 5 percentage points decrease would have resulted in an increase in the impairmentcharges by approximately US$21.4 million. Share-based Compensation – share options Share-based compensation from share option grants is measured at fair value on grant date and recognized as compensation expense over the requisiteservice period (which is generally the vesting period) in the consolidated statements of operations. We applied the Black-Scholes option pricing model in determiningthe estimated fair value of the share options on grant date. This model requires the input of assumptions, most of which are not subject to significant estimationuncertainty. The expected term of the option for which employees are likely to exercise their share options is based on the simplified method due to insufficientrelevant historical exercise data to provide a reasonable basis to estimate expected term. The risk-free rate used is based on the US Treasury Yields at the time of grantwhich is generally objectively determinable. The estimated stock price volatility assumption used in the Black-Scholes option pricing model is judgmental and changes to the volatility assumption couldsignificantly affect the estimated fair value of our share options and hence the amount of compensation expense that we recognize in our consolidated financialstatements. During the year ended December 31, 2023, the expected volatility used in Black-Scholes option pricing model to estimate the fair value of share optiongranted in 2023 ranged between 60.2% – 62.0%. A 10 percentage points increase in expected volatility would result in an approximately US$6.2 million increase in theaggregate fair value of the options we granted in 2023, which would be recognized over the awards’ requisite service period. Conversely, if the expected volatilitydecreased by 10 percentage points, the aggregate fair value of the options we granted in 2023 would have decreased by approximately US$6.4 million, which would berecognized over the awards’ requisite service period. Income Taxes We account for income taxes using the liability method. We determine deferred tax assets and liabilities based on the difference between the financialreporting and tax bases of assets and liabilities using enacted tax rates that are in effect in the period in which the differences are expected to reverse. Determining thelikelihood that our net deferred tax assets will be realized from future taxable income may require certain judgment. The accounting for deferred tax represents our bestestimates of certain future events. We record a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-notthat some portion, or all, of the deferred tax assets will not be realized. Changes in estimates, due to unanticipated events or otherwise, could have a material effect onour consolidated financial statements. Impairment of Long-lived Assets in E-commerce Segment We evaluate our long-lived assets for impairment when there are events or changes in circumstances which indicate that the carrying amounts of the long-lived assets may not be recoverable. Due to the losses incurred by the E-commerce segment, we evaluate the related long-lived assets for impairment at the assetgroup level by comparing the carrying amount of the asset group to the recoverable value determined by forecasted undiscounted cash flows expected to begenerated by this asset group. If the carrying amount of the asset group exceeds the forecasted undiscounted cash flows, we would then be required to compare theestimated fair value of the asset group to its carrying amount to determine the amount of impairment, if any, to record against the long-lived assets in the asset group.As of December 31, 2023, our long-lived assets in the E-commerce segment amounted to approximately 84.6% of our total long-lived assets and no impairment hadbeen provided. 112Table of ContentsThe accounting estimates related to impairment of long-lived assets is critical due to the magnitude of the carrying amount of long-lived assets andmanagement’s judgment is required in estimating the recoverable value (undiscounted cash flows) of the asset group, which are sensitive to key assumptions such asprojected revenue and sales and marketing expenses. As at December 31, 2023, the recoverable value assessed exceeded the carrying amount of the asset group by asubstantial margin. Goodwill Impairment Goodwill is tested for impairment annually, or whenever events or changes in circumstances indicate that it might be impaired. For the impairment assessmenton goodwill, we make a qualitative assessment to determine whether quantitative impairment testing is necessary. The qualitative assessment includes a review ofmacroeconomic conditions, industry and market considerations, and overall financial performance of the reporting unit, among other factors. If the qualitativeassessment indicates that it is more likely than not that the carrying value of the reporting unit exceeds its fair value, we then perform a quantitative test to calculatethe estimated fair value of the reporting unit. We record goodwill impairment if the carrying amount of the reporting unit exceeds its fair value. Determining the fair value of each goodwill reporting unit requires significant judgment. Estimation of the fair value of each of our goodwill reporting unitsgenerally uses public company multiples, which requires reasonable selection of market multiples based on a comparison of the reporting unit's performance to that ofits peer companies. In the first quarter of 2023, we recorded goodwill impairment charges of US$117.9 million due to the change in business strategy of a certainreporting unit. The reporting unit was subsequently disposed during the year. We performed our annual goodwill impairment testing in the fourth quarter of 2023 andwe determined that no goodwill impairment existed. Our reporting units with material goodwill had estimated fair value exceeded the carrying value by more than 10%. Allowance for Credit Losses We established allowances for credit losses for accounts receivable, loans receivable, off-balance sheet loan commitments and available-for-sale investments,the most significant of which is the allowances associated with our consumer and SME loans receivable from our digital financial services business.For our consumer and SME loans receivable, we establish a provision matrix applied on the portfolio segmented by factors such as geographic region andproducts that are considered to have similar credit characteristics and risk of loss. We compute our allowance for credit loss based on our historical lifetime credit lossexperience, adjusted for relevant forward-looking factors. We utilize models such as transition matrix method based on roll rates and then transformed, taking intoaccount expected future delinquency rate to estimate the likelihood that a loan will default over a given period of time, net of any estimated recoveries. These modelsutilize information that is available at the reporting date about past events, current conditions, estimated recovery rate and macro-economic forecasts. As at December31, 2023, a relative 5% decrease in the estimated recovery rate would have resulted in an increase in the allowance for credit losses by approximately US$14.8 million.Conversely, a relative 5% increase in the estimated recovery rate would have resulted in a decrease in the allowance for credit losses by approximately US$15.8 million.Recent Accounting Pronouncements The recent accounting pronouncement adopted during the year ended December 31, 2023 is discussed and included in Note 2(z) – Summary of SignificantAccounting Policies – Recently adopted accounting pronouncements in the accompanying notes to consolidated financial statements included in “Item 17. FinancialStatements.” The recently issued accounting pronouncements not yet adopted during the year ended December 31, 2023 is discussed and included in Note 2(aa) –Summary of Significant Accounting Policies – Recently issued accounting pronouncements not yet adopted in the accompanying notes to consolidated financialstatements included in “Item 17. Financial Statements.” 113Table of ContentsITEM 6.DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A.Directors and Senior Management The following table provides information regarding our directors and executive officers as of the date of this annual report. Directors and Executive Officers Age Position/TitleForrest Xiaodong Li 46 Chairman and Chief Executive OfficerGang Ye 43 Director and Chief Operating OfficerTony Tianyu Hou 45 Director and Chief Financial OfficerDavid Heng Chen Seng 57 DirectorKhoon Hua Kuok 45 DirectorDavid Y Ma 43 DirectorChris Zhimin Feng 41 PresidentTerry Feng Zhao 40 President of GarenaYanjun Wang 43 Chief Corporate Officer, General Counsel and Company SecretaryDavid Jingye Chen 43 Chief Product Officer of ShopeeForrest Xiaodong Li is our founder and has served as the chairman of Sea Limited and our chief executive officer since our inception in May 2009. He is amember of the board of directors of the Singapore Economic Development Board, and serves as an independent non-executive director of Shangri-La Asia Limited. Healso serves on the board of trustees for the National University of Singapore, and on the advisory council of Stanford University’s Graduate School of Business.Forrest holds an M.B.A. degree from Stanford University’s Graduate School of Business and a bachelor’s degree in Engineering from Shanghai Jiaotong University. Gang Ye is our co-founder and has been a member of the board of directors of Sea Limited since March 2010. Gang has served as our chief operating officersince January 2017 and served as our chief technology officer between March 2010 and December 2016. He previously worked at Wilmar International and theEconomic Development Board of Singapore. Gang holds B.S. degrees in Computer Science and Economics from Carnegie Mellon University. Tony Tianyu Hou has served as our director since February 2018. Tony joined our company in September 2010 and has served as our chief financial officersince January 2013. He previously served as our financial controller. Before joining us, Tony was an audit senior manager at Ernst & Young, where he worked fromOctober 2000 to September 2010 in both China and the U.S. Tony is a non-practicing U.S. Certified Public Accountant and a non-practicing member of the ChineseInstitute of Certified Public Accountants. He holds an M.B.A. degree from the University of Chicago’s Booth School of Business and a bachelor’s degree inAccounting from Fudan University. David Heng Chen Seng has served as our director since October 2017. David is the chief executive officer of Temasek Trust Asset Management, a Singapore-based global asset management firm established by Temasek Trust. Under his leadership, Temasek Trust Asset Management operates two core investment units –ABC Impact and Temasek Trust Capital. David has over 25 years of experience in the investment industry. Over a span of 14 years, David held senior leadership rolesin Singapore-headquartered global investment company Temasek, including head of real estate, head of Japan and Korea, joint head of consumer, as well as joint headof China. Prior to Temasek, David was with Deutsche Bank AG. He currently serves as a director at Seatown Holdings and Temasek Trust Asset Management, amongother appointments, the Centre for Impact Investing and Practices, and the Singapore Art Museum. He also sits on the investment committees of ABC Impact anddecarbonization investment platform GenZero. David holds an M.B.A. degree from the University of Hull (United Kingdom) and a Bachelor of Engineering degree fromthe University of Canterbury (New Zealand). Khoon Hua Kuok has served as our director since October 2017. Khoon Hua is the chairman of Kerry Holdings Limited, the main investment holdingcompany of the Kuok Group in Hong Kong. He is also a director of Kerry Group Limited and Kuok (Singapore) Limited, the chairman and chief executive officer ofKerry Properties Limited and the non-executive vice chairman of Kerry Logistics Network Limited, both of which are companies listed on the Hong Kong StockExchange, and a non-executive director of Wilmar International Limited, a company listed on the Singapore Stock Exchange. Khoon Hua holds a B.A. degree inEconomics from Harvard University. 114Table of ContentsDavid Y Ma has served as our director since May 2023. He previously worked at Sea as the Chief Investment Officer of Sea Capital from March 2021 to April2023. He was the founder and Managing Partner of Composite Capital, a global investment management firm. Previously he served as a partner at Hillhouse Capital,and worked at Bain Capital and Boston Consulting Group. David holds a bachelor’s degree in Economics, Finance, and Management from the Wharton School of theUniversity of Pennsylvania. Chris Zhimin Feng joined our company in March 2014 and has served as President since January 2022. Prior to this role, he served as the chief executiveofficer of Shopee from July 2015, and as the chief executive officer of SeaMoney from March 2020. Previously he served as our head of mobile business. Before joiningour company, Chris worked at Rocket Internet SE, where he served in management roles at Zalora and Lazada, and at McKinsey & Company. Chris holds a bachelor’sdegree in Computer Science with first class honors from the National University of Singapore. Terry Feng Zhao has been with our company since our inception in 2009 and has served as the president of Garena since November 2018. Prior to assuminghis current role, Terry has also served in a number of senior roles in our digital entertainment business across several key markets. Terry holds a bachelor’s degree inComputer Engineering with first class honors from Nanyang Technological University.Yanjun Wang is our chief corporate officer, general counsel and company secretary. Yanjun has served as our chief corporate officer since May 2019,company secretary since November 2017 and general counsel since March 2014. Prior to joining our company, Yanjun was an attorney at Skadden, Arps, Slate,Meagher & Flom LLP and Kirkland & Ellis. She is qualified to practice law in the State of New York. She holds a J.D. degree from Harvard Law School and a B.A.degree in Economics from Harvard University. David Jingye Chen is our co-founder and serves as the chief product officer of Shopee. He was formerly chief of staff, a position he held from January 2017to December 2019. Prior to that, David served as our chief operating officer from our inception in May 2009 to December 2016. He previously held positions at PSACorporation Limited. David holds a bachelor’s degree in Computer Engineering with first class honors from the National University of Singapore.Employment Agreements and Indemnification Agreements We have entered into employment agreements with our executive officers. Each of our executive officers is employed for a continuous term unless either weor the executive officer gives prior notice to terminate such employment. We may terminate the employment for cause, at any time, without notice or remuneration, forcertain acts of the executive officer, including but not limited to the commitments of any serious or persistent breach or non-observance of the terms and conditions ofthe employment, conviction of a criminal offense other than one which in the opinion of the board does not affect the executive’s position, willful, disobedience of alawful and reasonable order, misconduct being inconsistent with the due and faithful discharge of the executive officer’s material duties, fraud or dishonesty, orhabitual neglect of his or her duties. An executive officer may terminate his or her employment at any time with a three- to six-month prior written notice. Each executive officer has agreed to hold, both during and after the employment agreement expires or is earlier terminated, in strict confidence and not to useor disclose to any person, corporation or other entity without written consent, any confidential information or trade secrets. Each executive officer has also agreed todisclose in confidence to us all inventions, intellectual and industry property rights and trade secrets which they made, discover, conceive, develop or reduce topractice during the executive officer’s employment with us and to assign to our company all of his or her associated titles, interests, patents, patent rights, copyrights,trade secret rights, trademarks, trademark rights, mask work rights and other intellectual property and rights anywhere in the world which the executive officer maysolely or jointly conceive, invent, discover, reduce to practice, create, drive, develop or make, or cause to be conceived, invented, discovered, reduced to practice,created, driven, developed or made, during the period of the executive officer’s employment with us that are either related to our business, actual or demonstrablyanticipated research or development or any of our products or services being developed, manufactured, marketed, sold, or are related to the scope of the employmentor make use of our resources. In addition, all executive officers have agreed to be bound by non-competition and non-solicitation restrictions set forth in theiragreements. Each executive officer has agreed to devote all his or her working time and attention to our business and use best efforts to develop our business andinterests. Moreover, each executive officer has agreed not to, for a certain period following termination of his or her employment or expiration of the employmentagreement: (i) carry on or be engaged, concerned or interested directly or indirectly whether as shareholder, director, employee, partner, agent or otherwise carry onany business in direct competition with us, (ii) solicit or entice away any of our customer, client, representative or agent, or (iii) employ, solicit or entice away orattempt to employ, solicit or entice away any of our officers, managers, consultants or employees. 115Table of ContentsWe have entered into indemnification agreements with our directors and executive officers, pursuant to which we will agree to indemnify our directors andexecutive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being such a director orexecutive officer. B.Compensation Compensation of Directors and Executive Officers For the year ended December 31, 2023, we paid and accrued fees and compensation in cash (excluding equity-based awards) of approximately US$1.6million to our directors and executive officers as a group. On April 17, 2022, the board of directors of the company canceled authorized grants from May 2019 to Forrest and certain other employees of options topurchase 20 million and 30 million Class A ordinary shares of the company, respectively, at US$22.50 per share. At the time of cancellation, these options had not beengranted. In substitution of these canceled options, the board of directors of the company awarded the executive officers of the company options to purchase up to atotal of 30 million Class A ordinary shares at US$120 per share, including options to purchase five million Class A ordinary shares to Forrest. These options will vestevery three months over a period of five years commencing April 30, 2022 and will expire 10 years after the grant date. These awards have been granted to theexecutive officers in April 2022. In 2023, the board of directors of the company approved the cancellation of unvested options to purchase 3.75 million Class Aordinary shares to certain executive officers from the aforesaid April 2022 awards and substituted with 1.25 million restricted share units to the affected executiveofficers. Such restricted share units were to vest over the remaining vesting period of the cancelled options, subject to the same vesting terms and conditions. Thesubstitution did not have any financial impact on our share-based compensation expenses. In addition, a total of 47,016 restricted shares units were granted to ourdirectors and executive officers in 2023, among which 37,016 restricted share units had fully vested within the year of 2023 and therefore do not show in the tablebelow regarding the outstanding awards to our directors and executive officers as of December 31, 2023. For more information on share incentive grants to ourdirectors and executive officers, see “—Share Incentive Plan.” Our Singapore subsidiaries are required by the laws and regulations of Singapore to make contributions, as employers, to the Central Provident Fund for ourexecutive officers who are employed by our Singapore subsidiaries and are Singapore citizens or permanent residents as prescribed under the Singapore CentralProvident Fund Act. The contribution rates vary, depending on the age of the executive officers, and whether such executive officer is a Singapore citizen orpermanent resident. Share Incentive Plan We maintain a share incentive plan in order to attract, motivate, retain and reward talent, provide additional incentives to our officers, employees, directorsand other eligible persons, and promote the success of our business and the interests of our shareholders. 2009 Share Incentive Plan We adopted the 2009 Plan to promote the success of our business and the interests of our shareholders by providing additional incentives to attract,motivate, retain and reward our officers, employees, directors and other eligible persons and to link the interests of the award recipients with our shareholders. InFebruary 2018, our board of directors approved automatic increases on January 1 of each of 2019, 2020, 2021 and 2022 of the maximum aggregate number of ordinaryshares which may be issued under the 2009 Plan by 5% of the total number of ordinary shares of all classes of the company outstanding on that day immediatelybefore the increase. In addition, in July 2019, our board of directors approved a one-time increase of the maximum aggregate number of shares which may be issuedpursuant to the 2009 Plan by three million, and at the same time reduced three million shares from the scheduled automatic increase of shares pursuant to the aforesaidautomatic annual increase mechanism on January 1, 2020. In April 2022, our board of directors approved the amendment and restatement of the 2009 Plan to increasethe maximum aggregate number of shares available under the 2009 Plan, pursuant to which on January 1 of each of 2023, 2024, 2025 and 2026, the maximum aggregatenumber of ordinary shares which may be issued under the 2009 Plan will increase by 3% of the total number of ordinary shares of all classes of the companyoutstanding on that day immediately before the increase. Currently, the maximum aggregate number of ordinary shares which may be issued pursuant to all awardsunder the 2009 Plan is 210,888,606. The awards expire 10 years after the date of the grant. 116Table of ContentsAs of March 31, 2024, outstanding awards granted under the 2009 Plan consisted of (i) options to purchase 59,598,234 Class A ordinary shares, (ii) 16,005,794restricted Class A ordinary share units, and (iii) 267,574 share appreciation rights. The following paragraphs summarize the terms of the 2009 Plan. Plan Administration. Our board of directors or one or more committees appointed by the board act as the plan administrator. Types of Awards. The 2009 Plan permits grants of (i) options to purchase Class A ordinary shares, (ii) awards of share appreciation rights to receive apayment in cash, or, at the discretion of the plan administrator, in Class A ordinary shares, equal to the excess of the fair market value of a Class A ordinary share onthe date the share appreciate right is exercised over the base price of the share appreciate right, (iii) awards of restricted Class A ordinary shares or unrestricted ClassA ordinary shares, or (iv) awards of restricted share units, which are contractual rights to receive Class A ordinary shares of our company. Any Class A ordinaryshares issuable pursuant to the awards under the 2009 Plan may be represented by ADSs. Eligibility. Only our employees, officers, directors and individual consultants or advisors who render or have rendered bona fide services to us are eligibleto receive awards or grants under the 2009 Plan. Term of Awards. Each award under the 2009 Plan will (in the case of options and share appreciation rights) expire, or (in the case of share awards) vest or berepurchased by us not more than 10 years after the date of grant which term be extended by the plan administrator to a maximum of 10 years. An award is onlyexercisable or distributable before the eligible individual’s termination of service with us, unless determined otherwise by the plan administrator or set forth in theaward agreement. Vesting Schedule and Other Restrictions. The plan administrator has discretion in determining and making adjustment in the individual vesting schedulesand other restrictions applicable to the awards granted under the 2009 Plan. The vesting schedule is set forth in each award agreement. Exercise Price and Purchase Price. The plan administrator has discretion in determining the price of the awards, subject to a number of limitations, andhas discretion in making adjustments in the exercise price of the options or the base price of the share appreciation rights. Acceleration of Vesting upon Corporate Transaction. Upon the occurrence of a change in control event, the plan administrator may make provision for acash payment in settlement of, or for the assumption, substitution or exchange of any or all outstanding awards (or the cash, securities or other property deliverable tothe holder(s) of any or all outstanding awards) based upon, to the extent relevant in the circumstances, the distribution or consideration payable to holders of theClass A ordinary shares upon or in respect of such event. Termination. The plan will terminate in 2027. Our board of directors may terminate the plan at any time, in whole or in part. Amendment, Suspension or Termination. The administrator may waive conditions of or limitations on awards to award recipients that the administrator inthe prior exercise of its discretion has imposed, without the consent of award recipients, and may make other changes to the terms and conditions of awards. However,no amendments, suspension or termination of the 2009 Plan or amendments of any outstanding award may, without written consent of the award recipients, materiallyand adversely affect any rights or benefits of the award recipient or obligations of us under any award granted under the plan prior to the effective date of suchchange. Subject to the above, our board of directors may, at any time, terminate or, from time to time, amend, modify or suspend the 2009 Plan, in whole or in part. Noawards may be granted during any period that the board of directors suspends the 2009 Plan. To the extent set forth in the 2009 Plan and where required by theapplicable laws, rules or regulations, any amendments to the 2009 Plan shall be subject to shareholders’ approval. 117Table of ContentsTransfer Restrictions. All awards are non-transferable and will not be subject in any manner to sale, transfer, anticipation, alienation, assignment, pledge,encumbrance or charge except in certain situations. Power of Attorney on Voting. Under the award agreements, with respect to the Class A ordinary shares issued upon exercise of options or vesting ofrestricted shares or restricted share units, almost all of our award recipients appoint Mr. Forrest Xiaodong Li, our chairman and chief executive officer, as his or herirrevocable proxy to vote all such Class A ordinary shares on all matters on which such Class A ordinary shares are entitled to vote. The table below sets forth certain information as of December 31, 2023 concerning the outstanding awards we have granted to our directors and executiveofficers by the time on an individual basis. Name Class AOrdinarySharesUnderlyingOutstandingAwardsGranted Price(US$/Share) Date of Grant Date of ExpirationForrest Xiaodong Li 10,000,000(1)(3) 15.0 April 30, 2019 April 30, 2029 5,000,000(1)(3) 15.0 April 30, 2020 April 30, 2030 5,000,000(1) 120.0 April 17, 2022 April 17, 2032Gang Ye 4,650,000(1) 15.0 February 28, 2018 February 28, 2028 5,000,000(1) 120.0 April 17, 2022 April 17, 2032Tony Tianyu Hou *(1) 15.0 February 28, 2018 February 28, 2028 *(1) 120.0 April 17, 2022 April 17, 2032 *(2) — July 31, 2023 —David Heng Chen Seng *(2) — October 19, 2021 —Khoon Hua Kuok 5,000(2) — October 19, 2021 —David Y Ma *(1) 120.0 April 17, 2022 April 17, 2032 *(2) — May 15, 2023 —Chris Zhimin Feng 100,000(1) 4.5 January 26, 2015 January 26, 2025 4,500,000(1) 15.0 February 28, 2018 February 28, 2028 4,000,000(1) 15.0 February 28, 2019 February 28, 2029 6,000,000(1) 120.0 April 17, 2022 April 17, 2032Terry Feng Zhao *(1) 15.0 January 31, 2019 January 31, 2029 *(1) 120.0 April 17, 2022 April 17, 2032Yanjun Wang *(1) 15.0 February 28, 2018 February 28, 2028 *(1) 120.0 April 17, 2022 April 17, 2032 *(2) — July 31, 2023 —David Jingye Chen 220,000(1) 4.5 January 26, 2015 January 26, 2025 2,000,000(1) 15.0 February 28, 2018 February 28, 2028 2,000,000(1) 120.0 April 17, 2022 April 17, 2032All directors and executive officers as a group 59,906,667 *Each of these directors and executive officers beneficially owns less than 1% of our total outstanding shares as of December 31, 2023.(1)Represents options to purchase Class A ordinary shares.(2)Represents unvested restricted shares units for Class A ordinary shares.(3)Granted pursuant to the previously disclosed authorization by our board of directors on April 8, 2018 of options to purchase a total of 20 million Class Aordinary shares. The relevant options disclosed here were granted to Mr. Li between April 2019 and April 2020 and to vest between April 2020 and April 2022. 118Table of ContentsC.Board Practice Our board of directors consists of six directors. A director is not required to hold any shares in our company to qualify to serve as a director. A director whois in any way, whether directly or indirectly, interested in a contract or proposed contract with our company is required to declare the nature of his interest at a meetingof our directors. A general notice given to the directors by any director to the effect that he is a member of any specified company or firm and is to be regarded asinterested in any contract or transaction which may thereafter be made with that company or firm shall be deemed a sufficient declaration of interest in regard to anycontract so made or transaction so consummated. Subject to applicable New York Stock Exchange listing rules and disqualification by the chairman of the relevantboard meeting, a director may vote in respect of any contract or transaction or proposed contract or transaction notwithstanding that he may be interested therein andif he does so his vote shall be counted and he may be counted in the quorum at any meeting of the directors at which any such contract or transaction or proposedcontract or transaction is considered. Our board of directors may exercise all of the powers of our company to borrow money, to mortgage or charge its undertaking,property and uncalled capital, or any part thereof, and to issue debentures, debenture stock or other securities whenever money is borrowed or as security for anydebt, liability or obligation of our company or of any third-party. None of our directors has a service contract with us that provides for benefits upon termination ofservice, or an appropriate negative statement. Committees of the Board of Directors We have established an audit committee, a compensation committee and a nominating committee under the board of directors. We have adopted a charter foreach of the three committees. Each committee’s members and functions are described below. Audit Committee. Our audit committee consists of Mr. David Heng Chen Seng and Mr. Khoon Hua Kuok, and is chaired by Mr. David Heng Chen Seng.Both of Mr. David Heng Chen Seng and Mr. Khoon Hua Kuok satisfy the “independence” requirements of Section 303A of the New York Stock Exchange ListedCompany Manual and meet the independence standards under Rule 10A-3 under the Exchange Act. Our board of directors has also determined that Mr. David HengChen Seng qualifies as an “audit committee financial expert” within the meaning of the SEC rules and that both members of the audit committee are financially literatewithin the meaning of Section 303A of the New York Stock Exchange Listed Company Manual. The audit committee oversees our accounting and financial reportingprocesses and the audits of the financial statements of our company. The audit committee is responsible for, among other things: •selecting our independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed by ourindependent registered public accounting firm; •reviewing with our independent registered public accounting firm any audit problems or difficulties and management’s response; •reviewing and approving related party transactions; •discussing the annual audited financial statements with management and our independent registered public accounting firm; •meeting periodically with the management and our internal auditor and our independent registered public accounting firm; and •reviewing and discussing our accounting and control policies and procedures and any steps taken to monitor and control major financial risk exposure. 119Table of ContentsCompensation Committee. Our compensation committee consists of Mr. Forrest Xiaodong Li and Mr. Khoon Hua Kuok, and is chaired by Mr. ForrestXiaodong Li. Mr. Khoon Hua Kuok satisfies the “independence” requirements for compensation committee members of Section 303A of the New York Stock ExchangeListed Company Manual. Our compensation committee assists the board in reviewing and evaluating the compensation structure, including compensation plansrelating to our directors and executive officers. The compensation committee is responsible for, among other things: •reviewing and approving the compensation package for our chief executive officer; •reviewing the annual bonus, long-term incentive compensation, stock option, employee pension and welfare benefit plans of our company; •reviewing annually and administering all long-term incentive compensation or equity plans; and •selecting and receiving advice from compensation consultants, legal counsel or other advisors after taking into consideration all factors relevant to thatperson’s independence from management. Corporate Governance and Nominating Committee. Our corporate governance and nominating committee consists of Mr. Forrest Xiaodong Li and Mr.Khoon Hua Kuok, and is chaired by Mr. Forrest Xiaodong Li. Mr. Khoon Hua Kuok satisfies the “independence” requirements of Section 303A of the New York StockExchange Listed Company Manual. The corporate governance and nominating committee assists the board in selecting individuals qualified to become our directorsand in determining the composition of the board of directors. The corporate governance and nominating committee is responsible for, among other things: •identifying and recommending nominees for election or re-election to our board of directors or for appointment to fill any vacancy; •reviewing annually with our board of directors its current composition in light of the characteristics of independence, qualification, experience andavailability of service to us; •review the performance of our board of directors and management and will make appropriate recommendations for improving performance; and •monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensureproper compliance. 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 whatthey consider in good faith to be in our best interests. Our directors must also exercise their powers only for a proper purpose. Our directors also owe to our companya duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than mayreasonably be expected from a person of his knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard withregard 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 ensurecompliance with our memorandum and articles of association, as amended and restated from time to time. Our company has the right to seek damages if a duty owedby our directors is breached. In limited exceptional circumstances, a shareholder may have the right to seek damages in our name if a duty owed by our directors isbreached. 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 officers; •exercising the borrowing powers of our company and mortgaging the property of our company; and •approving the transfer of shares of our company, including the registering of such shares in our share register. 120Table of ContentsTerms of Directors and Executive Officers Each of our directors holds office until the expiration of his or her term, as may be provided in a written agreement with our company, and his or her successorhas been elected and qualified, until his or her resignation or until his or her office is otherwise vacated in accordance with our articles of association. All of ourexecutive officers are appointed by and serve at the discretion of our board of directors. Our directors may, at any time and from time to time, appoint any person to bea director to fill a vacancy arising from the resignation or removal of a former director or as an addition to the existing board of directors. In addition, our directors maybe appointed or removed from office by an ordinary resolution of shareholders. A director will be removed from office automatically if, among other things, the director(i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) dies or is found to be or becomes of unsound mind; (iii) resigns by notice inwriting to our company; (iv) without special leave of absence from our board of directors, is absent from three consecutive meetings of the board and the boardresolves that his office be vacated; or (v) is removed pursuant to our amended and restated memorandum and articles of association. The compensation of ourdirectors is determined by the board of directors. There is no mandatory retirement age for directors. D.Employees We had a total of approximately 67,300, 63,800 and 62,700 employees as of December 31, 2021, 2022 and 2023, respectively. The following table indicates thedistribution of our employees by function as of December 31, 2023: Function Number of Employees General operation 36,900 Sales and marketing 10,600 General and administrative 5,600 Research and development 9,600 Total 62,700 We generally enter into standard confidentiality and employment agreements with our management and other employees. These contracts include a standardnon-compete covenant that prohibits the employee from competing with us, directly or indirectly, during his or her employment and for one year after the terminationof his or her employment. We believe that we maintain a good working relationship with our employees and we have not experienced any significant labor disputes as of the date ofthis annual report. E.Share Ownership The following table sets forth information concerning the beneficial ownership of our ordinary shares as of March 31, 2024: •each of our directors and executive officers; and •each person known to us to beneficially own more than 5% of our ordinary shares. The calculations in the table below are based on 574,340,007 ordinary shares issued and outstanding as of March 31, 2024, comprising 528,812,214 Class Aordinary shares and 45,527,793 Class B ordinary shares. Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by aperson and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exerciseof 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 ownershipof any other person. 121Table of Contents Class AOrdinaryShares Class BOrdinaryShares Percentage ofTotal Class Aand Class BOrdinaryShares† Percentage ofTotal VotingPower Held†† Directors and Executive Officers:(1) Forrest Xiaodong Li(2) 69,416,146 45,527,793 18.5 59.8 Gang Ye(3) 34,087,398 — 5.9 1.7 Tony Tianyu Hou * — * * David Heng Chen Seng * — * * Khoon Hua Kuok(4) 8,207,907 — 1.4 0.7 David Y Ma * — * * Chris Zhimin Feng(5) 9,357,650 — 1.6 0.0 Terry Feng Zhao * — * * Yanjun Wang * — * * David Jingye Chen(6) 11,864,075 — 2.1 0.7 All directors and executive officers as a group(7) 213,444,147 45,527,793 41.7 71.3 Principal Shareholders: Tencent entities(8) 104,264,743 — 18.2 0.0 Blue Dolphins Venture Inc(9) — 45,527,793 7.9 56.4 Baillie Gifford & Co(10) 34,183,394 — 6.0 2.8 *Less than 1% of our total outstanding shares on an as converted basis. †For each person and group included in this column, percentage ownership is calculated by dividing the number of shares beneficially owned by such personor group, including shares that such person or group has the right to acquire within 60 days after March 31, 2024, by the sum of Class A and Class B ordinaryshares, and the number of shares that such person or group has the right to acquire beneficial ownership within 60 days after March 31, 2024. ††For each person and group included in this column, percentage of total voting power represents voting power based on both Class A and Class B ordinaryshares beneficially owned by such person or group with respect to all outstanding Class A and Class B ordinary shares as one single class. Holders of ClassA ordinary shares are entitled to one vote per share and holders of Class B ordinary shares are entitled to 15 votes per share on all matters subject to ashareholders vote. (1)Unless otherwise indicated, the business address of our directors and executive officers is c/o 1 Fusionopolis Place, #17-10, Galaxis, Singapore 138522. (2)Represents (i) 45,527,793 Class B ordinary shares held by Blue Dolphins Venture Inc, a British Virgin Islands company wholly owned by Mr. Li, (ii) 2,695,579Class A ordinary shares beneficially owned by Mr. Li (including through an entity solely owned and controlled by Mr. Li), (iii) 17,000,000 Class A ordinaryshares issuable upon exercise of options held by Mr. Li within 60 days of March 31, 2024 and 2,834 Class A Ordinary Shares issuable upon vesting ofrestricted share units within 60 days from March 31, 2024, and (iv) an aggregate of 49,717,733 Class A ordinary shares over which Mr. Li has receivedirrevocable voting proxies from the respective owners of such shares (including certain directors and employees, certain affiliates of our employees, GarenaESOP Program (PTC) Limited and a family member of Mr. Li), including 27,997,705 Class A ordinary shares issuable upon exercise of options within 60 days ofMarch 31, 2024 and 1,224,424 Class A ordinary shares issuable upon vesting of restricted share units within 60 days of March 31, 2024. (3)Represents (i) 27,434,564 Class A ordinary shares held or beneficially owned by Mr. Ye, and (ii) 6,650,000 Class A ordinary shares issuable upon exercise ofoptions held by Mr. Ye within 60 days of March 31, 2024 and 2,834 Class A Ordinary Shares issuable upon vesting of restricted share units within 60 daysfrom March 31, 2024. With respect to 13,111,553 Class A ordinary shares, Forrest Xiaodong Li has been given an irrevocable proxy with regard to all mattersthat are subject to the vote of shareholders, and such numbers are excluded from the total voting power of Mr. Ye. 122Table of Contents(4)Includes (i) 200,000 Class A ordinary shares held or beneficially owned by Bright Magic Investments Limited, a British Virgin Islands company, (ii) 2,926,071Class A ordinary shares held by Fexos Limited, a British Virgin Islands company, (iii) 1,701,945 Class A ordinary shares beneficially owned by MacromindInvestments Limited, a British Virgin Islands company (iv) 705,184 Class A ordinary shares held by City Jet Limited, a British Virgin Islands company, (v)104,616 Class A ordinary shares beneficially owned by Joyce M. Kuok Foundation, a Hong Kong company, (vi) 104,616 Class A ordinary shares beneficiallyowned by Zheng Ge Ru Foundation, a Hong Kong company, and (vii) 322,000 shares held by Always Best International Limited, a Hong Kong company.Bright Magic Investments Limited, Fexos Limited, and Macromind Investments Limited are all wholly-owned subsidiaries of Kerry Group Limited. Mr. Kuok isa director of Kerry Group Limited and has indirect minority interests in these entities. Mr. Kuok may be deemed to have beneficial interests in the sharesbeneficially owned by these entities. City Jet Limited’s shareholders are Joyce M. Kuok Foundation and Zheng Ge Ru Foundation. As Mr. Kuok is agovernor of these two foundations, he may be deemed to have or share investment power which includes the power to dispose, or to direct the dispositionof, the shares beneficially owned by City Jet Limited and these two foundations. Always Best International Limited is an investment company of adiscretionary trust in which Mr. Kuok is one of the discretionary beneficiaries. Mr. Kuok disclaims beneficial ownership of ordinary shares held or beneficiallyowned by all of the aforesaid entities for all other purposes. The business address of Kerry Group Limited is 32/F, Kerry Centre, 683 King’s Road, Quarry Bay,Hong Kong. The business address or registered office of all the other aforesaid entities is 31/F, Kerry Centre, 683 King’s Road, Quarry Bay, Hong Kong,except for City Jet Limited whose registered office is at Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands.Shares beneficially owned by Mr. Kuok do not include the shares issuable upon conversion of the following convertible notes which were not convertibleaccordingly to their respective terms and conditions within 60 days of March 31, 2024: (i) US$100 million principal amount of our 2024 convertible notescurrently held by Macromind Investments Limited, (ii) US$10 million principal amount of our 2025 convertible notes currently held by Velmar CompanyLimited, a Hong Kong company, wholly owned by Kerry Group Limited, and (iii) US$35 million principal amount of our 2026 convertible notes currently heldby Merrywood Investments Limited, a British Virgin Islands company, wholly owned by Kerry Group Limited, subject to the terms and conditions of suchnotes. (5)Represents (i) 354,816 Class A ordinary shares held or beneficially owned by Mr. Feng, and (ii) 9,000,000 Class A ordinary shares issuable upon exercise ofoptions held by Mr. Feng within 60 days of March 31, 2024 and 2,834 Class A Ordinary Shares issuable upon vesting of restricted share units within 60 daysfrom March 31, 2024. With respect to all these shares, Forrest Xiaodong Li has been given an irrevocable proxy with regard to all matters that are subject tothe vote of shareholders, and such numbers are excluded from the total voting power of Mr. Feng. (6)Represents (i) 8,841,241 Class A ordinary shares held or beneficially owned by Mr. Chen, and (ii) 3,020,000 Class A ordinary shares issuable upon exercise ofoptions held by Mr. Chen within 60 days of March 31, 2024 and 2,834 Class A Ordinary Shares issuable upon vesting of restricted share units within 60 daysfrom March 31, 2024. With respect to 3,706,703 Class A ordinary shares, Forrest Xiaodong Li has been given an irrevocable proxy with regard to all mattersthat are subject to the vote of shareholders, and such numbers are excluded from the total voting power of Mr. Chen. (7)In September 2022, Tencent Holdings Limited and certain other Tencent entities granted an irrevocable voting proxy with respect to all their Class A ordinaryshares to our board of directors to vote on matters that are subject to the vote of shareholders of Sea. Such proxy gives our board of directors (dulyconstituted from time to time) approximately 8.6% of total voting power as of March 31, 2024. The total number of Class A ordinary shares beneficially ownedby all directors and executive officers as a group and the voting power of all directors and executive officers as a group have included the shares subject tosuch proxy. (8)Based on a Schedule 13D/A filed with the SEC on September 8, 2022 by Tencent Holdings Limited and Tencent Limited, the number of shares beneficiallyowned by Tencent entities are as follows: (i) 1,816,833 Class A ordinary shares beneficially owned by Tencent Holdings Limited through Huang RiverInvestment Limited, (ii) 98,510,410 Class A ordinary shares held by Tencent Limited, and (iii) 3,937,500 Class A ordinary shares by Tencent GrowthfundLimited, a wholly-owned subsidiary of Tencent Holdings Limited. Tencent Holdings Limited is a limited liability company organized and existing under thelaws of the Cayman Islands and is currently listed on Hong Kong Stock Exchange. The registered office of Tencent Holdings Limited is Cricket Square,Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands. In September 2022, Tencent granted an irrevocable voting proxy with respect to allits Class A ordinary shares to our board of directors (duly constituted from time to time) to vote on matters that are subject to the vote of shareholders ofSea. Total voting power of Tencent excludes voting power subject to such proxy. 123Table of Contents(9)Represents 45,527,793 Class B ordinary shares held by Blue Dolphins Venture Inc, a company wholly owned by Forrest Xiaodong Li. The registered addressof Blue Dolphins Venture Inc is Kingston Chambers, P.O. Box 173, Road Town, Tortola, British Virgin Islands. (10)Based on a Schedule 13G filed with the SEC on January 26, 2024 by Baillie Gifford & Co (“Baillie Gifford”), Baillie Gifford reported sole voting power over22,321,284 ADSs, each representing one Class A ordinary share, and sole dispositive power over 34,183,394 ADSs. The address of Baillie Gifford is CaltonSquare 1 Greenside Row Edinburgh EH1 3AN, Scotland, United Kingdom. Our ADSs are traded on the New York Stock Exchange and brokers or other nominees may hold ADSs in “street name” for customers who are the beneficialowners of our ADSs. As a result, we may not be aware of each person or group of affiliated persons who beneficially owns more than 5.0% of our ordinary shares. Our issued and outstanding share capital consists of Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares and Class Bordinary shares have the same rights except for voting and conversion rights and certain approval rights. Each Class A ordinary share is entitled to one vote, and eachClass B ordinary share is entitled to 15 votes and is convertible into one Class A ordinary share. Class A ordinary shares are not convertible into Class B ordinaryshares under any circumstances. See “Item 10. Additional Information—B. Memorandum and Articles of Association” for a more detailed description of our Class Aordinary shares and Class B ordinary shares. As of March 31, 2024, 392,323,309 of our Class A ordinary shares were held as ADSs by the depositary for our ADS holders. Other than the depositary, weare not aware of any record shareholder being a United States citizen or an entity incorporated in the United States as of March 31, 2024. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. For certain information as of December 31, 2023 concerning the outstanding awards we have granted to our directors and executive officers individuallypursuant to our share incentive plan, see “—B. Compensation—Share Incentive Plan.” Other than under the 2009 Plan, there are no arrangements for involving theemployees in the capital of the company, including any arrangement that involves the issue or grant of options or shares or securities of the company. F.Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable.ITEM 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A.Major Shareholders See “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” B.Related Party Transactions In October 2023, we deconsolidated a subsidiary. For further information, refer to Note 20 – Related Party Transactions in the accompanying notes toconsolidated financial statements included in “Item 17. Financial Statements.” Contractual Arrangements with Our VIEs, Their Shareholders and Us See “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements among Our VIEs, Their Shareholders and Us.” 124Table of ContentsShare Incentive Plan See “Item 6. Directors, Senior Management and Employees—B. Compensation—Share Incentive Plan.” Employment Agreements and Indemnification Agreements See “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management—Employment Agreements and IndemnificationAgreements.” C.Interest of Experts and Counsel Not applicable. 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 and Administrative Proceedings From time to time, we are and may become involved in legal proceedings, claims, investigations, and other disputes incidental to the ordinary conduct of ourbusiness including, among other things, contract or licensing disputes, copyright, trademark and other intellectual property infringement claims, consumer protectionclaims, employment related cases, disputes between consumers and third-party sellers or merchants, and disputes concerning other matters incidental to the ordinarycourse of our business. We may also initiate legal proceedings to protect our rights and interests. We are not a party to, nor are we aware of, any legal proceeding,investigation or claim which, in the opinion of our management, is likely to have any material adverse effect on our business, financial condition or results ofoperations, and our management believes that the risk of material loss in connection with the actions discussed below is currently remote. However, in light of theinherent uncertainties involved in these matters, some of which are beyond our control, the risk of loss may become more likely and an adverse outcome of one ormore of these matters could be material to our results of operations or cash flows for any particular reporting period. Class Action Litigations New York Action. On February 11, 2022, a putative class action captioned City of Taylor Police and Fire Retirement System v. Sea Limited, et al., No.151344/2022, was filed in New York state court against our company, directors, one of our shareholders, registered agent, and the underwriters of our ADS offering inSeptember 2021. The plaintiff’s complaint, which was amended on May 16, 2022, alleges that the registration statement for our ADS offering contained materialmisstatements or omissions in violation of the U.S. securities laws. On June 17, 2022, a second putative securities class action lawsuit captioned General RetirementSystem of the City of Detroit v. Sea Limited, et al., Index No. 155162/2022, was filed in New York state court against the same defendants. The complaint is purportedlyon behalf of investors who purchased the company’s 0.25% convertible notes due 2026 in our registered notes offering in September 2021 conducted concurrentlywith the abovementioned ADS offering and contained substantially similar allegations. In July 2022, the parties to both lawsuits jointly filed a stipulation and proposed order of consolidation, seeking to consolidate the two lawsuits, which wasso-ordered by the New York state court on August 3, 2022. On August 8, 2022, the county clerk certified the consolidation of the actions, with the consolidated actionproceeding under Index No. 151344/2022, and re-captioning the consolidated action as In re Sea Limited Securities Litigation. In July 2022, the Company and other served defendants filed a motion to dismiss the consolidated amended complaint. On May 15, 2023, the court issued adecision and order dismissing the complaint in its entirety with prejudice. 125Table of ContentsOn June 15, 2023, the plaintiffs filed a motion for leave to reargue and renew the motion to dismiss. On November 20, 2023, the court issued a decision andorder denying the plaintiffs’ motion for leave to reargue and renew the motion to dismiss. On June 15, 2023, the plaintiffs also filed a notice of appeal, which remains pending. We believe the case is without merit and intend to vigorously defend theaction. Arizona Action. On July 21, 2023 and September 8, 2023, two putative securities fraud class actions Muraweh v. Sea Limited, et al. and Mirvaydulloev v. SeaLimited, et al. were filed in the United States District Court for the District of Arizona against our company and two of our officers, asserting claims under the U.S.Securities Exchange Act of 1934. On October 6, 2023, the Court consolidated both actions and appointed Laborers District Council Construction Industry PensionFund as lead plaintiff under the caption Laborers District Council Construction Industry Pension Fund v. Sea Limited, et al., Case No. CV-23-01455-PHX-DLR. On October 23, 2023, the Company filed a motion to transfer the class action to the United States District Court for the Southern District of New York. Themotion to transfer is fully briefed and remains pending. On December 22, 2023, lead plaintiff filed a consolidated amended complaint against the Company and five ofits officers alleging claims under the Exchange Act. The Company has filed a motion to dismiss the action, which remains at its preliminary stages. We believe the caseis without merit and intend to vigorously defend the action. For risks and uncertainties relating to the pending cases against us, please see “Item 3. Key Information—D. Risk Factors—Business and OperationalRelated Risks—Other Operational Risks—We may be subject to risks related to litigation and regulatory proceedings.” Dividend Policy We do 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, ofour available funds and any future earnings to operate and expand our business. Our board of directors has discretion as to whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, ourshareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors. Under Cayman Islands law, aCayman Islands company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid if this wouldresult in the company being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to pay dividends, theform, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractualrestrictions and other factors that the board of directors may deem relevant. If we pay any dividends on our ordinary shares, we will pay those dividends which arepayable in respect of the Class A ordinary shares underlying the ADSs to the depositary, as the registered holder of such Class A ordinary shares, and the depositarythen will pay such amounts to our ADS holders who will receive payment to the same extent as holders of our ordinary shares, subject to the terms of the depositagreement, including the fees and expenses payable thereunder. Cash dividends on our ordinary shares, if any, will be paid in U.S. dollars. 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 financialstatements included in this annual report. ITEM 9.THE OFFER AND LISTING A.Offer and Listing Details Our ADSs have been listed on the New York Stock Exchange since October 20, 2017 and traded under the symbol “SE.” Each ADS represents one Class Aordinary share. 126Table of ContentsB.Plan of Distribution Not applicable. C.Markets Our ADSs have been listed on the New York Stock Exchange since October 20, 2017 under the symbol “SE.” 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 and our affairs are governed by our amended and restated memorandum and articles of association and theCompanies Act (As Revised) of the Cayman Islands, or Companies Act, and the common law of the Cayman Islands. We incorporate by reference into this annual report our Ninth Amended and Restated Memorandum and Articles of Association, the form of which wasincluded as Exhibit 3.1 to the Form 6-K (File No. 001-38237) we furnished to the Securities and Exchange Commission on February 14, 2022. Our shareholders adoptedour Ninth Amended and Restated Memorandum and Articles of Association by a special resolution on February 14, 2022. The following are summaries of material provisions of our Ninth Amended and Restated Memorandum and Articles of Association and the Companies Act asthey relate to the material terms of our ordinary shares. Registered Office and Objects Our registered office in the Cayman Islands is at the offices of Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1-1104,Cayman Islands. According to Clause 3 of our Ninth Amended and Restated Memorandum of Association, the objects for which we are established are unrestricted and wehave full power and authority to carry out any object not prohibited by the Companies Act or any other law of the Cayman Islands. Board of Directors See “Item 6. Directors, Senior Management and Employees.” 127Table of ContentsExempted Company We are an exempted company incorporated with limited liability under the Companies Act. The Companies Act distinguishes between ordinary residentcompanies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may applyto be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary resident company except for theexemptions 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 is not required to open its register of members for 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 given for a period of up to 30 years); •an exempted company may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; •an exempted company may register as a limited duration company; and •an exempted company may register as a segregated portfolio company. Ordinary Shares General All of our issued and outstanding ordinary shares are fully paid and non-assessable. Our shareholders who are non-residents of the Cayman Islands mayfreely hold and vote their ordinary shares. Our Ninth Amended and Restated Memorandum and Articles of Association prohibit us from issuing bearer shares. Ourcompany will issue only shares in registered form, which will be issued when registered in our register of members. Dividends The holders of our ordinary shares are entitled to receive such dividends as may be declared by our board of directors subject to our Ninth Amended andRestated Memorandum and Articles of Association and the Companies Act. In addition, our shareholders may by ordinary resolution declare a dividend, but nodividend may exceed the amount recommended by our directors. Under Cayman Islands law, dividends may be paid only out of profits, which include net earnings andretained earnings undistributed in prior years, and out of share premium, a concept analogous to paid-in surplus in the United States. No dividend may be declaredand paid unless our directors determine that, immediately after the payment, we will be able to pay our debts as they fall due in the ordinary course of business and wehave funds lawfully available for such purpose. Register of Members Under Cayman Islands law, we must keep a register of members and there must 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) of the amountpaid 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 eachrelevant category of shares held by a member carries voting rights under the articles of association of the company, and if so, whether such voting rightsare 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. 128Table of ContentsUnder 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 willraise a presumption of fact on the matters referred to above unless rebutted) and a member registered in the register of members will be deemed as a matter of CaymanIslands 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, without sufficient cause, entered in or omitted from the register of members, or if default is made or unnecessary delay takesplace in entering on the register the fact of any person having ceased to be a member, the person or member aggrieved or any member or the company itself may applyto 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 justiceof the case, make an order for the rectification of the register. Classes of Ordinary Shares; Conversion Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Except for conversion rights and voting rights, the Class Aordinary shares and Class B ordinary shares carry equal rights and rank pari passu with one another, including the rights to dividends and other capital distributions.Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. In addition, upon any direct or indirect sale, transfer,assignment or disposition of any number of Class B ordinary shares by a holder thereof or the direct or indirect transfer or assignment of the voting power attached tosuch Class B ordinary shares through voting proxy or otherwise to any person or entity which is not a permitted transferee, such Class B ordinary shares willautomatically convert into an equal number of Class A ordinary shares. Permitted transferees of our founder, who currently beneficially owns all issued andoutstanding Class B ordinary shares, include certain of his relatives so long as our founder retains control of the voting power over the Class B ordinary shares heldby such permitted transferees. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances and no Class B ordinary shares willbe issued after our initial public offering. Voting Rights Holders of our ordinary shares have the right to receive notice of, attend, speak and vote at general meetings of our company. Holders of Class A ordinaryshares and Class B ordinary shares shall at all times vote together as one class on all resolutions submitted to a vote for shareholders’ approval or authorization,except for certain class consents required under our memorandum and articles of association. Each Class A ordinary share shall be entitled to one vote, and each ClassB ordinary share shall be entitled to 15 votes, on all matters subject to the vote at general meetings of our company. At any general meeting a resolution put to thevote of the meeting shall be decided on a poll. An ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple majority of the votescast in a general meeting. A special resolution requires the affirmative vote of two-thirds of the votes cast in a general meeting. Both ordinary resolutions and specialresolutions 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 NinthAmended and Restated Memorandum and Articles of Association. A special resolution will be required for important matters such as making changes to ourmemorandum and articles of association. General Meetings and Shareholder Proposals As a Cayman Islands exempted company, we are not obliged by the Companies Act to call shareholders’ annual general meetings. Our Ninth Amended andRestated Memorandum and Articles of Association provide that we may (but are not obliged to) in each year hold a general meeting as our annual general meeting inwhich case we will specify the meeting as such in the notices calling it, and the annual general meeting will be held at such time and place as may be determined by ourdirectors. Cayman Islands law provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to putany proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our Ninth Amended and Restated Memorandumand Articles of Association allow shareholders holding shares representing in aggregate not less than one-third of all votes attaching to the issued and outstandingshares of our company entitled to vote at general meetings to requisition an extraordinary general meeting of the shareholders, in which case the directors are obligedto call such meeting and to put the resolutions so requisitioned to a vote at such meeting; however, our Ninth Amended and Restated Memorandum and Articles ofAssociation do not provide our shareholders with any right to put any proposals before annual general meetings or extraordinary general meetings not called by suchshareholders. 129Table of ContentsA quorum required for a meeting of shareholders consists of one or more shareholders holding, in aggregate, not less than 40% of the votes attaching to allissued and outstanding shares of our company present in person or by proxy or, if a corporation or other non-natural person, by its duly authorized representative.Advance notice of at least seven calendar days, or such longer period as may be determined by the chairman of our board of directors or our board of directors(exclusive of the day on which it is given or deemed to be given and of the day for which it is given) is required for the convening of our annual general meeting andother shareholders meetings. Transfer of Ordinary Shares Subject to the restrictions in our Ninth Amended and Restated Memorandum and Articles of Association as set out below, any of our shareholders maytransfer 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. 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 we have alien. Our directors may also, but is not required to, 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 boardof 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; •in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four; or •the ordinary shares transferred are free of any lien in favor of us; or •a fee of such maximum sum as the designated stock exchange may determine to be payable, or such lesser sum as the board of directors may from time totime require, is paid to us in respect thereof. If our directors refuse to register a transfer they are obligated to, within three months after the date on which the instrument of transfer was lodged, send toeach of the transferor and the transferee notice of such refusal. The registration of transfers of shares or of any class of shares may, after compliance with any noticerequirement of the designated stock exchange, be suspended at such times and for such periods (not exceeding in the whole thirty (30) days in any year) as our boardof directors may determine. Issuance of Additional Shares Our Ninth Amended and Restated Memorandum and Articles of Association authorizes our board of directors to issue additional ordinary shares from timeto time as our board of directors shall determine, to the extent of available authorized but unissued shares. Our Ninth Amended and Restated Memorandum andArticles of Association also authorize our board of directors to establish from time to time one or more series of preference shares and to determine, with respect toany series of preference shares, the terms and rights of that series, including: •the designation of the series; •the number of shares of the series; •the dividend rights, dividend rates, conversion rights, voting rights; and •the rights and terms of redemption and liquidation preferences. 130Table of ContentsOur board of directors may issue preference shares without further action by our shareholders to the extent authorized but unissued. Issuance of theseshares may dilute the voting power of holders of ordinary shares. Liquidation On the winding up of our company, if the assets available for distribution amongst our shareholders shall be more than sufficient to repay the whole of theshare capital at the commencement of the winding up, the surplus shall be distributed amongst our shareholders in proportion to the par value of the shares held bythem at the commencement of the winding up, subject to a deduction from those shares in respect of which there are monies due, of all monies payable to ourcompany for unpaid calls or otherwise. If our assets available for distribution are insufficient to repay all of the paid-up capital, the assets will be distributed so thatthe losses are borne by our shareholders in proportion to the par value of the shares held by them. We are an exempted company with “limited liability” incorporatedunder 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 Ninth Amended and Restated 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 in a notice served to suchshareholders at least 14 calendar days prior to the specified time and place of payment. The ordinary shares that have been called upon and remain unpaid on thespecified time 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 suchmanner 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 anyredeemable shares) provided that the manner and terms of such purchase have been approved by our board of directors or are otherwise authorized by our NinthAmended and Restated Memorandum and Articles of Association. Under the Companies Act, the redemption or repurchase of any share may be paid out of ourcompany’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 premiumaccount and capital redemption reserve) if the company can, immediately following such payment, pay its debts as they fall due in the ordinary course of business. Inaddition, under the Companies Act no such share may be redeemed or repurchased (a) unless it is fully paid up, (b) if such redemption or repurchase would result inthere being no shares issued and outstanding, or (c) if the company has commenced liquidation. In addition, our company may accept the surrender of any fully paidshare for no consideration. Variations of Rights of Shares The rights attached to any class of shares may, unless otherwise provided by the terms of issue of the shares of or the rights attaching to that class, bematerially adversely varied only with the written consent of the holders of a majority of the issued shares of that class or with the sanction of an ordinary resolutionpassed at a separate meeting of the holders of the shares of that class. Inspection of Books and Records Holders of our ordinary shares will have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporaterecords (save for our memorandum and articles of association, register of mortgages and charges, and special resolutions of our shareholders). However, we willprovide our shareholders with annual audited financial statements. See “—H. Documents on Display.” Changes in Capital Our shareholders may from time to time by ordinary resolutions: 131Table of Contents•increase the share capital by such sum, to be divided into shares of such classes and amount, as the resolution prescribes; •consolidate and divide all or any of our share capital into shares of a larger amount than our existing shares; •convert all or any of its paid-up shares into stock and reconvert the stock into paid-up shares of any denomination; •sub-divide our existing shares, or any of them into shares of a smaller amount than that fixed by our Ninth Amended and Restated Memorandum ofAssociation; provided that in the subdivision the proportion between the amount paid and the amount, if any, unpaid on each reduced share will be thesame as it was in case of the share from which the reduced share is derived; and •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 ofour share capital by the amount of the shares so canceled. Our shareholders may by special resolution, subject to confirmation by the Grand Court of the Cayman Islands on an application by our company for anorder confirming such reduction, reduce our share capital and any capital redemption reserve in any manner authorized by law. 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 this annual report. D.Exchange Controls The Cayman Islands currently has no exchange control regulations or currency restrictions. See “Item 4. Information on the Company—B. BusinessOverview—Regulation” for exchange control and currency restrictions in Indonesia, Taiwan, Vietnam, Thailand, Singapore and Malaysia. E.Taxation The following discussion is a summary of Cayman Islands, Singapore and U.S. federal income tax considerations of an investment in our ADSs or ordinaryshares is based upon laws and relevant interpretations thereof in effect as of the date of this annual report, all of which are subject to change. This summary does notdeal with all possible tax considerations relating to an investment in our ADSs or ordinary shares, such as the tax considerations under state, local and other tax laws,or tax laws of jurisdictions other than the Cayman Islands, Singapore and the United States. To the extent that the discussion relates to matters of Cayman Islands taxlaw, it represents the opinion of Maples and Calder (Hong Kong) LLP, our counsel as to Cayman Islands law. To the extent that the discussion relates to matters ofSingapore tax law, it represents the opinion of Rajah & Tann Singapore LLP, our counsel as to Singapore law. 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 thenature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp dutieswhich may be applicable on instruments executed in, or brought within, the jurisdiction of the Cayman Islands. The Cayman Islands is not party to any double taxtreaties which are applicable to any payments made by or to our company. There are no exchange control regulations or currency restrictions in the Cayman Islands. Payments of dividends and capital in respect of our ordinary shares or our ADSs will not be subject to taxation in the Cayman Islands and no withholdingwill be required on the payment of a dividend or capital to any holder of our ordinary shares or our ADSs, nor will gains derived from the disposal of our ordinaryshares or our ADSs be subject to Cayman Islands income or corporation tax. 132Table of ContentsNo stamp duty is payable in respect of the issue of our ordinary shares or on an instrument of transfer in respect of our ordinary shares. Singapore Taxation The following discussion is a summary of Singapore income tax, goods and services tax and stamp duty considerations relevant to the acquisition,ownership and disposition of ADSs or our ordinary shares. The statements made herein regarding taxation are general in nature and based upon certain aspects of thecurrent tax laws of Singapore and administrative guidelines issued by the relevant authorities in force as of the date hereof and are subject to any changes in suchlaws or administrative guidelines or the interpretation of such laws or guidelines occurring after such date, which changes could be made on a retrospective basis. Thestatements made herein do not purport to be a comprehensive or exhaustive description of all of the tax considerations that may be relevant to a decision to acquire,own or dispose of our ADSs or our ordinary shares and do not purport to deal with the tax consequences applicable to all categories of investors, some of which(such as dealers in securities) may be subject to special rules. Prospective shareholders are advised to consult their own tax advisers as to the Singapore or other taxconsequences of the acquisition, ownership of or disposal of our ADSs and our ordinary shares, taking into account their own particular circumstances. It isemphasized that neither we, our counsels, nor any other persons involved in this annual report accept responsibility for any tax effects or liabilities resulting from theacquisition, holding or disposal of our ADSs or our ordinary shares. Income Tax Under the Singapore Income Tax Act, a company established outside Singapore but whose governing body, being the board of directors, usually exercisesde facto control and management of its business in Singapore could be considered tax residents in Singapore. However, such control and management of the businessshould not be deemed to be in Singapore if physical board meetings are mainly conducted outside Singapore. Where board resolutions are passed in the form ofwritten consent signed by the directors each acting in their own jurisdictions, or where the board meetings are held by teleconference or videoconference, it ispossible that the place of de facto control and management will be considered to be where the majority of the board are located when they sign such consent or attendsuch conferences. We believe that Sea Limited is not a Singapore tax resident for Singapore income tax purposes. However, the tax resident status of Sea Limited is subject todetermination by the IRAS and uncertainties remain with respect to our tax residence status. It is not certain if Sea Limited will be classified as a Singapore tax resident.See “Item 3. Key Information—D. Risk Factors—Markets Related Risks” for a discussion of the Singapore tax consequences to non-resident investors if Sea Limitedis deemed to be a Singapore tax resident. The statements below are based on the assumption that Sea Limited is not a tax resident in Singapore for Singapore incometax purposes. Dividends With Respect to Our ADSs or Our Ordinary Shares Where Sea Limited is not considered a tax resident in Singapore for Singapore income tax purposes, the dividend payments made by Sea Limited would beconsidered sourced outside Singapore (unless our ADSs or our ordinary shares are held as part of a trade or business carried out in Singapore, in which case theholders of our ADSs or our ordinary shares may be taxed on the dividends distributed to them). Foreign-sourced dividends received or deemed to be received inSingapore by non-resident individuals are exempt from Singapore income tax. This exemption also applies to Singapore tax resident individuals who have received or,are deemed to have received his foreign-sourced income in Singapore on or after January 1, 2004 (except where such income is received through a partnership inSingapore). Foreign-sourced dividends received or deemed to be received in Singapore by corporate investors who do not have a business presence in Singapore, arenot tax resident in Singapore, and who do not have a permanent establishment or tax presence in Singapore, will generally not be subject to income tax in Singapore.Foreign-sourced dividends received or deemed to be received in Singapore by corporate investors who are tax residents in Singapore will generally be subject toSingapore income tax. Since Sea Limited is a company incorporated in the Cayman Islands, and the prevailing rate of tax in the Cayman Islands, being a tax of a similarcharacter to the Singapore income tax, is 0%, dividends received in Singapore by resident corporate investors should be subject to Singapore income tax at theprevailing rate of 17% unless the resident corporate investors are able to avail themselves to the exemption in Section 13(12) of the Singapore Income Tax Act. 133Table of ContentsDividends received in respect of our ADSs or our ordinary shares whether by a Singapore tax resident or a non-Singapore tax resident as a shareholder arenot subject to any withholding tax in Singapore. Gains With Respect to Disposition of Our ADSs or Our Ordinary Shares Gains arising from disposition of our ADSs or our ordinary shares may be construed as income and subject to Singapore income tax if they arise from or areotherwise connected with a trade or business activity in Singapore. Factors that determine the existence of a trade include, inter alia, the length of ownership, thefrequency of similar transactions, and the motive of acquisition. Such gains may also be considered revenue in nature, even if they do not arise from an activity in the ordinary course of trade or business or an ordinaryincident of some other business activity. For example, if our ADSs or our ordinary shares were purchased with the intention or purpose of making a profit by salerather than holding for long-term investment purposes in Singapore. Conversely, gains from disposition of our ADSs or our ordinary shares in Singapore, ifconsidered as capital gains rather than income by the Inland Revenue Authority of Singapore, are not taxable in Singapore to the extent that they do not fall within theambit of Section 10L. Under Section 10L of the Singapore Income Tax Act, effective January 1, 2024, foreign-sourced disposal gains received in Singapore by an entity of a relevantgroup from the sale or disposal of a foreign asset will be treated as income chargeable to tax under Section 10(1)(g) of the Singapore Income Tax Act. A group is arelevant group if the entities of the group are not all incorporated, registered or established in Singapore, or any entity of the group has a place of business outsideSingapore. An entity in this context includes any legal person (but not an individual), a general or limited partnership, or a trust. “Foreign sourced disposal gains” are gains derived from the sale of moveable or immoveable property situated outside Singapore. Such gains will only besubject to tax if they are received in Singapore by an entity that does not have adequate economic substance in Singapore and the sale or disposal of the foreign assetoccurs on or after January 1, 2024. Foreign sourced disposal gains derived by foreign entities (incorporated, registered or established outside Singapore) that are notoperating in or from Singapore will generally not be within the scope of Section 10L. For example, a foreign entity that only makes use of banking facilities in Singaporeand has no operations in Singapore is not within the scope of Section 10L. Investors should seek their own tax advice on the taxability of the gains arising from the disposition of our ADSs or our ordinary shares. For corporate shareholders who are subject to Singapore income tax treatment under Section 34A or 34AA of the Singapore Income Tax Act in relation to theadoption of Singapore Financial Reporting Standard 39—Financial Instruments: Recognition and Measurement (FRS 39) or Singapore Financial Reporting Standard109—Financial Instruments (FRS 109), for accounting purposes, they may be required to recognize gains or losses (not being gains or losses in the nature of capital)even though no sale or disposal of our ADSs or our ordinary shares has been made. Our corporate shareholders who may be subject to such provisions shouldconsult their own accounting and tax advisers regarding the Singapore income tax consequences of their acquisition, ownership and disposition of our ADSs and ourordinary shares arising from the adoption of FRS 39 or FRS 109. Notwithstanding the above, foreign investors may claim that the gains from disposition of their ADSs or ordinary shares are not sourced or received inSingapore (so that such gains will not be subject to Singapore income tax) if (i) the foreign investor is not a tax resident in Singapore, (ii) the foreign investor does notmaintain a permanent establishment in Singapore, to which the disposition gains may be effectively connected, and (iii) the entire process (including the negotiation,deliberation, execution of the acquisition and sale, etc.) leading up to the actual acquisition and sale of our ADSs or our ordinary shares is performed outside ofSingapore. Goods and Services Tax The issuance of our ADSs or our ordinary shares is not subject to Singapore goods and services tax (GST). 134Table of ContentsThe sale of our ADS or our ordinary shares by a GST-registered investor in Singapore to another person belonging in Singapore is an exempt supply (i.e., notsubject to GST). Any input GST (for example, GST on brokerage) incurred by the GST-registered investor in connection with the making of this exempt supply isgenerally not recoverable and will become an additional cost to the investor unless the investor satisfies certain conditions prescribed under the GST legislation orsatisfies certain GST concessions. Where our ADS or our ordinary shares are sold by a GST-registered investor in the course or furtherance of a business carried on by such an investor to aperson belonging outside Singapore (and who is outside Singapore at the time of supply), the sale is a taxable supply subject to GST at a zero rate (i.e., 0%). Anyinput GST (for example, GST on brokerage) incurred by the GST-registered investor in making this zero-rated supply for the purpose of his business will, subject to theconditions prescribed under the GST legislation, be recoverable from the Comptroller of GST. Investors should seek their own tax advice on the recoverability of GST incurred on expenses in connection with the purchase and sale of our ADSs or ourordinary shares. Services such as brokerage and handling services rendered by a GST-registered person to an investor belonging in Singapore in connection with theinvestor’s purchase or sale of our ADSs or our ordinary shares will be subject to GST at the prevailing rate (currently at 9% with effect from January 1, 2024). Similarservices rendered contractually to an investor belonging outside Singapore should, subject to certain conditions prescribed under the GST legislation, qualify for GSTat zero rate (i.e. 0%). Stamp Duty No stamp duty is payable on the subscription and issuance of our ADSs or our ordinary shares. As Sea Limited is incorporated in the Cayman Islands andour ADSs and our ordinary shares are not registered in any register kept in Singapore, no stamp duty is payable in Singapore on any instrument of transfer upon asale or gift of our ADSs or our ordinary shares. This position would remain as long as Sea Limited is not considered a residential property-holding entity. United States Federal Income Tax Considerations The following discussion is a summary of U.S. federal income tax considerations generally applicable to the ownership and disposition of the ADSs ownedby U.S. Holders (as defined below) and to the underlying ordinary shares. This discussion applies only to U.S. Holders that hold the ADSs or ordinary shares ascapital assets (generally, property held for investment). This discussion is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), U.S. Treasuryregulations promulgated thereunder (“Regulations”), published positions of the Internal Revenue Service (the “IRS”), court decisions and other applicable authorities,all as of the date hereof and all of which are subject to change or differing interpretations (possibly with retroactive effect).This discussion does not address all U.S. federal income tax considerations that may be applicable to U.S. Holders in light of their particular circumstances orU.S. Holders subject to special treatment under U.S. federal income tax law, such as:•banks, insurance companies and other financial institutions;•entities treated as partnerships for U.S. federal income tax purposes, S corporations or other pass-through entities;•tax-exempt entities;•real estate investment trusts;•regulated investment companies;•brokers, dealers, or traders in securities that elect to use a mark-to-market method of accounting;•certain former citizens or residents of the United States;•persons that elect to mark their securities to market;135Table of Contents•persons who hold ADSs or ordinary shares as part of a hedging, integrated, straddle, conversion or constructive sale transaction for U.S. federal incometax purposes;•persons that have a functional currency other than the U.S. dollar; and•persons that actually or constructively own 10% or more of our stock by vote or value.This discussion does not address any U.S. state or local or non-U.S. tax considerations or any U.S. federal estate, gift, alternative minimum tax or Medicarecontribution tax considerations.For purposes of this discussion, a “U.S. Holder” is a beneficial owner of the ADSs or ordinary shares that is for U.S. federal income tax purposes:•an individual who is a citizen or resident of the United States;•a corporation (including any entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the UnitedStates or any state thereof or the District of Columbia;•an estate whose income is subject to U.S. federal income taxation regardless of its source; or•a trust, (i) the administration of which is subject to the primary supervision of a court within the United States and for which one or more U.S. personshave the authority to control all substantial decisions, or (ii) that has a valid election in effect under applicable Regulations 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 holds the ADSs or ordinary shares, the tax treatment of a partnerwill generally depend on the status of the partner and the activities of the partnership. Partners in a partnership holding the ADSs or ordinary shares should consulttheir tax advisors regarding the tax considerations of an investment in the ADSs or ordinary shares.The discussion below assumes that the representations contained in the deposit agreement are true and that the obligations in the deposit agreement andany related agreement have been and will be complied with in accordance with their terms.If a U.S. Holder holds ADSs, such holder will generally be treated as owning the underlying ordinary shares represented by those ADSs for U.S. federalincome tax purposes.DividendsSubject to the discussion below under “—Passive Foreign Investment Company Rules,” the gross amount of any distribution to a U.S. Holder with respectto the ADSs or ordinary shares will generally be included in such holder’s gross income as ordinary dividend income on the date actually or constructively receivedby such holder, in the case of ordinary shares, or by the depositary, in the case of ADSs, to the extent that the distribution is paid out of our current or accumulatedearnings and profits (as determined under U.S. federal income tax principles). We do not intend to calculate our earnings and profits under U.S. federal income taxprinciples. Therefore, U.S. Holders should expect that any distribution from us will generally be reported as a dividend. The amount of such dividend will includeamounts withheld by us or our paying agent in respect of any foreign taxes. Any dividend from us will not be eligible for the dividends-received deduction generallyallowed to corporations in respect of dividends received from U.S. corporations.The amount of any dividend paid in foreign currency will equal the U.S. dollar value of the foreign currency received calculated by reference to the exchangerate in effect on the date the dividend is received by a U.S. Holder, in the case of ordinary shares, or by the depositary in the case of ADSs, regardless of whether theforeign currency is converted into U.S. dollars. If the foreign currency received as a dividend is converted into U.S. dollars on the date it is received, a U.S. Holder willgenerally not be required to recognize foreign currency gain or loss in respect of the dividend income. If the foreign currency received as a dividend is not convertedinto U.S. dollars on the date of receipt, a U.S. Holder will have a basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Any gain or lossrealized on a subsequent conversion or other disposition of the foreign currency will be treated as U.S. source ordinary income or loss.136Table of ContentsWith respect to individuals and certain other non-corporate U.S. Holders, dividends may constitute “qualified dividend income” that is subject to tax at thelower applicable capital gains rates provided that (1) the ADSs or ordinary shares on which the dividends are paid are readily tradable on an established securitiesmarket in the United States, (2) we are not a PFIC for either our taxable year in which the dividend was paid or the preceding taxable year, and (3) certain holding periodand other requirements are met. The ADSs, but not our ordinary shares, are listed on the NYSE so we anticipate that the ADSs should qualify as readily tradable on anestablished securities market in the United States, although there can be no assurances in this regard. U.S. Holders should consult their tax advisors regarding theavailability of the lower capital gains rate applicable to qualified dividend income for dividends paid with respect to the ADSs.Dividends from us will generally constitute non-U.S. source income and be treated as “passive category income” for foreign tax credit limitation purposes.U.S. Holders may be eligible, subject to a number of complex limitations, to claim a foreign tax credit in respect of any nonrefundable foreign withholding tax imposedon dividends received on the ADSs or ordinary shares. If a U.S. Holder does not elect to claim a foreign tax credit for foreign taxes withheld, such holder may insteadclaim a deduction for U.S. federal income tax purposes in respect of such taxes, but only for a year in which such holder elects to do so for all creditable foreign incometaxes. U.S. Holders should consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.Sale or Other Disposition of ADSs or Ordinary SharesSubject to the discussion below under “—Passive Foreign Investment Company Rules,” a U.S. Holder will generally recognize gain or loss on any sale orother disposition of the ADSs or ordinary shares equal to the difference between the amount realized with respect to such ADSs or ordinary shares and such holder’stax basis in such ADSs or ordinary shares. Such gain or loss will generally be capital gain or loss. Individuals and certain other non-corporate U.S. Holders who haveheld such ADSs or ordinary shares for more than one year will generally be eligible for reduced tax rates. The deductibility of capital losses is subject to limitations.Any such gain or loss recognized by a U.S. Holder will generally be treated as U.S.-source gain or loss for foreign tax credit limitation purposes.Passive Foreign Investment Company RulesA non-U.S. corporation, such as our company, will be classified as a PFIC for U.S. federal income tax purposes for any taxable year, if either (i) 75% or more ofits 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 aquarterly average) during such year produce or are held for the production of passive income. Passive income generally includes dividends, interest (includinginterest from our non-banking credit business), royalties, rents, annuities, net gains from the sale or exchange of property producing such income and net foreigncurrency gains. For this purpose, cash is generally categorized as a passive asset and the company’s unbooked intangibles associated with active business activityare taken into account as a non-passive asset. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the incomeof any other corporation in which we own (or are deemed to own), directly, indirectly or constructively, 25% or more (by value) of the stock.Although the law in this regard is not entirely clear, we treat our VIEs as being owned by us for U.S. federal income tax purposes.Based on our income and assets, and the value of the ADSs, we do not believe that we were a PFIC, for U.S. federal income tax purposes, for the taxable yearended December 31, 2023, and do not anticipate becoming a PFIC for the current taxable year or for the foreseeable future. Nevertheless, because PFIC status is afactual determination made annually after the close of each taxable year on the basis of the composition of our income and assets, there can be no assurance that wewill not be a PFIC for the current taxable year or any future taxable year. Under circumstances where revenues from activities that produce passive income significantlyincrease relative to our revenues from activities that produce non-passive income, or where we determine not to deploy significant amounts of cash, our risk ofbecoming classified as a PFIC may substantially increase. In addition, because we have valued our goodwill based on the market value of the ADSs, a decrease in themarket value of the ADSs may also result in our becoming a PFIC.137Table of ContentsIf we are a PFIC for any taxable year during which a U.S. Holder holds the ADSs or ordinary shares, such holder will be subject to special tax rules withrespect to any “excess distribution” that such holder receives on the ADSs or ordinary shares and any gain such holder realizes from a sale or other disposition(including a pledge) of the ADSs or ordinary shares, unless such holder makes a “mark-to-market” election as discussed below. Distributions received by a U.S.Holder in a taxable year that are greater than 125% of the average annual distributions such holder received during the shorter of the three preceding taxable years orsuch holder’s holding period for the ADSs or ordinary shares will be treated as an excess distribution. Under these special tax rules:•the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the ADSs or ordinary shares;•amounts 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 areclassified as a PFIC (a “pre-PFIC year”) will be subject to tax as ordinary income; and•amounts allocated to each prior taxable year, other than the current taxable year or a pre-PFIC year, will be subject to tax at the highest tax rate in effectapplicable to the U.S. Holder for that year, and such amounts will be increased by an additional tax equal to interest on the resulting tax deemed deferredwith respect to such years.If we are a PFIC for any taxable year during which a U.S. Holder holds ADSs or ordinary shares and any of our non-U.S. affiliated entities are also PFICs,such holder will be treated as owning a proportionate amount (by value) of the shares of each such non-U.S. affiliate classified as a PFIC for purposes of theapplication of these rules. Alternatively, a U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election for such stock of a PFIC to elect out of thetax treatment discussed in the second preceding paragraph. If a U.S. Holder makes a valid mark-to-market election for the ADSs, the U.S. Holder will include in incomeeach year an amount equal to the excess, if any, of the fair market value of the ADSs as of the close of such holder’s taxable year over such holder’s adjusted basis insuch ADSs. The U.S. Holder is allowed a deduction for the excess, if any, of such holder’s adjusted basis in the ADSs over their fair market value as of the close of thetaxable year. Deductions are allowable however, only to the extent of any net mark-to-market gains on the ADSs included in the U.S. Holder’s income for prior taxableyears. Amounts included in the U.S. Holder’s income under a mark-to-market election, as well as gain on the actual sale or other disposition of the ADSs, are treatedas ordinary income. Ordinary loss treatment also applies to the deductible portion of any mark-to-market loss on the ADSs, as well as to any loss realized on the actualsale or disposition of the ADSs, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously included in income with respect tosuch ADSs. The U.S. Holder’s basis in the ADSs will be adjusted to reflect any such income or loss amounts. If a U.S. Holder makes such a mark-to-market election,tax rules that apply to distributions by corporations which are not PFICs would apply to distributions by us (except that the lower applicable capital gains rate forqualified dividend income would not apply). If a U.S. Holder makes a valid mark-to-market election, and we subsequently cease to be classified as a PFIC, such U.S.Holder will not be required to take into account the mark-to-market income or loss described above during any period that we are not classified as a PFIC. 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 15 daysduring each calendar quarter (“regularly traded”) on a qualified exchange or other market, as defined in applicable Regulations. We expect that the ADSs will continueto be listed on the NYSE, which is a qualified exchange for these purposes, and, consequently, assuming that the ADSs are regularly traded, if a U.S. Holder holds theADSs, it is expected that the mark-to-market election would be available to such holder were we to become a PFIC. A mark-to-market election may not, however, bemade with respect to the ordinary shares, as they are not marketable stock. Accordingly, if we are a PFIC during any year in which a U.S. Holder holds ordinary shares,such holder will generally be subject to the special tax rules discussed above. In addition, because, as a technical matter, a mark-to-market election cannot be made for any lower-tier PFICs that we may own, a U.S. Holder may continue tobe subject to the PFIC rules with respect to such holder’s indirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S. federalincome tax purposes. 138Table of ContentsWe do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections, which, if available, would result in tax treatmentdifferent from the general tax treatment for PFICs described above. If a U.S. Holder owns the ADSs or ordinary shares during any taxable year that we are a PFIC, such holder must generally file an annual report with the IRSregarding their ownership of the ADSs or ordinary shares. U.S. Holders should consult their tax advisors concerning the U.S. federal income tax considerations ofholding and disposing of the ADSs or ordinary shares if we are or become a PFIC, including the availability and possibility of making a mark-to-market election. THE PRECEDING DISCUSSION OF U.S. FEDERAL INCOME TAX CONSIDERATIONS IS INTENDED FOR GENERAL INFORMATION ONLY ANDDOES NOT CONSTITUTE TAX ADVICE. U.S. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS AS TO THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSIDERATIONS TO THEM OF THE OWNERSHIP AND DISPOSITION OF THE ADSs AND ORDINARY SHARES IN THEIR PARTICULARCIRCUMSTANCES. F.Dividends and Paying Agents Not applicable. G.Statement by Experts Not applicable. H.Documents on Display We previously filed with the SEC registration statement on Form F-1 (File No. 333-220571), as amended, including the prospectus contained therein, togetherwith the post-effective registration statement on Form F-1 (File No. 333-221029) to register additional securities that become effective immediately upon filing, toregister our Class A ordinary shares in relation to our initial public offering. We also filed with the SEC related registration statement on Form F-6 (File No. 333-220861)to register our ADSs and registration statements on Form S-8 (File No. 333-222071, No. 333-223551, No. 333-229137, No. 333-232859, No. 333-235799, No. 333-251873,No. 333-261969, No. 333-269099 and No. 333-276358) to register our securities to be issued under our 2009 Plan. We are subject to the periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers. Under theExchange Act, we are required to file reports and other information with the SEC. Specifically, we are required to file annually a Form 20-F within four months after theend of each fiscal year. Copies of reports and other information, when so filed with the SEC, can be obtained from the SEC’s website at www.sec.gov. As a foreignprivate issuer, we are exempt from the rules of the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements, and our executiveofficers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. Inaddition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companieswhose securities are registered under the Exchange Act. We will furnish The Bank of New York Mellon, the depositary of our ADSs, with our annual reports, which will include a review of operations and annualaudited consolidated financial statements prepared in conformity with U.S. GAAP, and all notices of shareholders’ meetings and other reports and communicationsthat are made generally available to our shareholders. The depositary will make such notices, reports and communications available to holders of ADSs and, upon ourrequest, will mail to all record holders of ADSs the information contained in any notice of a shareholders’ meeting received by the depositary from us. I.Subsidiary Information Not applicable. 139Table of ContentsITEM 11.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Foreign Exchange Risk Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. Ourexposure to the risk of changes in foreign exchange rates relates primarily to our operating activities when revenue or expense is denominated in a foreign currencyand our net investments in foreign subsidiaries. We have transactional currency exposures arising from sales or cost of revenue that are denominated in a currencyother than the respective functional currencies of our subsidiaries, primarily Singapore dollar, Indonesian rupiah, Vietnamese dong, Philippines peso, Malaysianringgit, Thai baht, Chinese yuan, New Taiwan dollar and Brazil real. The foreign currencies in which these transactions are denominated are mainly U.S. dollar. Oursales and costs are denominated in the respective functional currencies of our subsidiaries. Our trade receivable and trade payable balances at the end of the reportingperiod have similar exposures. Such amounts include balances within the subsidiaries which, although eliminated from the consolidated balance sheets, will continueto contribute to foreign exchange risk exposures in the consolidated statements of operations and consolidated statements of comprehensive loss.Foreign currency exchange rates for currencies in some of our markets have experienced substantial volatility. It is difficult to predict how market forces or thegovernment policies in those markets may impact the exchange rates against the U.S. dollar in the future. See “Item 3. Key Information—D. Risk Factors—Businessand Operational Related Risks—Risks Applicable Across Multiple Businesses—Fluctuations in foreign currency exchange rates may adversely affect our operationaland financial results, which we report in U.S. dollars.”As of December 31, 2023, we had cash, cash equivalents and restricted cash of US$4,243.7 million. We had U.S. dollar-denominated cash, cash equivalentsand restricted cash of US$1,629.0 million, Singapore dollar-denominated cash, cash equivalents and restricted cash of US$540.6 million, Indonesian rupiah-denominated cash, cash equivalents and restricted cash of US$408.1 million, Vietnamese dong-denominated cash, cash equivalents and restricted cash of US$341.9million, and cash, cash equivalents and restricted cash denominated in other currencies of US$1,324.1 million. If the U.S. dollar had strengthened or weakened by 100basis points against Singapore dollar, our cash, cash equivalents and restricted cash would have decreased or increased by US$5.4 million. If the U.S. dollar hadstrengthened or weakened by 100 basis points against Indonesian rupiah, our cash, cash equivalents and restricted cash would have decreased or increased byUS$4.1 million. If the U.S. dollar had strengthened or weakened by 100 basis points against Vietnamese dong, our cash, cash equivalents and restricted cash wouldhave decreased or increased by US$3.4 million. If the U.S. dollar had strengthened or weakened by 100 basis points against each of the other currencies in which weheld cash, cash equivalents and restricted cash, our cash, cash equivalents and restricted cash would have decreased or increased by US$13.2 million. Credit Risk We are exposed to credit risk from our operating activities (primarily from trade and other receivables) and from our investing activities, including loansreceivable, deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. Our objective is to seek continual revenuegrowth while minimizing losses incurred due to increased credit risk exposure. Financial instruments that potentially subject us to significant concentrations of creditrisk consist primarily of cash and cash equivalents, restricted cash, accounts receivable, other receivables, loans receivable, held to maturity investments, available-for-sale investments, and amounts due from related parties. As of December 31, 2023, substantially all of our cash and cash equivalents were held at major financialinstitutions in their respective locations. We believe that these financial institutions are of high credit quality and continually monitor the credit worthiness of thesefinancial institutions. Due to the relatively small dollar amount of individual loans receivable, we generally do not require collateral on these balances. As of December31, 2023, no single loan customer’s balance accounted for more than 5% of net loans receivable. ITEM 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES A.Debt Securities Not applicable. 140Table of ContentsB.Warrants and Rights Not applicable. C.Other Securities Not applicable. D.American Depositary Shares Fees and Charges Our ADS Holders May Have to Pay Our ADSs, each of which represents one Class A ordinary share, are listed on the New York Stock Exchange. The Bank of New York Mellon is the depositaryof our ADS program. A holder of ADSs may have to pay certain fees of The Bank of New York Mellon, as depositary, and certain taxes, registration and transfercharges and fees and governmental charges and fees. The depositary collects fees for delivery and surrender of ADSs directly from holders depositing shares orsurrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to holders by deductingthose 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 depositaryservices by deduction from cash distributions or by directly billing holders or by charging the book-entry system accounts of participants acting for them. Thedepositary may collect any fees by deduction from any cash distribution payable (or by selling a portion of securities or other property distributable) to ADS holdersthat are obligated to pay those fees. The depositary may generally refuse to deliver ADSs or deposited shares or to forward any distributions until its fees for thoseservices are paid. Pursuant to the depositary agreement, holders of our ADSs may have to pay to The Bank of New York Mellon, either directly or indirectly, fees orcharges up to the amounts set forth in the table below. From time to time, the depositary may make payments to us to reimburse us for costs and expenses generally arising out of establishment and maintenance ofthe ADS program, waive fees and expenses for services provided to us by the depositary or share revenue from the fees collected from ADS holders. In performing itsduties under the deposit agreement, the depositary may use brokers, dealers, foreign currency dealers or other service providers that are owned by or affiliated withthe depositary and that may earn or share fees, spreads or commissions. A copy of the depositary agreement is filed as an exhibit to this annual report on Form 20-F. Persons depositing or withdrawing sharesor holders of ADSs must pay: For:US$5.00 (or less) per 100 ADSs (or portion thereof) Issuance of ADSs, including issuances resulting from a distribution ofshares or rights or other propertyCancelation of ADSs for the purpose of withdrawal, including if the depositagreement terminates US$.05 (or less) per ADS (or portion thereof) Any cash distribution to ADS holders A fee equivalent to the fee that would be payable if securities distributed to youhad been shares and the shares had been deposited for issuance of ADSs Distribution of securities distributed to holders of deposited securities(including rights) that are distributed by the depositary to ADS holders US$.05 (or less) per ADS (or portion thereof) per annum Depositary services Registration or transfer fees Transfer and registration of shares on our share register to or from the nameof the depositary or its agent when you deposit or withdraw shares Expenses of the depositary Cable, telex and facsimile transmissions (when expressly provided in thedeposit agreement) Converting foreign currency to U.S. dollars Taxes and other governmental charges the depositary or the custodian has to payon any ADS or shares underlying ADSs, such as stock transfer taxes, stamp dutyor withholding taxes As necessary Any charges incurred by the depositary or its agents for servicing the depositedsecurities As necessary141Table of ContentsPART II ITEM 13.DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES None. ITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS Not applicable. ITEM 15.CONTROLS AND PROCEDURES Disclosure Controls and Procedures The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, asamended (the “Exchange Act”)) that are designed to ensure that required information is recorded, processed, summarized and reported within the required timeframe,as specified in the rules set forth by the Securities and Exchange Commission (“SEC”). Our disclosure controls and procedures are also designed to ensure thatinformation required to be disclosed is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allowtimely decisions regarding required disclosures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls andprocedures as of December 31, 2023. While there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including thepossibility of human error and the circumvention or overriding of the controls and procedures, the Company’s disclosure controls, and procedure are designed toprovide reasonable assurance of achieving their objectives. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that ourdisclosure controls and procedures were effective as of December 31, 2023. Management’s Annual Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f)under the Securities Exchange Act of 1934. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financialstatements would be prevented or detected. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls maybecome inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. 142Table of ContentsManagement conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2023. In making thisassessment, management used the criteria set forth in the “Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of theTreadway Commission (2013 framework).” Based on the results of this assessment and on those criteria, management concluded that our internal control over financial reporting was effective as ofDecember 31, 2023. Attestation Report of the Registered Public Accounting Firm The effectiveness of the company’s internal control over financial reporting as of December 31, 2023 has been audited by Ernst & Young LLP, an independentregistered public accounting firm, as stated in their report. Changes in Internal Control over Financial Reporting There were no changes in our internal controls over financial reporting that occurred during the period covered by this annual report on Form 20-F that havematerially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 16A.AUDIT COMMITTEE FINANCIAL EXPERT Our board of directors has also determined that Mr. David Heng Chen Seng, an independent director and a member of our audit committee, qualifies as an“audit committee financial expert” within the meaning of the SEC rules and possesses financial sophistication within the meaning of the New York Stock ExchangeListed Company Manual. Mr. David Heng Chen Seng satisfies the “independence” requirements of Section 303A of the New York Stock Exchange Listed CompanyManual and meets the independence standards under Rule 10A-3 under the Exchange Act. ITEM 16B.CODE OF ETHICS Our board of directors has adopted a code of business conduct and ethics that applies to all of our directors, officers, employees, including certainprovisions that specifically apply to our principal executive officer, principal financial officer, principal accounting officer or controller and any other persons whoperform similar functions for us. We have filed our code of business conduct and ethics as Exhibit 99.1 of our registration statement on Form F-1 (File No. 333-220571)filed with the SEC on September 22, 2017. A copy of our code of business conduct and ethics is available on our website at www.sea.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 Ernst & YoungLLP, our independent registered public accounting firm, for the periods indicated. We did not pay any other fees to our independent registered public accounting firmduring the periods indicated below. For the Year Ended December 31, 2022 2023 (US$ thousands) Audit fees(1) 4,414 5,000 Tax fees(2) 79 90 Audit-related fees(3) 1,062 1,650 Other fees(4) 453 161 (1)“Audit fees” means the aggregate fees billed for professional services rendered by our independent registered public accounting firm for the audit of ourannual financial statements. This category also included professional services rendered by our independent registered public accounting firm for statutoryaudits required by non-U.S. jurisdictions. In 2023, the audit refers to financial audit and audit pursuant to Section 404 of the Sarbanes-Oxley Act of 2002. (2)“Tax fees” means the aggregate fees billed for the tax services provided with respect to tax consulting and tax audit assistance. 143Table of Contents(3)“Audit-related fees” means the aggregate fees billed in each fiscal year listed for professional services rendered by our principal auditors related to the auditof our financial statements that are not reported under “audit fees.” (4)“Other fees” means the aggregate fees billed for transaction advisory services with respect to the review of our sustainability, regulatory compliance,cybersecurity, accounting standards training and transaction due diligence. The policy of our audit committee is to pre-approve all audit and non-audit services provided by Ernst & Young LLP, our independent registered publicaccounting firm, including audit services, audit-related services and tax services as described above, other than those for de minimis services which are approved bythe audit committee prior to the completion of the audit. ITEM 16D.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES Not applicable. ITEM 16E.PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS None. ITEM 16F.CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT Not applicable. ITEM 16G.CORPORATE GOVERNANCE We are subject to the New York Stock Exchange corporate governance listing standards. However, New York Stock Exchange rules permit a foreign privateissuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our homecountry, may differ significantly from the New York Stock Exchange corporate governance listing standards. Section 303A.08 of the New York Stock Exchange Listed Company Manual requires a listed company to give shareholders an opportunity to vote on all equity-compensation plans and material revisions thereto. We are a Cayman Islands company, and there are no shareholder approval requirements for such matter. Pursuantto the exemption granted to foreign private issuers under Section 303A.00 of the New York Stock Exchange Listed Company Manual, we have followed our homecountry practice in lieu of the requirements of Sections 303A.08. In November 2017 and February 2018, we obtained approvals from our board of directors to increasethe maximum aggregate number of ordinary shares which may be issued pursuant to all awards under the 2009 Plan. In April 2022, our board of directors approved theamendment and restatement of the 2009 Plan to increase the maximum aggregate number of shares available under the 2009 Plan, pursuant to which on January 1 ofeach of 2023, 2024, 2025 and 2026, the maximum aggregate number of ordinary shares which may be issued under the 2009 Plan will increase by 3% of the total numberof ordinary shares of all classes of the company outstanding on that day immediately before the increase. For additional information, see “Item 6. Directors, SeniorManagement and Employees—B. Compensation—Share Incentive Plan.” Section 303A.01 of the New York Stock Exchange Listed Company Manual requires a listed company to have a majority of independent directors, which is notrequired under the Companies Act of the Cayman Islands. Currently, our board of directors is composed of six members, two of whom are independent directors asdescribed under “Item 6. Directors, Senior Management and Employees—C. Board Practice.” We follow home country practice that permits our Audit Committee to consist of less than three members, in lieu of complying with Section 303A.07 of the NewYork Stock Exchange Listed Company Manual which requires each company to have an audit committee of at least three members. Our Audit Committee currentlyconsists of two members. Pursuant to Sections 303A.04 and 303A.05 of the New York Stock Exchange Listed Company Manual, a listed U.S. company is required to have anominating/corporate governance committee and a compensation committee, each composed entirely of independent directors. We follow home country practice andthe compensation committee and corporate governance and nominating committee of our board of directors are not comprised entirely of independent directors. 144Table of ContentsOther than the home country practice described above, we are not aware of any significant ways in which our corporate governance practices differ from thosefollowed by U.S. domestic companies under the New York Stock Exchange listing rules. See “Item 3. Key Information—D. Risk Factors—Risks Related to the ADS—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 domesticpublic companies in the United States.” 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 Cybersecurity Risk Management We have processes in place designed to protect the confidentiality, integrity, and availability of our critical systems, information and data. These processesinclude mechanisms, controls, technologies, methods and systems that are designed to prevent, detect, or mitigate data loss, theft, misuse, unauthorized access, orother security incidents or vulnerabilities affecting the confidential, proprietary, and business and personal information that we collect, process, store, and transmit aspart of our businesses. We also take measures to identify, protect, detect, and respond to reasonably foreseeable cybersecurity risk and threats. We maintain incidentresponse plans designed to protect, identify, evaluate, respond to, and recover from a cybersecurity incident. Such plans are designed to be flexible so that they maybe adapted to an array of scenarios and provide for the creation of cross-functional cybersecurity incident response teams in the event of a cybersecurity incident.Our cybersecurity risk management framework is based on applicable laws and regulations, as well as industry recognized standards and practices. As partof our risk management process, we conduct application security assessments, vulnerability management, penetration testing, security audits, and ongoing riskassessments. In addition, we have implemented cybersecurity trainings designed to educate and train employees on how to identify and report cybersecurity threats.Our cybersecurity risk management framework includes:●Risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterpriseinformation technology environment;●Regular testing of our systems to identify and address potential vulnerabilities;●Integrated planning and preparedness activities supporting business continuity and operational resiliency;●Security teams principally responsible for managing (1) our annual cybersecurity risk assessment processes, (2) our security controls, and (3) our response tocybersecurity incidents;●A cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents;●The use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls;●An information training and awareness program for our employees, contractors, incident response personnel, and senior management; and●a vendor assessment program designed to identify and mitigate cybersecurity risks associated with our use of third-party service providers.Cybersecurity Governance Our board of directors considers cybersecurity risk as part of its risk oversight function and has oversight of cybersecurity and other information technologyrisks. The board of directors oversees management’s implementation of our cybersecurity risk management program and management discusses and updates theBoard, as necessary, regarding any significant cybersecurity incidents and any pressing risk or compliance matters.145Table of ContentsManagement is responsible for assessing, identifying, and managing material cybersecurity risks, and we have chief security officers and their security teamsmeet regularly with each other and with members of management to review and evaluate our cybersecurity risks and risk management framework.Our security teams’ experience includes cybersecurity incident response, in-depth security assessments and security emulation exercises to evaluate securityprofile, security research, education and outreach, and security tool development.We also periodically engage third-party advisors to assess the effectiveness of our cybersecurity program, policies and practices and consult with externaladvisors regarding opportunities and enhancements to strengthen our policies and practices.As of the date of this report, we are not aware of any material risks from cybersecurity threats that have materially affected or are reasonably likely tomaterially affect us, including our business strategy, results of operations or financial condition. Although we have invested in the protection of our data andinformation technology, and monitor our systems on an ongoing basis, there can be no assurance that such efforts will be successful in preventing our informationtechnology systems from being compromised or otherwise protecting us completely from security breaches or incidents. For additional information please see thesection titled “Risk Factors,” in this Annual Report on Form 20-F, including the section titled “Risk Factors – Business or Operational Related Risks – Risks AcrossMultiple Businesses – We may be liable for security breaches and attacks against our or our third-party partners’ platforms and network, particularly with regard toconfidential user information and personal or other data or any other privacy or data protection compliance issue, and our platforms and games may containunforeseen “bugs”, vulnerabilities or errors.”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 Sea Limited are included at the end of this annual report. 146Table of ContentsITEM 19.EXHIBITS ExhibitNumberDescription of Document 1.1Ninth Amended and Restated Memorandum and Articles of Association of Sea Limited (incorporated by reference to Exhibit 3.1 from our Form 6-K(File No. 001-38237) filed with the SEC on February 14, 2022) 2.1Form of Sea Limited’s Specimen American Depositary Receipt (included in Exhibit 2.3) 2.2Sea Limited’s Specimen Certificate for its Class A Ordinary Shares (incorporated by reference to Exhibit 4.2 from our registration statement on FormF-1 (File No. 333-220571) filed with the SEC on September 22, 2017) 2.3Deposit Agreement dated as of October 19, 2017 among Sea Limited, The Bank of New York Mellon and owners and holders of the ADSs(incorporated by reference to Exhibit 4.3 from our registration statement on Form S-8 (File No. 333-222071) filed publicly with the SEC on December15, 2017) 2.4*Description of Securities registered under Section 12 of the Exchange Act 3.1Irrevocable Proxy, dated as of September 5, 2022, between Tencent Holdings Limited, Tencent Limited, Tencent Growthfund Limited and Huang RiverInvestment Limited, on the one hand, and Sea Limited’s Board of Directors, on the other hand (incorporated by reference to Exhibit 3.1 from ourannual report on Form 20-F filed with the SEC on April 6, 2023) 4.1Second Amended and Restated Share Incentive Plan (incorporated by reference to Exhibit 4.1 from our annual report on Form 20-F filed with the SECon April 22, 2022) 4.2Form of Indemnification Agreement between Sea Limited and each director and executive officer (incorporated by reference to Exhibit 10.2 from ourregistration statement on Form F-1 (File No. 333-220571) filed with the SEC on September 22, 2017) 4.3Form of Employment Letter with each executive officer (incorporated by reference to Exhibit 10.3 from our registration statement on Form F-1 (FileNo. 333-220571) filed with the SEC on September 22, 2017) 4.4†Amended and Restated Mobile Game Development Agreement, dated as of March 8, 2018, by and between Garena Online Private Limited andProxima Beta Private Limited (incorporated by reference to Exhibit 4.16 from our annual report on Form 20-F filed with the SEC on April 10, 2018) 4.5Indenture, dated as of June 18, 2018, by and between Sea Limited and Wilmington Trust, National Association (incorporated by reference to Exhibit4.16 from our annual report on Form 20-F filed with the SEC on March 1, 2019) 4.6†Master License Agreement, dated as of November 16, 2018, by and between Garena Online Private Limited and Shenzhen Tencent ComputerSystems Company Limited (incorporated by reference to Exhibit 4.17 from our annual report on Form 20-F filed with the SEC on March 1, 2019) 4.7Indenture, dated as of November 18, 2019, by and between Sea Limited and Wilmington Trust, National Association (incorporated by reference toExhibit 4.16 from our annual report on Form 20-F filed with the SEC on April 14, 2020) 4.8Indenture, dated as of May 22, 2020, by and between Sea Limited and Wilmington Trust, National Association (incorporated by reference to Exhibit4.16 from our annual report on Form 20-F filed with the SEC on April 16, 2021)147Table of Contents4.9Indenture, dated as of September 14, 2021, by and between Sea Limited and Wilmington Trust, National Association (incorporated by reference toExhibit 4.10 from our annual report on Form 20-F filed with the SEC on April 22, 2022) 4.10First Supplemental Indenture, dated as of September 14, 2021, by and between Sea Limited and Wilmington Trust, National Association(incorporated by reference to Exhibit 4.11 from our annual report on Form 20-F filed with the SEC on April 22, 2022) 8.1*List of Principal Subsidiaries and Consolidated Affiliated Entities of Sea Limited 11.1Code of Business Conduct and Ethics of Sea Limited (incorporated by reference to Exhibit 99.1 from our registration statement on Form F-1 (File No.333-220571) filed with the SEC on September 22, 2017) 12.1*Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 12.2*Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 13.1**Certification by the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 13.2**Certification by the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 15.1*Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm 15.2*Consent of Maples and Calder (Hong Kong) LLP 15.3*Consent of LCS & Partners 15.4*Consent of Kudun and Partners Company Limited 15.5*Consent of Rajah & Tann Singapore LLP 97.1*Clawback Policy of Sea Limited 101.INSInline XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded withinthe Inline XBRL document 101.SCHInline XBRL Taxonomy Extension Schema Document 101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document 101.LABInline XBRL Taxonomy Extension Label Linkbase Document 101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document 104Cover Page Interactive Data File (embedded within the Exhibit 101 Inline XBRL document)*Filed with this annual report on Form 20-F. **Furnished with this annual report on Form 20-F. †Confidential treatment has been granted by the U.S. Securities and Exchange Commission with respect to portions of the exhibit that have been redacted. 148Table of ContentsSIGNATURES 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 signthis annual report on its behalf. Sea Limited By:/s/ Forrest Xiaodong Li Name:Forrest Xiaodong Li Title:Chairman and Chief Executive Officer Date: April 26, 2024 Table of ContentsSEA LIMITEDINDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 01247)F-2Consolidated Balance Sheets as of December 31, 2022 and 2023F-7Consolidated Statements of Operations for the Years Ended December 31, 2021, 2022 and 2023F-11Consolidated Statements of Comprehensive (Loss) Income for the Years Ended December 31, 2021, 2022 and 2023F-13Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2022 and 2023F-14Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2021, 2022 and 2023F-17Notes to the Consolidated Financial Statements for the Years Ended December 31, 2021, 2022 and 2023F-20Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Shareholders and the Board of Directors of Sea LimitedOpinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Sea Limited (the Company) as of December 31, 2023 and 2022, the related consolidated statementsof operations, comprehensive (loss) income, cash flows, and shareholders’ equity for each of the three years in the period ended December 31, 2023, and the relatednotes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects,the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the periodended December 31, 2023, in conformity with U.S. generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internalcontrol over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission (2013 framework), and our report dated April 26, 2024 expressed an unqualified opinion thereon.Adoption of ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s OwnEquity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own EquityAs discussed in Note 2(z) to the consolidated financial statements, the Company has changed its method for accounting for convertible notes due to the adoption ofASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.Basis for OpinionThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statementsbased on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance withthe 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 audit to obtain reasonable assuranceabout whether the financial statements are free of material misstatement, whether due to error or fraud.Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performingprocedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financialstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.F-2Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Shareholders and the Board of Directors of Sea LimitedCritical Audit MattersThe critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to becommunicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especiallychallenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financialstatements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on theaccounts or disclosures to which they relate.Recognition of Digital Entertainment (“DE”) RevenueDescription of the Matter For the year ended December 31, 2023, the Company’s revenue arising from DE was $2,172 million. As outlined in Note 2(o) of the consolidated financial statements, DE revenue is recognized over the performance obligation period.The Company has determined that an implied obligation exists to the paying users to continue providing hosting services andaccess to the purchased in-game items within the online games over an estimated performance obligation period. Such performanceobligation period is largely determined in accordance with the estimated average lifespan of the paying users. Auditing the DE revenue recognition process was complex and involved judgment to determine the historical paying users’ inactiverate and playing behavior, in estimating the average lifespan of the paying users. In addition, the Company utilized various operatingsystems to process user data and transactions and relies on automated processes and controls over the completeness and accuracyof the historical user and game data, which were key inputs to the above-mentioned estimates. How We Addressed theMatter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Company’sDE revenue recognition process. For example, we tested the automated controls of the related operating systems. We also tested theeffectiveness of management’s review controls over assessing the completeness and accuracy of the historical user and game dataand the appropriateness of the judgments regarding the most relevant historical user and game data to be applied in their estimates. To test the recognition of DE revenue, our audit procedures included, among others, testing the completeness and accuracy of theabove-mentioned underlying historical user and game data and assessing the reasonableness of the historical data applied inestimating the average lifespan of the paying users. We also recalculated the amount of revenue to be deferred based onmanagement’s estimated performance obligation periods and compared those amounts with the amounts recorded by the Company.F-3Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Shareholders and the Board of Directors of Sea LimitedCritical Audit Matters (continued)Impairment of long-lived assets in E-commerce (“EC”) segmentDescription of the Matter As at December 31, 2023, the Company’s long-lived assets in EC segment amounted to approximately 84.6% of the Company’s long-lived assets. The long-lived assets include property and equipment, operating lease right-of-use assets and intangible assets. As outlined in Note 2(m) to the consolidated financial statements, the Company evaluates its long-lived assets for impairment whenthere are events or changes in circumstances which indicate that the carrying amounts of the long-lived assets may not berecoverable. Due to the losses incurred by EC segment, the Company evaluated the related long-lived assets for impairment at theasset group level by comparing the carrying amount of the asset group to the recoverable value determined by forecastedundiscounted cash flows expected to be generated by this asset group. Auditing management’s long-lived assets impairment test was highly judgmental due to the magnitude of the carrying amount oflong-lived assets and management’s judgment in estimating the recoverable value (undiscounted cash flows) of the asset group,which were sensitive to key assumptions such as projected revenue and sales and marketing expenses. How We Addressed theMatter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s long-lived asset impairment process to determine the recoverable value of the asset group. For example, we tested controls overmanagement’s review of the key assumptions used in estimating the recoverable value. To test the impairment of long-lived assets, our audit procedures included, among others, obtaining an understanding frommanagement regarding the basis of which the undiscounted cash flows were prepared and assessing the reasonableness of theforecasted undiscounted cash flows by comparing them against the Company’s business strategies and underlying key assumptionsover the forecast periods, taking into consideration current industry and economic trends. We performed sensitivity analysis overthe key assumptions described above to evaluate the changes to the estimated recoverable value for the asset group that wouldresult from reasonable changes in the assumptions. /s/ Ernst & Young LLPWe have served as the Company’s auditor since 2010.SingaporeApril 26, 2024F-4Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Shareholders and the Board of Directors of Sea LimitedOpinion on Internal Control Over Financial ReportingWe have audited Sea Limited’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—IntegratedFramework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria). In our opinion, Sea Limited (theCompany) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balancesheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, cash flows, and shareholders’equity for each of the three years in the period ended December 31, 2023, and the related notes and our report dated April 26, 2024 expressed an unqualified opinionthereon.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internalcontrol over financial reporting included in the accompanying Management’s Assessment of Internal Control Over Financial Reporting. Our responsibility is toexpress an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and arerequired to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securitiesand Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether effective internal control over financial reporting was maintained in all material respects.Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in thecircumstances. We believe that our audit provides a reasonable basis for our opinion.F-5Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMDefinition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financialreporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactionsand dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate./s/ Ernst & Young LLPSingaporeApril 26, 2024F-6Table of ContentsSEA LIMITEDCONSOLIDATED BALANCE SHEETS(Amounts expressed in thousands of US dollars (“$”)) As of December 31, Note 2022$ 2023$ ASSETS Current assets Cash and cash equivalents 6,029,859 2,811,056 Restricted cash (including restricted cash of the Consolidated VIEs that can only be used to settle theobligations of those Consolidated VIEs of nil and $14,773 as of December 31, 2022 and 2023,respectively) 1,549,574 1,410,365 Accounts receivable, net of allowance for credit losses of $12,818 and $9,351, as of December 31, 2022 and2023, respectively 268,814 262,716 Prepaid expenses and other assets (including prepaid expenses and other assets of the Consolidated VIEsthat can only be used to settle the obligations of those Consolidated VIEs of nil and $7 as of December31, 2022 and 2023, respectively) 5 1,798,651 1,861,842 Loans receivable, net of allowance for credit losses of $236,797 and $319,463, as of December 31, 2022 and2023, respectively (including loans receivable, net of allowance for credit losses of the ConsolidatedVIEs that can only be used to settle the obligations of those Consolidated VIEs of nil and $153,820 as ofDecember 31, 2022 and 2023, respectively) 6 2,053,767 2,464,662 Inventories, net 109,668 125,395 Short-term investments 7 864,258 2,547,644 Amounts due from related parties 13,421 290,254 Total current assets 12,688,012 11,773,934 Non-current assets Property and equipment, net 8 1,387,895 1,207,698 Operating lease right-of-use assets, net 9 957,840 1,015,982 Intangible assets, net 10 65,019 50,821 Long-term investments 7 1,253,593 4,262,562 Prepaid expenses and other assets 5 135,616 87,705 Loans receivable, net of allowance for credit losses of $2,022 and $2,105, as of December 31, 2022 and 2023,respectively 6 21,663 20,551 Restricted cash 17,724 22,236 Deferred tax assets 18 245,226 328,961 Goodwill 4 230,208 112,782 Total non-current assets 4,314,784 7,109,298 Total assets 17,002,796 18,883,232 The accompanying notes are an integral part of these consolidated financial statements.F-7Table of ContentsSEA LIMITEDCONSOLIDATED BALANCE SHEETS (continued)(Amounts expressed in thousands of US dollars (“$”)) As of December 31, Note 2022$ 2023$ LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Accounts payable (including accounts payable of the Consolidated VIEs without recourse to the primarybeneficiaries of $18,699 and $7,612 as of December 31, 2022 and 2023, respectively) 258,648 342,547 Accrued expenses and other payables (including accrued expenses and other payables of theConsolidated VIEs without recourse to the primary beneficiaries of $148,631 and $131,409 as ofDecember 31, 2022 and 2023, respectively) 11 1,396,613 1,834,807 Deposits payable 1,316,395 1,706,299 Escrow payables and advances from customers (including escrow payables and advances from customersof the Consolidated VIEs without recourse to the primary beneficiaries of $19,143 and $17,747 as ofDecember 31, 2022 and 2023, respectively) 1,862,325 2,199,464 Amounts due to related parties (including amounts due to related parties of the Consolidated VIEs withoutrecourse to the primary beneficiaries of $9 and $15 as of December 31, 2022 and 2023, respectively) 415 64,081 Borrowings 12 88,410 146,661 Operating lease liabilities (including operating lease liabilities of the Consolidated VIEs without recourseto the primary beneficiaries of $5,250 and $6,416 as of December 31, 2022 and 2023, respectively) 9 269,968 290,788 Convertible notes 13 31,237 151,764 Deferred revenue (including deferred revenue of the Consolidated VIEs without recourse to the primarybeneficiaries of $192,243 and $169,059 as of December 31, 2022 and 2023, respectively) 1,535,083 1,208,892 Income tax payable (including income tax payable of the Consolidated VIEs without recourse to theprimary beneficiaries of $664 and $1,748 as of December 31, 2022 and 2023, respectively) 176,598 223,638 Total current liabilities 6,935,692 8,168,941 The accompanying notes are an integral part of these consolidated financial statements.F-8Table of ContentsSEA LIMITEDCONSOLIDATED BALANCE SHEETS (continued)(Amounts expressed in thousands of US dollars (“$”)) As of December 31, Note 2022$ 2023$ Non-current liabilities Accrued expenses and other payables (including accrued expenses and other payables of theConsolidated VIEs without recourse to the primary beneficiaries of $4,338 and $3,141 as of December 31,2022 and 2023, respectively) 11 87,072 79,257 Borrowings (including borrowings of the Consolidated VIEs without recourse to the primary beneficiariesof nil and $119,323 as of December 31, 2022 and 2023, respectively) 12 – 119,323 Operating lease liabilities (including operating lease liabilities of the Consolidated VIEs without recourseto the primary beneficiaries of $7,666 and $18,344 as of December 31, 2022 and 2023, respectively) 9 756,818 789,514 Deferred revenue (including deferred revenue of the Consolidated VIEs without recourse to the primarybeneficiaries of $23,886 and $16,658 as of December 31, 2022 and 2023, respectively) 63,566 72,587 Convertible notes 13 3,338,750 2,949,785 Deferred tax liabilities 18 9,967 133 Unrecognized tax benefits (including unrecognized tax benefits of the Consolidated VIEs without recourseto the primary beneficiaries of $107 and $107 as of December 31, 2022 and 2023, respectively) 107 6,107 Total non-current liabilities 4,256,280 4,016,706 Total liabilities 11,191,972 12,185,647 Commitments and contingencies 23 The accompanying notes are an integral part of these consolidated financial statements.F-9Table of ContentsSEA LIMITEDCONSOLIDATED BALANCE SHEETS (continued)(Amounts expressed in thousands of US dollars (“$”) except for number of shares and par value) As of December 31, Note 2022$ 2023$ Shareholders’ equity Class A Ordinary shares (par value of US$0.0005 per share; authorized: 14,800,000,000 and 14,800,000,000shares as of December 31, 2022 and 2023, respectively; issued and outstanding: 519,231,049 and526,812,214 shares as of December 31, 2022 and 2023, respectively) 15 258 262 Class B Ordinary shares (par value of US$0.0005 per share; authorized: 200,000,000 and 200,000,000 sharesas of December 31, 2022 and 2023, respectively; issued and outstanding: 45,527,793 and 45,527,793shares as of December 31, 2022 and 2023, respectively) 15 23 23 Additional paid-in capital 14,559,690 15,283,870 Accumulated other comprehensive loss 16 (111,215) (108,000)Statutory reserves 17 12,490 16,981 Accumulated deficit (8,745,541) (8,599,306)Total Sea Limited shareholders’ equity 5,715,705 6,593,830 Non-controlling interests 95,119 103,755 Total shareholders’ equity 5,810,824 6,697,585 Total liabilities and shareholders’ equity 17,002,796 18,883,232 The accompanying notes are an integral part of these consolidated financial statements.F-10Table of ContentsSEA LIMITEDCONSOLIDATED STATEMENTS OF OPERATIONS(Amounts expressed in thousands of US dollars (“$”)) Year ended December 31, Note 2021$ 2022$ 2023$ Revenue Service revenue Digital entertainment 4,320,013 3,877,163 2,172,009 E-commerce and other services 4,564,617 7,463,173 9,770,376 Sales of goods 1,070,560 1,109,369 1,121,175 Total revenue 9,955,190 12,449,705 13,063,560 Cost of revenue Cost of service Digital entertainment (1,230,082) (1,077,017) (672,481)E-commerce and other services (3,825,826) (5,194,065) (5,530,043) Cost of goods sold (1,003,547) (993,346) (1,027,389)Total cost of revenue (6,059,455) (7,264,428) (7,229,913)Gross profit 3,895,735 5,185,277 5,833,647 Operating income (expenses) Other operating income 287,946 279,184 221,021 Sales and marketing expenses (3,829,743) (3,269,223) (2,779,223)General and administrative expenses (987,868) (1,437,612) (1,134,724)Provision for credit losses (117,427) (513,690) (633,942)Research and development expenses (831,703) (1,376,501) (1,164,126)Impairment of goodwill – (354,943) (117,875)Total operating expenses (5,478,795) (6,672,785) (5,608,869) Operating (loss) income (1,583,060) (1,487,508) 224,778 Interest income 36,082 115,515 331,310 Interest expense (136,876) (45,396) (41,075)Net investment loss (43,502) (207,331) (125,656)Net (loss) gain on debt extinguishment (2,069) 199,697 38,550 Foreign exchange gain (loss) 14,241 (75,510) 4,487 (Loss) Income before income tax and share of results of equity investees (1,715,184) (1,500,533) 432,394 Income tax expense18 (332,865) (168,395) (262,680)Share of results of equity investees 5,019 11,156 (7,032)Net (loss) income (2,043,030) (1,657,772) 162,682 Net (income) loss attributable to non-controlling interests (3,729) 6,351 (11,956)Net (loss) income attributable to Sea Limited’s ordinary shareholders (2,046,759) (1,651,421) 150,726 The accompanying notes are an integral part of these consolidated financial statements.F-11Table of ContentsSEA LIMITEDCONSOLIDATED STATEMENTS OF OPERATIONS (continued)(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data) Year ended December 31, Note 2021$ 2022$ 2023$ (Loss) Earnings per share: Basic 19 (3.84) (2.96) 0.27 Diluted 19 (3.84) (2.96) 0.25 Weighted average shares used in (loss) earnings per share computation: Basic 532,705,796 558,119,948 566,612,815 Diluted 532,705,796 558,119,948 594,405,604 The accompanying notes are an integral part of these consolidated financial statements.F-12Table of ContentsSEA LIMITEDCONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME(Amounts expressed in thousands of US dollars (“$”)) Year ended December 31, 2021$ 2022$ 2023$ Net (loss) income (2,043,030) (1,657,772) 162,682 Other comprehensive (loss) income, net of tax Foreign currency translation adjustments: Translation loss (32,972) (81,620) (695)Net change (32,972) (81,620) (695)Available-for-sale investments: Change in unrealized (loss) gain (1,386) (7,930) 5,067 Reclassification adjustment to net (loss) income 236 212 148 Net change (1,150) (7,718) 5,215 Total other comprehensive (loss) income, net of tax (34,122) (89,338) 4,520 Total comprehensive (income) loss attributable to non-controlling interests (3,148) 11,129 (13,261)Total comprehensive (loss) income attributable to Sea Limited’s ordinary shareholders (2,080,300) (1,735,981) 153,941 The accompanying notes are an integral part of these consolidated financial statements.F-13Table of ContentsSEA LIMITEDCONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts expressed in thousands of US dollars (“$”)) Year ended December 31, 2021$ 2022$ 2023$ Cash flows from operating activities Net (loss) income (2,043,030) (1,657,772) 162,682 Adjustments to reconcile net (loss) income to net cash generated from (used in) operating activities: Amortization of discount and debt issuance costs of convertible notes 100,141 7,536 6,034 Deferred income tax (975) (140,553) (94,551)Depreciation and amortization 279,032 428,344 440,845 Impairment and write-off of long-lived assets 1,614 32,823 1,680 Impairment of goodwill – 354,943 117,875 Net foreign exchange differences (45,214) 41,737 3,814 Net investment loss 43,337 216,001 135,932 Net loss (gain) on debt extinguishment 2,069 (199,697) (38,550)Provision for credit losses 117,427 513,690 633,942 Share-based compensation 470,324 705,896 685,030 Share of results of equity investees (5,019) (11,156) 7,032 Others 12,723 22,144 (37,186)Operating cash flows before changes in working capital: (1,067,571) 313,936 2,024,579 Inventories (62,735) 1,441 (14,838)Accounts receivable (37,066) 98,981 7,516 Prepaid expenses and other assets (395,803) (497,889) (344,845)Amounts due from related parties 2,185 1,360 (274,482)Operating lease right-of-use assets (418,846) (360,472) (47,543)Accounts payable 99,639 43,311 81,381 Accrued expenses and other payables 545,691 (39,069) 455,088 Escrow payables and advances from customers 654,257 166,996 396,757 Operating lease liabilities 429,366 385,911 42,473 Deferred revenue 314,048 (1,093,229) (325,160)Income tax payable 105,927 (4,628) 43,598 Amounts due to related parties 39,557 (72,341) 35,164 Net cash generated from (used in) operating activities 208,649 (1,055,692) 2,079,688 The accompanying notes are an integral part of these consolidated financial statements.F-14Table of ContentsSEA LIMITEDCONSOLIDATED STATEMENTS OF CASH FLOWS (continued)(Amounts expressed in thousands of US dollars (“$”)) Year ended December 31, 2021$ 2022$ 2023$ Cash flows from investing activities Purchase of property and equipment (772,177) (924,178) (241,605)Purchase of intangible assets and capitalized software costs (34,999) (52,105) (16,656)Proceeds from disposal of long-lived assets 620 119,996 61,873 Purchase of investments (2,505,358) (2,630,842) (8,319,757)Proceeds from sale and maturity of investments 798,178 2,281,019 3,521,187 Distributions from investments 1,632 4,674 912 Acquisition of businesses, net of cash acquired (22,763) (60,713) – Effect on cash from deconsolidation of subsidiaries (11,775) (230) (43,785)Change in securities purchased under agreements to resell – – 233,219 Change in loans receivable (1,220,631) (1,166,430) (999,850)Net cash used in investing activities (3,767,273) (2,428,809) (5,804,462) Cash flows from financing activities Repayment of bank borrowings and finance lease obligations (1,247) (117,238) (54,407)Proceeds from bank borrowings 115,282 49,000 – Proceeds from issuance of convertible notes, net 2,846,250 – – Capital contributed by non-controlling interest 339 70,876 1,336 Transactions with non-controlling interests – (22,889) – Payments for redemption, exchange, conversion and repurchase of convertible notes (1,935) (611,315) (204,625)Proceeds from issuance of ordinary shares, net 4,050,055 50,211 10,643 Change in deposits payable 392,845 942,630 389,276 Proceeds from borrowings under securitization transactions – – 119,687 Proceeds from secured borrowings, net – 38,981 104,101 Net cash generated from financing activities 7,401,589 400,256 366,011 Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash (58,218) (143,511) (7,964)Net increase (decrease) in cash, cash equivalents and restricted cash 3,784,747 (3,227,756) (3,366,727)Cash, cash equivalents and restricted cash at beginning of the year 7,053,393 10,838,140 7,610,384 Cash, cash equivalents and restricted cash at end of the year(1) 10,838,140 7,610,384 4,243,657 (1)As of December 31, 2022, cash and cash equivalents of $13,227 was included in Assets held for sale within Prepaid expenses and other assets.The accompanying notes are an integral part of these consolidated financial statements.F-15Table of ContentsSEA LIMITEDCONSOLIDATED STATEMENTS OF CASH FLOWS (continued)(Amounts expressed in thousands of US dollars (“$”)) Year ended December 31, Year ended December 31, 2021$ 2022$ 2023$ Supplement disclosures of cash flow information Income taxes paid (207,381) (313,755) (318,924)Interest paid (44,981) (103,335) (119,471) Supplement disclosures of non-cash activities Purchase of property and equipment included in accrued expenses and other payables 38,742 (14,631) 6,482 Purchase of property and equipment included in prepayments 58,249 (13,171) 28,459 Purchase of intangible assets included in accrued expenses and other payables 183 (554) (4,049)Purchase of intangible assets included in prepayments (3,875) (4,506) 8,956 Conversion and exchange of convertible notes into ordinary shares (826,124) (5) (31,297)Acquisition of subsidiaries by conversion of convertible notes or issuance of shares 1,594 6,875 – Proceeds from disposal of a subsidiary included in prepaid expenses and other assets 270,733 – – The accompanying notes are an integral part of these consolidated financial statements.F-16Table of ContentsSEA LIMITEDCONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY(Amounts expressed in thousands of US dollars (“$”) except for number of shares)Note No ofordinaryshares Ordinaryshares Additionalpaid-incapital Accumulatedothercomprehensiveincome (loss) Statutoryreserves Accumulateddeficit Total SeaLimitedshareholders’equity Non-controllinginterests Totalshareholders’equity $ $ $ $ $ $ $ $ Balance as of January 1,2021 511,931,470 255 8,526,571 4,681 2,363 (5,150,958) 3,382,912 37,327 3,420,239 Net loss for the year – – – – – (2,046,759) (2,046,759) 3,729 (2,043,030)Other comprehensiveloss – – – (33,541) – – (33,541) (581) (34,122)Acquisition ofsubsidiaries 1,051,731 1 270,732 – – – 270,733 – 270,733 Appropriation ofstatutory reserves – – – – 3,781 (3,781) – – – Equity component ofconvertible notes – – 486,758 – – – 486,758 – 486,758 Issuance of Class Aordinary shares, netof issuance costs 15 12,650,000 6 3,972,410 – – – 3,972,416 – 3,972,416 Conversion ofconvertible notes intoClass A ordinaryshares 20,039,849 10 826,114 – – – 826,124 – 826,124 Capital contributed bynon-controllinginterest – – – – – – – 339 339 Transactions with non-controlling interests – – 6,761 341 – – 7,102 (15,102) (8,000)Shares issued todepositary bank 12,000,000 – – – – – – – – Exercise of shareoptions 8,027,170 4 77,635 – – – 77,639 – 77,639 Restricted share awardsand restricted shareunits issued 4,125,722 2 (2) – – – – – – Share-basedcompensation – – 455,313 – – – 455,313 – 455,313 Settlement of shareincentives with sharesheld by depositarybank (12,087,982) – – – – – – – – Balance as of December31, 2021 557,737,960 278 14,622,292 (28,519) 6,144 (7,201,498) 7,398,697 25,712 7,424,409 The accompanying notes are an integral part of these consolidated financial statements.F-17Table of ContentsSEA LIMITEDCONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (continued)(Amounts expressed in thousands of US dollars (“$”) except for number of shares) Note No ofordinaryshares Ordinaryshares Additionalpaid-incapital Accumulatedothercomprehensive loss Statutoryreserves Accumulateddeficit TotalSea Limitedshareholders’equity Non-controllinginterests Totalshareholders’equity $ $ $ $ $ $ $ $ Balance as of January 1,2022 557,737,960 278 14,622,292 (28,519) 6,144 (7,201,498) 7,398,697 25,712 7,424,409 Adjustments for priorperiods from adoptingASU 2020-06 – – (811,483) – – 113,724 (697,759) – (697,759)Net loss for the year – – – – – (1,651,421) (1,651,421) (6,351) (1,657,772)Other comprehensiveloss – – – (84,560) – – (84,560) (4,778) (89,338)Acquisition ofsubsidiaries – – – – – – – 12,560 12,560 Appropriation ofstatutory reserves – – – – 6,346 (6,346) – – – Conversion ofconvertible notes intoClass A ordinaryshares 252 – 5 – – – 5 – 5 Capital contributed bynon-controllinginterest – – 335 1,864 – – 2,199 68,677 70,876 Transactions with non-controlling interests – – (14,889) – – – (14,889) – (14,889)Disposal of interest in asubsidiary – – – – – – – (701) (701)Shares issued todepositary bank 7,000,000 – – – – – – – – Exercise of shareoptions 3,412,987 1 50,210 – – – 50,211 – 50,211 Restricted share awardsand restricted shareunits issued 3,809,600 2 (2) – – – – – – Share-basedcompensation – – 713,222 – – – 713,222 – 713,222 Settlement of shareincentives with sharesheld by depositarybank (7,201,957) – – – – – – – – Balance as of December31, 2022 564,758,842 281 14,559,690 (111,215) 12,490 (8,745,541) 5,715,705 95,119 5,810,824 The accompanying notes are an integral part of these consolidated financial statements.F-18Table of ContentsSEA LIMITEDCONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (continued)(Amounts expressed in thousands of US dollars (“$”) except for number of shares) Note No ofordinaryshares Ordinaryshares Additionalpaid-incapital Accumulatedothercomprehensiveloss Statutoryreserves Accumulateddeficit TotalSea Limitedshareholders’equity Non-controllinginterests Totalshareholders’equity $ $ $ $ $ $ $ $ Balance as of January 1,2023 564,758,842 281 14,559,690 (111,215) 12,490 (8,745,541) 5,715,705 95,119 5,810,824 Net income for the year – – – – – 150,726 150,726 11,956 162,682 Other comprehensiveincome – – – 3,215 – – 3,215 1,305 4,520 Appropriation ofstatutory reserves – – – – 4,491 (4,491) – – – Conversion ofconvertible notes intoClass A ordinaryshares 1,581,165 1 31,296 – – – 31,297 – 31,297 Capital contributed bynon-controllinginterest – – – – – – – 1,336 1,336 Deconsolidation of asubsidiary – – (1,352) – – – (1,352) (5,961) (7,313)Shares issued todepositary bank 6,000,000 – – – – – – – – Exercise of share options 1,603,859 1 10,642 – – – 10,643 – 10,643 Restricted share awardsand restricted shareunits issued 4,101,762 2 (2) – – – – – – Share-basedcompensation – – 683,596 – – – 683,596 – 683,596 Settlement of shareincentives with sharesheld by depositarybank (5,705,621) – – – – – – – – Balance as of December31, 2023 572,340,007 285 15,283,870 (108,000) 16,981 (8,599,306) 6,593,830 103,755 6,697,585 The accompanying notes are an integral part of these consolidated financial statements.F-19Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)1.ORGANIZATIONSea Limited (the “Company”) is a limited liability company incorporated in the Cayman Islands on May 8, 2009 and conducts its business primarily throughits subsidiaries and variable interest entities (“VIEs”) in markets including Southeast Asia, Taiwan and Latin America. The Company is principally engaged inthe digital entertainment, e-commerce and digital financial service businesses.(a)As of December 31, 2023, significant subsidiaries of the Company include the following entities:EntityDate ofincorporation/acquisition Place ofincorporation Percentage ofdirect ownershipby the Company Principal activities 2022 2023 Garena Online Private Limited (“Garena Online”)May 8, 2009 Singapore 100 100 Game operations and software development Shopee LimitedJanuary 16, 2015 Cayman Islands 100 100 Investment holding company Shopee Singapore Private LimitedFebruary 5, 2015 Singapore 100 100 Online platform PT Shopee International IndonesiaAugust 5, 2015 Indonesia 100 100 Online platform Sea Services Limited (formerly known as SeaCapital Limited)January 30, 2020 Cayman Islands 100 100 Investment holding company Sea Services Holdings Limited (formerly knownas SEA Capital C1 Holdings Limited)June 30, 2021 Cayman Islands 100 100 Investment holding companyF-20Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)1.ORGANIZATION (continued)(b)VIE structureA VIE is a legal entity that has either a total equity investment that is insufficient to finance its activities without additional subordinated financialsupport or whose equity investors lack the characteristics of a controlling financial interest. The Company’s variable interest arises from contractual,ownership or other monetary interests in the entity, which change with fluctuations in the fair value of the entity’s net assets. A VIE is consolidatedby its primary beneficiary, the party that has both the power to direct the activities that most significantly impact the VIE’s economic performance,and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The Companyconsolidates a VIE when it is deemed to be the primary beneficiary. The Company assesses whether it is the primary beneficiary of a VIE on anongoing basis.(i)Contractual arrangements that give the Company control of the VIEsThe Company operates in various markets that have certain restrictions on foreign ownership of local companies. To comply with theseforeign ownership restrictions, the Company conducts certain businesses through VIEs using contractual agreements (the “VIEAgreements”).The following is a summary of the key terms of the VIE Agreements that were signed amongst the primary beneficiary and the respectiveshareholders of the VIEs (collectively the “VIE Shareholders”):Loan AgreementsIn order to ensure that the VIE Shareholders are able to provide capital to each of these VIEs in order to develop its business, the primarybeneficiary has entered into loan agreements with each VIE Shareholder.Pursuant to the loan agreements, the primary beneficiary has granted loans to the VIE Shareholders that may only be used for the purposeof acquiring equity interests in or contributing to the registered capital of these VIEs. The time and manner for repayment of the loans areat the sole discretion of the primary beneficiary. The loans may be repaid only by transferring all of the VIE Shareholders’ equity interestsin the VIE to the primary beneficiary or their respective designee upon exercise of the option under the exclusive option agreement. Theloan agreements also prohibit the VIE Shareholders from assigning or transferring to any third party, or from creating or causing anysecurity interest to be created on, any part of their equity interests in these entities. In the event that the respective VIE Shareholders selltheir equity interests to the primary beneficiary or their respective designee at a price which is equal to or lower than the principal amountof the loan, the loan will be interest-free. If the price is higher than the principal amount of the loans, the excess amount will be deemed tobe interest on the loans payable by the VIE Shareholders to the primary beneficiary.F-21Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)1.ORGANIZATION (continued)(b)VIE structure (continued)(i)Contractual arrangements that give the Company control of the VIEs (continued)Exclusive Option AgreementsIn order to ensure that the Company is able to acquire all of the equity interests in the VIEs at its discretion, the primary beneficiary hasentered into exclusive option agreements with the respective VIE Shareholders. Each option is exercisable by the primary beneficiary at anytime, provided that doing so is not prohibited by law. The exercise price under each option is the minimum amount required by law and anyproceeds obtained by the respective VIE Shareholders through the transfer of their equity interests in these VIEs shall be used for therepayment of the loan provided in accordance with the loan agreements.During the terms of the exclusive option agreements, the VIE Shareholders will not grant a similar right or transfer any of the equityinterests in these VIEs to any party other than the primary beneficiary or their respective designee, nor will it pledge, create or permit anysecurity interest or similar encumbrance to be created on any of the equity interests. The VIEs cannot declare any profit distributions orgrant loans in any form without the prior consent of the primary beneficiary. The VIE Shareholders must remit in full any funds receivedfrom the VIEs to the primary beneficiary or their respective designee in the event any distributions are made by the VIEs.The exclusive option agreements will remain in effect until the respective VIE Shareholder has transferred such shareholder’s equityinterests in the VIEs to the primary beneficiary or their respective designee.Powers of AttorneyIn order to ensure that the Company is able to make all of the decisions concerning the VIEs, the primary beneficiary has entered intopowers of attorney with the shareholders of these VIEs. Pursuant to the powers of attorney, each VIE Shareholder has irrevocablyappointed the primary beneficiary as their attorney-in-fact to act for all matters pertaining to such shareholding in these VIEs and toexercise all of their rights as shareholders, including but not limited to attending shareholders’ meetings and designating and appointingdirectors, supervisors, the chief executive officer and other senior management members of these entities, and selling, transferring,pledging or disposing the shares of these entities. The primary beneficiary may authorize or assign its rights to any other person or entityat its sole discretion without prior notice to or prior consent from the VIE Shareholders of these VIEs.Each power of attorney remains in effect until the VIE Shareholder ceases to hold any equity interest in the respective VIE.F-22Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)1.ORGANIZATION (continued)(b)VIE structure (continued)(i)Contractual arrangements that give the Company control of the VIEs (continued)Equity Interest Pledge AgreementsIn order to secure the performance of the VIEs and the VIE Shareholders under the contractual arrangements, each of the VIE Shareholdersof the VIEs has pledged all of their shares to the primary beneficiary. These pledges secure the contractual obligations and indebtedness ofthe VIE Shareholders, including all penalties, damages and expenses incurred by the primary beneficiary in connection with the contractualarrangements, and all other payments due and payable to the primary beneficiary by the respective VIEs under the exclusive businesscooperation agreements and by the VIE Shareholders under the loan agreements, exclusive option agreements, and powers of attorney.Should the VIEs or their respective VIE Shareholders breach or default under any of the contractual arrangements, the primary beneficiaryhas the right to require the transfer of the respective VIE Shareholders’ pledged equity interests in the VIEs to the primary beneficiary ortheir respective designee, to the extent permitted by laws, or require a sale of the pledged equity interests and has priority in any proceedsfrom the auction or sale of such pledged interests. Moreover, the primary beneficiary has the right to collect any and all dividends inrespect of the pledged equity interests during the term of the pledge.Unless the respective VIEs have fully performed all of their obligations in accordance with the exclusive business cooperation agreementsand the pledged equity interests have been fully transferred to the primary beneficiary or their respective designee in accordance with theexclusive option agreements and the loan agreements, the equity interest pledge agreements will continue to remain in effect.Spousal Consent LettersUnder the spousal consent letters, each spouse of the married VIE Shareholders of the VIEs unconditionally and irrevocably agreed thatthe equity interest in the respective VIE held by and registered in the name of their spouse will be disposed of pursuant to the contractualarrangements. Each spouse agreed not to assert any rights over the equity interest in these VIEs held by their spouse. In addition, in theevent that the spouses obtain any equity interest in these VIEs held by their spouse for any reason, they agree to be bound by thecontractual arrangements.F-23Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)1.ORGANIZATION (continued)(b)VIE structure (continued)(i)Contractual arrangements that give the Company control of the VIEs (continued)Exclusive Business Cooperation AgreementsIn order to ensure that the Company receives the economic benefits of the VIEs, the primary beneficiary has entered into exclusivebusiness cooperation agreements with these VIEs under which the primary beneficiary has the exclusive right to provide or to designateany third party to provide, among other things, technical support, consulting services, intellectual property licenses and other services tothese VIEs, and these VIEs agree to accept all services provided by the primary beneficiary or their respective designee. Without theprimary beneficiary’s prior written consent, the VIEs are prohibited from directly or indirectly engaging any third party to provide the sameor any similar services under these agreements or establishing similar cooperative relationships with any third party regarding the matterscontemplated by these agreements. In addition, the primary beneficiary shall have exclusive and proprietary ownership, rights and interestsin any and all intellectual properties arising out of or created during the performance of the exclusive business cooperation agreements.The VIEs agree to pay a monthly fee to the primary beneficiary at an amount determined at the primary beneficiary’s sole discretion aftertaking into account factors including the complexity and difficulty of the services provided, the level of and time consumed by itsemployees or third-party service providers designated by the primary beneficiary providing the services, the content and value of servicesand licenses provided and the market price of the similar type of services or licenses.The exclusive business cooperation agreements will remain effective unless terminated in accordance with their provisions or terminated inwriting by the primary beneficiary. Unless otherwise required by applicable laws, these VIEs do not have any right to terminate theexclusive business cooperation agreements in any event.Financial Support Confirmation LettersIn order to ensure that the VIEs have sufficient cash flow to fund their daily operations and/or to set off any losses incurred in suchoperations, the primary beneficiary has entered into financial support confirmation letters with each of these VIEs. Under the financialsupport confirmation letters, the primary beneficiary pledges to provide continuous financial support to these VIEs by itself or theirrespective designee and agreed to forego its right to seek repayment in the event these entities are unable to repay such financial supportor the primary beneficiary becomes liable for the liabilities of these VIEs. These VIEs agree to accept such financial support and pledge toonly use such support to develop their respective businesses. To the extent permitted by law, the financial support the primary beneficiaryprovides to these VIEs may take the form of loans, borrowings or guarantees.F-24Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)1.ORGANIZATION (continued)(b)VIE structure (continued)(i)Contractual arrangements that give the Company control of the VIEs (continued)Despite the lack of technical majority ownership, there exists a parent-subsidiary relationship between the primary beneficiary and theirrespective VIEs, through the irrevocable power of attorney agreements, whereby the VIE Shareholders effectively assigned all of the votingrights underlying their equity interest in the respective VIEs to the primary beneficiary. Furthermore, pursuant to the loan agreements,exclusive option agreements and equity interest pledge agreements, the primary beneficiary obtained effective control over the respectiveVIEs, through the ability to exercise all the rights of the VIE Shareholders and therefore the power to govern the activities that mostsignificantly impact the economic performance of the VIEs. The primary beneficiary demonstrates its ability and intention to continue toabsorb substantially all the expected losses through the financial support confirmation letters. The primary beneficiary also demonstratesits ability to receive substantially all of the economic benefits of the VIEs through the exclusive business cooperation agreements. Thus,the Company consolidates these VIEs and their subsidiaries under ASC 810-10, Consolidation: Overall.In the opinion of the Company’s management and external legal counsels, the ownership structure of its VIEs are generally in compliancewith the local laws or regulations that are currently in effect, and each of the agreements among the primary beneficiary, the VIEs and/or theVIE Shareholders is valid, binding and enforceable, and do not and will not result in any violation of such laws or regulations that arecurrently in effect.However, there are substantial uncertainties regarding the interpretation and application of current and future local laws and regulations.Accordingly, the Company cannot be assured that the local regulatory authorities will not ultimately take a contrary view to its opinion. Ifthe current ownership structure of the Company and its contractual arrangements with the VIEs are found to be in violation of any existingor future local laws and regulations, the Company may be required to restructure its ownership structure and operations in certain countriesto comply with the changing and new local laws and regulations. To the extent that changes and new local laws and regulations prohibitthe Company’s VIE arrangements from complying with the principles of consolidation, the Company would have to deconsolidate thefinancial position and results of operations of its VIEs. In the opinion of management, the likelihood of loss in respect of the Company’scurrent ownership structure or the contractual arrangements with the VIEs is remote based on current facts and circumstances.F-25Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)1.ORGANIZATION (continued)(b)VIE structure (continued)(ii)SecuritizationsThe Company securitizes certain loans receivable through special purpose entities, deemed as VIEs. These VIEs were created and designedto transfer credit risk associated with the loans receivable through the issuance of borrowing. The Company has various forms ofinvolvement with such VIEs, including servicing of loans held by these VIEs, ownership of minority shareholding interests in these VIEsand holding subordinated debt issued by these VIEs. The third-party investors in the securitization transactions have legal recourse onlyto the assets of the VIEs including the loans receivable backing the debt and do not have direct recourse to the Company.The primary beneficiary also demonstrates that it retains economic interests in the VIEs in the form of subordinated interests, and thepower to direct the activities that most significantly impact the VIEs’ economic performance as servicer.(c)VIE disclosuresCertain assets of the VIEs can only be used to settle the obligations of the VIEs, and such amounts have been parenthetically presented on the faceof the consolidated balance sheets. Creditors of the VIEs have no recourse to the general credit of the primary beneficiaries of the VIEs, and suchamounts have been parenthetically presented on the face of the consolidated balance sheets. The Company has not provided any financial or othersupport that it was not previously contractually required to provide to the VIEs during the periods presented.F-26Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)1.ORGANIZATION (continued)(c)VIE disclosures (continued) The following tables represent the financial information of the VIEs whom the Company does not have majority voting interest as of December 31,2022 and 2023 and for the years ended December 31, 2021, 2022 and 2023 before eliminating the intercompany balances and transactions between theVIEs and other entities within the group: As of December 31, 2022 2023 $ $ ASSETS Current assets Cash and cash equivalents 79,922 63,187 Loans receivable, net – 148,246 Amounts due from intercompanies(1) 153,070 241,740 Others 85,787 123,046 Total current assets 318,779 576,219 Non-current assets Property and equipment, net 86,229 123,094 Long-term investments 14,500 1,475 Deferred tax assets 40,561 35,280 Others 18,059 27,174 Total non-current assets 159,349 187,023 Total assets 478,128 763,242 F-27Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)1.ORGANIZATION (continued)(c)VIE disclosures (continued) As of December 31, 2022 2023 $ $ LIABILITIES Current liabilities Accrued expenses and other payables 110,526 128,917 Deferred revenue 192,243 169,059 Amounts due to intercompanies(1) 88,639 230,884 Others 12,658 15,864 Total current liabilities 404,066 544,724 Non-current liabilities Deferred revenue 23,886 16,658 Amounts due to intercompanies(1) 83,958 61,165 Borrowings – 119,323 Others 4,579 19,529 Total non-current liabilities 112,423 216,675 Total liabilities 516,489 761,399 (1)Amounts due from or to intercompanies consist of intercompany receivables or payables to the other companies within the group arising fromintercompany transactions, and funds advanced for working capital purpose. Year ended December 31, 2021 2022 2023 $ $ $ Revenue - Third-party customers 690,383 722,607 551,978 - Intercompanies 195,639 176,072 248,637 Net income 22,390 20,425 40,776 Year ended December 31, 2021 2022 2023 $ $ $ Net cash generated from (used in) operating activities 61,875 22,449 (21,369)Net cash used in investing activities (14,847) (89,160) (189,617)Net cash generated from financing activities 15,030 44,442 232,420 F-28Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a)Basis of preparationThe accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S.GAAP”).(b)Principles of consolidationThe consolidated financial statements include the financial statements of the Company, its subsidiaries and the VIEs for which the Company or asubsidiary of the Company is the primary beneficiary. All significant intercompany transactions and balances between the Company, its subsidiariesand the VIEs are eliminated upon consolidation.(c)Use of estimatesThe preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financialstatements and the reported amounts of revenues and expenses during the period. Areas where management uses subjective judgment include, butare not limited to, revenue recognition, estimating the useful lives and impairment assessment of long-lived assets and goodwill, accounting for andimpairment assessment of investments, impairment assessment of loans receivable, accounting for deferred income taxes and accounting for share-based compensation arrangements. Changes in facts and circumstances may result in revised estimates.(d)Foreign currencyThe functional currency of the Company is the United States dollar (“$” or “USD”), whereas the functional currency of the Company’s subsidiariesand its VIEs are the respective local currencies as determined based on the criteria of ASC 830, Foreign Currency Matters. The Company uses theUSD as its reporting currency. Transactions denominated in foreign currencies are re-measured into the functional currency at the exchange ratesprevailing on the transaction dates. Foreign currency denominated financial assets and liabilities are re-measured at the balance sheet date exchangerate. Exchange gains and losses are included in foreign exchange gains and losses in the consolidated statements of operations.Assets and liabilities of the Company’s subsidiaries and its VIEs that have functional currencies other than USD are translated into USD at fiscalyear-end exchange rates. Income and expense items are translated at average exchange rates prevailing during the fiscal year. The resultingtranslation adjustments are recorded in accumulated other comprehensive income (loss), a component of shareholders’ equity.Exchange differences arising on monetary items that form part of the Company’s net investments in foreign operations are recognized initially inother comprehensive loss and accumulated under accumulated other comprehensive income (loss) in equity. The other comprehensive income orloss arising from exchange differences is reclassified from equity to profit or loss of the Company on disposal of the foreign operations.F-29Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)(e)Cash and cash equivalentsThe Company considers cash equivalents to be short-term, highly-liquid investments that are both readily convertible to cash and have a maturityof three months or less at the time of purchase. Cash and cash equivalents consist of cash on hand, demand deposits and money market fundsplaced with banks and other financial institutions which are unrestricted as to withdrawal and use.(f)Restricted cashRestricted cash mainly comprises monies received held in escrow in connection with the Company’s e-commerce business and mobile wallet inconnection with the Company’s digital financial services business that are restricted and not available for the Company’s use.(g)Accounts receivable, loans receivable and allowance for credit lossesAccounts receivable and loans receivable are carried at net realizable value. Loans principal and interest receivables are placed on non-accrualstatus when payments are 90 days past due contractually. When a loan principal and interest receivable is placed on non-accrual status, interestaccrual ceases. If the loan is non-accrual, the cost recovery method is used and cash collected is applied to first reduce the carrying value of theloan. Otherwise, interest income may be recognized to the extent cash is received. Loans principal and interest receivables may be returned toaccrual status when all of the borrower’s delinquent balances of loans principal and interest have been settled and the borrower continues toperform in accordance with the loan terms.The Company has established a provision matrix applied on the portfolio segmented by factors such as geographic region and products that areconsidered to have similar credit characteristics and risk of loss. The allowance for credit losses is computed based on its historical lifetime creditloss experience, adjusted for forward-looking factors specific to the receivable and economic environment. The Company utilizes models such astransition matrix method based on roll rates and then transformed, taking into account expected future delinquency rate to estimate the likelihoodthat a loan will default over a given period of time, net of any estimated recoveries. These models utilize information that is available at the reportingdate about past events, current conditions and macro-economic forecasts. The macro-economic forecast varies by countries and include factorssuch as unemployment rates, gross domestic product and consumer price indices.F-30Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)(h)InventoriesInventories which comprise mainly merchandise products sold through the Company’s e-commerce business platform are valued at the lower of costand net realizable value.Costs incurred in bringing each product to its present location and condition are accounted at purchase cost on first-in-first-out basis.Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costsnecessary to make the sale.(i)Property and equipmentProperty and equipment are stated at cost, net of accumulated depreciation and/or accumulated impairment losses, if any.Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:- Computers3 to 5 years- Office equipment, furniture and fittings3 to 10 years- Leasehold improvementsOver the shorter of lease term or the estimated useful lives of the assets- Transportation assets4 to 10 years- Warehouse equipment3 to 10 years- Land use rightOver the land use term- Building6 to 20 yearsFreehold land has unlimited useful life and therefore is not depreciated. The useful lives and methods of depreciation of property and equipment arereviewed at each financial year end and adjusted prospectively, if appropriate.Repair and maintenance costs are charged to expense as incurred, whereas the costs of betterments that extend the useful lives of property andequipment are capitalized as additions to the related assets. Retirements, sale and disposals of assets are recorded by removing the cost andaccumulated depreciation with any resulting gain or loss reflected in the consolidated statements of operations.Property and equipment that are purchased or constructed which require a period of time before the property and equipment are ready for theirintended use are accounted for as construction-in-progress. Construction-in-progress is recorded at acquisition cost, including installation costs.Construction-in-progress is transferred to specific property and equipment accounts and commences depreciation when these property andequipment are ready for their intended use.F-31Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (j)GoodwillGoodwill represents the excess of the purchase consideration over the fair value of the identifiable tangible and intangible assets acquired andliabilities assumed from the acquired entity as a result of the Company’s acquisitions of interests in its subsidiaries and Consolidated VIEs. Duringthe measurement period, which does not exceed one year from the acquisition date, the Company may record adjustments to the assets acquired andliabilities assumed with the corresponding adjustment to goodwill. Upon conclusion of the measurement period, any adjustments are recorded in theconsolidated statements of operations.Goodwill is not amortized but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that itmight be impaired. In testing goodwill for impairment, the Company evaluates whether it is more likely than not that the fair value of a reporting unitis less than its carrying amount. If the qualitative assessment indicates that goodwill impairment is more likely than not, the Company applies a one-step quantitative test and record the amount of goodwill impairment as the excess of goodwill allocated to the reporting unit’s carrying amount overits fair value, not to exceed the total amount of goodwill allocated to the reporting unit.(k)Intangible assetsIntangible assets acquired through business combinations are recognized as assets separate from goodwill if they satisfy either the “contractual-legal” or “separability” criterion. Intangible assets arising from business combinations are measured at fair value upon acquisition. Other intangibleassets are carried at cost less accumulated amortization and any recorded impairment.Costs incurred in connection with the planning and post implementation phases of the development of software for internal use are expensed. Costsincurred in the application development phase are capitalized when certain criteria are met. Capitalization ceases and the costs are amortized over thesoftware’s estimated useful life when the software is ready for its intended use.Costs incurred internally in researching and developing a software product are charged to expense as research and development costs prior totechnological feasibility being established for the product. Once technological feasibility is established, all software costs are capitalized until theproduct is available for general release to customers. Technological feasibility is established upon completion of all the activities that are necessaryto substantiate that the software product can be produced in accordance with its design specifications, including functions, features, and technicalperformance requirements. None of such costs were capitalized for any of the periods presented. F-32Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)(k)Intangible assets (continued)Intangible assets with finite useful lives are amortized over the estimated economic lives of the intangible assets as follows: - Licensing feeOver the shorter of licensing period or the estimated useful lives of the intangible assets- IP right1 to 6 years- Trademarks10 years- Software3 to 6 years- Customer relationships3 to 8 years The useful lives and methods of amortization of intangible assets are reviewed at each financial year end and adjusted prospectively, if appropriate.(l)InvestmentsThe Company’s investments consist of available-for-sale investments, held-to-maturity investments, equity security investments, investmentscarried at fair value and equity method investments.In accordance with ASC 320, Investments – Debt Securities, the Company classifies the investments in debt securities as “held-to-maturity”,“trading” or “available-for-sale”, whose classification determines the respective accounting methods stipulated by ASC 320. Dividend and interestincome for all categories of investments in securities are included in earnings. Any realized gains or losses, if any, on the sale of the investments aredetermined on a specific identification method, and such gains and losses are reflected in earnings during the period in which gains or losses arerealized. The debt securities that the Company has positive intent and ability to hold to maturity are classified as held-to-maturity securities andstated at amortized cost. The securities that are bought and held principally for the purpose of selling them in the near term are classified as tradingsecurities and measured at fair value. Unrealized holding gains and losses for trading securities are included in earnings. Investments not classifiedas trading or as held-to-maturity are classified as available-for-sale investments. Available-for-sale investments are reported at fair value, withunrealized gains and losses recorded in accumulated other comprehensive income (loss). Realized gains or losses are included in earnings duringthe period in which the gain or loss is realized.Credit losses related to available-for-sale investments to be recorded through an allowance for credit losses. The Company compares the presentvalue of cash flows expected to be collected from the investment with the amortized cost basis of the security to determine if a credit loss exists. Ifthe present value of cash flows expected to be collected is less than the amortized cost basis of the investment, a credit loss exists and an allowancefor credit losses is recorded for the credit loss, limited by the amount that the fair value is less than amortized cost basis. An available-for-saleinvestment is written off in the period the investment is deemed uncollectible. The Company has the ability and intent to hold these investmentswith unrealized losses for a reasonable period of time sufficient for the recovery of their amortized cost bases. F-33Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)(l)Investments (continued)In accordance with ASC 946-320, Financial Services – Investment Companies, Investments – Debt and Equity Securities, the Company accountsfor non-marketable equity securities and limited partnerships held by consolidated investment company at fair value. During the year endedDecember 31, 2023, the consolidated Investment Company no longer qualifies as an Investment Company under ASC 946-320, as a result of itstermination of its investment advisory agreement. The Company discontinued applying the guidance in ASC 946-320 and began to account for thechange in status prospectively by accounting for those investments in accordance with other U.S. GAAP as of the date of the change in status. Thefair value of the investments at the date of the change in status shall be the investments’ initial carrying amount.In accordance with ASC 321, Investments – Equity Securities, for investments in an investee over which the Company does not have significantinfluence, the Company carries the investments at fair value with unrealized gains and losses included in earnings. In accordance with ASC 820,Fair Value Measurements, for investments that do not have readily determinable fair value, the Company has elected to measure its equity securityinvestments at net asset value (or its equivalent), if it qualifies for the NAV practical expedient or at cost minus impairment, if any, plus or minuschanges resulting from observable price changes in orderly transactions for the identical or a similar investment of the same investee (“measurementalternative”). The Company’s management regularly evaluates the impairment of its equity security investments based on the performance andfinancial position of the investee as well as other evidence of estimated market values. Such evaluation includes, but is not limited to, reviewing theinvestee’s cash position, recent financing, projected and historical financial performance, cash flow forecasts and current and future financingneeds. An impairment loss is recognized in the consolidated statements of operations equal to the excess of the investment’s cost over its fair valueat the balance sheet date of the reporting period for which the assessment is made. The fair value would then become the new cost basis ofinvestment. Investments in equity investees represent investments in (a) entities in which the Company can exercise significant influence but does not own amajority equity interest or control and (b) limited partnership in which the Company holds a five percent or greater interest. Such investments areaccounted for using the equity method of accounting in accordance with ASC 323-10, Investments – Equity Method and Joint Ventures: Overall.Under the equity method, the Company initially records its investments at cost and prospectively recognizes its proportionate share of each equityinvestee’s net income or loss into its consolidated statements of operations. The difference between the cost of the equity investee and the amountof the underlying equity in the net assets of the equity investee is recognized as equity method goodwill included in equity method investments onthe consolidated balance sheets. The Company evaluates its equity method investments for impairment under ASC 323-10. An impairment loss onthe equity method investments is recognized in the consolidated statements of operations when the decline in value is determined to be other-than-temporary.F-34Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)(l)Investments (continued)The Company discontinues applying equity method if an investment (and additional financial supports to the investee, if any) has been reduced tozero. When the Company has other investments in the investee that have liquidation preferences more senior than the ordinary shares and theequity method investment in the ordinary shares is reduced to zero, the Company continues to report its share of equity losses in the consolidatedstatements of operations, to the extent of and as an adjustment to the adjusted basis of the other investments in the investee. The order in which theequity losses are applied to the other investments follows the seniority of the other investments in the same investee.(m)Impairment of long-lived assetsThe Company evaluates its long-lived assets or asset groups, including intangible assets with finite lives, for impairment whenever events orchanges in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that thecarrying amount of an asset or a company of long-lived assets may not be recoverable. When these events occur, the Company evaluates forimpairment by comparing the carrying amount of the assets to future undiscounted net cash flows expected to result from the use of the assets andtheir eventual disposition. If the forecasted undiscounted cash flows are less than the carrying amount of the assets, the Company would recognizean impairment loss based on the excess of the carrying amount of the asset group over its fair value. Fair value is generally determined bydiscounting the cash flows expected to be generated by the assets, when the market prices are not readily available for the long-lived assets.(n)Fair value of financial instrumentsAvailable-for-sale investments are measured at fair value with the change in fair value recognized in accumulated other comprehensive income(loss). Marketable equity securities, investments carried at fair value, certain other assets, derivative assets, derivative liabilities and shareappreciation rights are measured at fair value with corresponding changes in the assets and liabilities’ fair values reflected in consolidatedstatements of operations.(o)Revenue recognitionRevenue is recognized upon transfer of control of promised goods or services to customers in an amount that reflects the consideration to whichthe Company expects to be entitled to for those goods or services. Revenue is measured based on the amount of consideration that the Companyexpects to receive reduced by discounts, incentives and rebates. Revenue also excludes any amounts collected on behalf of third parties, includingsales taxes and indirect taxes.F-35Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)(o)Revenue recognition (continued)The Company evaluates revenue from services and sales of goods to determine if it controls such services and goods to be the principal (i.e., reportrevenues on a gross basis) or agent (i.e., report revenues on a net basis). The key indicators that the Company evaluates in determining grossversus net treatment include, but are not limited to, (i) which party is primarily responsible for fulfilling the promise to provide the specified good orservice; (ii) which party bears inventory risks before the specified good or service has been transferred to a customer; and (iii) which party hasdiscretion in establishing the price for the specified good or service.(i)Digital entertainment revenueThe Company distributes online games, including self-developed games and licensed games from game developers, through its PC andmobile based applications and certain app stores. The Company offers many ways for users to purchase in-game items (also known asvirtual items), including through online payment gateways, bank transfers, credit cards, mobile phone billing and prepaid cards (includingits own prepaid cards which are sold through agents). As the Company controls the service of providing games to the users and it has adirect contractual arrangement with the Company’s paying users and it has the right to determine the price to be paid by such users, thegross proceeds collected from these channels represent revenue to be recognized, and the amounts retained by these channels based on apredetermined percentage represent the Company’s cost of revenue to be recognized.Proceeds from these sales are initially recognized as “Escrow payables and advances from customers” and subsequently reclassified to“Deferred revenue” when the users make in-game purchases of the virtual items within the games operated by the Company and suchpurchases are no longer refundable. Deferred revenue recognized as revenue during the respective years ended December 31, 2022 and2023 was $2,551,285 and $1,420,420.For the licensed games, the Company records revenue inclusive of the royalties payable to game developers, which are based on revenue-sharing ratios, as it controls the service of providing the games to the users, and is primarily responsible to the customers and has latitudein establishing the pricing of the virtual items.Revenue is recognized over the performance obligation period. The Company recognizes an implied obligation to the paying users tocontinue to provide hosting services and access to the purchased virtual items within the online games over an estimated performanceobligation period. Such performance obligation period is determined in accordance with the estimated average lifespan of the paying useror virtual items sold.F-36Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)(o)Revenue recognition (continued)(i)Digital entertainment revenue (continued) (a)Item-based revenue modelVirtual items have different lifespan patterns: time-based, consumable and durable. Time-based virtual items are items with a statedexpiration time. Revenue attributable to a time-based virtual item is recognized ratably over the period based on the time unit of theitem. Consumable virtual items are items that can be consumed by a specific user action and have limitations on repeated use.Revenue attributable to a consumable virtual item is recognized upon consumption. Durable virtual items are items that providethe user with continuing benefits over an extended period of time. Revenue attributable to a durable virtual item is recognizedratably over its average lifespan. (b)User-based revenue modelThe Company tracks paying users’ activeness within each game where the user-based revenue model is used to estimate payingusers’ average lifespan. Paying users are defined as inactive when they have reached a period of inactivity such that it isreasonable to believe that these users will not return to a specific game.Determining the estimated performance obligation period requires management’s judgment and thus involves uncertainty. Future users’usage patterns and playing behaviors may change and differ from the historical usage patterns and playing behaviors, leading to a changein the estimated performance obligation period.F-37Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)(o)Revenue recognition (continued)(ii)E-commerceThe Company’s e-commerce business (“Shopee”) charges its sellers on its marketplace a fixed rate commission fee based on grossmerchandise value in selected markets. Fees are charged when the transactions are completed and settled. Such commission fees chargedare recognized on a net basis.The Company also provides logistic services to end customers. Revenue from logistic services is recognized over time as the customersimultaneously receives and consumes the benefits provided by the Company’s performance as it performs.Shopee operates a customer loyalty program, where end users who purchase merchandises and participate in activities through Shopee’splatform are given Shopee coins which entitle them to offset future purchases, participate in activities and redeem vouchers throughShopee’s platform. A portion of the revenue attributable to Shopee coins is deferred until they are redeemed, used or expired.The Company charges its sellers advertising fees through its paid ads service on Shopee’s platform. The paid ads service allows the sellersto bid for keywords that match their product or service listing appearing in search or browser results on Shopee marketplace. Their productor service listing will show higher in search rankings when users search for their bid keywords. Sellers prepay for paid ads services and theadvertising income is recognized based on the number of clicks on the product or service listings during the service period.Sellers and buyers are customers of Shopee.(iii)Digital financial servicesThe Company earns interest and fees from loans granted to customers. Interest and fees earned are recognized over the period of the loanbased on the effective interest method.The Company also earns commissions from merchants when transactions are completed and settled through its digital financial servicesplatform. Such commissions are generally determined as a percentage based on the value of the merchandise being sold by the merchants.Commissions are recognized in the consolidated statements of operations at the time when the underlying transaction is completed.(iv)Rendering of servicesThe Company also recognizes revenue from other services when the services are rendered.F-38Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)(o)Revenue recognition (continued)(v)Sales of goodsThe Company recognizes revenue from sales of goods at the point in time that the customer obtains control of the goods, which generallyoccurs upon delivery to the customer.(p)Cost of revenueCost of revenue consists primarily of purchase price of inventories, depreciation expenses, amortization expenses, payment channel costs, royaltyexpenses, hosting charges, interest expenses related to the Company’s digital financial services segment, payroll-related costs, bank transactionfees, cost of logistics and the other overhead expenses.(q)Advertising expenditureAdvertising expenditures are expensed as incurred and are included in sales and marketing expenses. As part of the advertising expenditure, salesincentives given to end users as a result of a concurrent sale are recognized as reductions of the corresponding consideration that the Companyexpects to receive. In some instances, the Company may record losses from transactions when the sales incentives provided exceed the revenueearned from the customer on a transaction-by-transaction basis. Such losses are then reclassified and recorded in sales and marketing expenses.(r)Research and development expensesResearch and development expenses consist primarily of payroll and related personnel costs related to product development. Research anddevelopment expenses are expensed as incurred, except for qualifying costs relating to the development of software for internal use as described inNote 2(k).(s)LeasesLeases are classified at the inception date as either a finance lease or an operating lease. As the lessee, a lease is a finance lease if any of thefollowing conditions exists: a) ownership is transferred to the lessee by the end of the lease term, b) there is a bargain purchase option, c) the leaseterm is at least 75% of the asset’s estimated remaining economic life, or d) the present value of the minimum lease payments at the beginning of thelease term is 90% or more of the fair value of the leased asset to the lessor at the inception date.Finance lease assets are included in property and equipment, net, and finance lease liabilities are included in accrued expenses and other payables,current and non-current.F-39Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)(s)Leases (continued)All other leases are accounted for as operating leases wherein rental payments are expensed on a straight-line basis over the periods of theirrespective leases. Operating leases (with an initial term of more than 12 months) are included in operating lease right-of-use (“ROU”) assets,operating lease liabilities (current), and operating lease liabilities (non-current) in the consolidated balance sheets. ROU assets represent theCompany’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease paymentsarising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of leasepayments over the lease term. The Company estimates the incremental borrowing rate based on the information available at commencement date indetermining the present value of lease payments. The operating lease ROU asset also includes any lease prepayments, reduced by lease incentivesand accrued rent. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercisethat option.The Company has lease agreements with lease and non-lease components. The Company has elected to account for lease and non-leasecomponents as a single lease component for data center leases only. In addition, leases with an initial term of 12 months or less are not recorded onthe consolidated balance sheets; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Certain leaseagreements contain rent holidays and escalating rent are considered when determining the straight-line rent expense to be recorded over the leaseterm. The lease term begins on the date of initial possession of the lease property for purposes of recognizing lease incentives.(t)Income taxesThe Company accounts for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based onthe difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period inwhich the differences are expected to reverse. The Company records a valuation allowance against deferred tax assets if, based on the weight ofavailable evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of achange in tax rates is recognized in income in the period that includes the enactment date. The Company applies ASC 740, Accounting for IncomeTaxes, to account for uncertainty in income taxes. ASC 740 prescribes a recognition threshold a tax position is required to meet before beingrecognized in the financial statements.The Company has elected to classify interest and penalties related to unrecognized tax benefits, if and when required, as part of “Income taxexpense” in the consolidated statements of operations.F-40Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)(u)Share-based compensationAll share-based compensation, including share options, restricted share awards, restricted share units and share appreciation rights under shareincentive plan are accounted for under ASC 718, Compensation – Stock Compensation, which requires that share-based awards granted toemployees to be measured at fair value and recognized as compensation expense over the requisite service period (which is generally the vestingperiod) in the consolidated statements of operations. The Company has elected to recognize compensation expense using the straight-line methodfor equity-classified share-based awards granted with service conditions that have a graded vesting schedule. Forfeitures are accounted for as theyoccur.The Company, with the assistance of an independent third-party valuation firm, determined the estimated fair value of the share options using theBlack-Scholes pricing model.(v)(Loss) Earnings per shareIn accordance with ASC 260, Earnings per Share, basic (loss) earnings per share is computed by dividing net (loss) income attributable to ordinaryshareholders by the weighted average number of unrestricted ordinary shares outstanding during the year using the two-class method. Under thetwo-class method, net (loss) income is allocated between ordinary shares and other participating securities based on their participating rights.Partially paid shares are included in the computation of basic (loss) earnings per share to the extent that these shares are entitled to dividends inproportion to the amount paid.Diluted (loss) earnings per share is calculated by dividing net (loss) income attributable to ordinary shareholders as adjusted for the effect ofdilutive ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding duringthe period. Ordinary equivalent shares consist of the ordinary shares issuable upon the conversion of the convertible notes using the if-convertedmethod and outstanding share-based awards, using the treasury stock method, when the impact is dilutive. Ordinary share equivalents are excludedfrom the computation of diluted (loss) earnings per share if their effects would be anti-dilutive.(w)Segment reportingThe Company identifies a business as an operating segment if: i) it engages in business activities from which it may earn revenues and incurexpenses; ii) its operating results are regularly reviewed by the Chief Operating Decision Maker (“CODM”) to make decisions about resources to beallocated to the segment and assess its performance; and iii) it has available discrete financial information. The CODM reviews financial informationat the operating segment level to allocate resources and to assess the operating results and financial performance for each operating segment.The Company has three operating and reportable segments: e-commerce, digital financial services and digital entertainment. Accordingly, thefinancial statements include segment information which reflects the current composition of the reportable segments in accordance with ASC 280,Segment Reporting.F-41Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)(x)Employee benefits(i)Defined contribution planThe Company participates in the national pension schemes as defined by the laws of the jurisdictions in which it has operations.Contributions to defined contribution pension schemes are recognized as an expense in the period in which the related service isperformed.(ii)Employee leave entitlementEmployee entitlements to annual leave are recognized as a liability when they are accrued to the employees. The undiscounted liability forleave expected to be settled wholly before twelve months after the end of the reporting period is recognized for services rendered byemployees up to the end of the reporting period.(y)Transfers of financial assets The Company accounts for transfers of financial assets as true sales when the transferred assets have been legally isolated from the Company, thetransferee has the right to pledge or exchange transferred assets and the Company does not maintain effective control over the transferred assets.Transfers of financial assets that do not qualify for sale accounting continue to be reported on the Company’s consolidated balance sheets as if thetransfer had not occurred. Accordingly, the sale proceeds are recognized as secured borrowings.(z)Recently adopted accounting pronouncementsIn August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options(Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting For Convertible Instrumentsand Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting and disclosures for convertible instruments andcontracts in an entity’s own equity by removing certain separation models in Subtopic 470-20 for convertible instruments, and requires the use ofthe if-converted method when calculating diluted earnings per share. Convertible debt instruments will be accounted for as a single liabilitymeasured at amortized cost. The Company adopted ASU 2020-06 on January 1, 2022 using the modified retrospective method.In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and VintageDisclosures (“ASU 2022-02”), which eliminates the accounting guidance for troubled debt restructurings and requires disclosure of current periodgross charge-offs by year of origination (vintage disclosure). The Company adopted ASU 2022-02 on January 1, 2023, on a prospective basis. Theadoption of the new standard did not have a material impact on the Company’s financial statements.F-42Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)(aa)Recently issued accounting pronouncements not yet adoptedIn November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU2023-07”). The amendments in ASU 2023-07 improve reportable segment disclosure requirements, primarily through enhanced disclosures aboutsignificant segment expenses. ASU 2023-07 is effective for annual periods beginning after December 15, 2023. Adoption of ASU 2023-07 should beapplied retrospectively to all prior periods presented in the financial statements. ASU 2023-07 will result in the required disclosures being included inthe Company’s consolidated financial statements, once adopted.In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on incometaxes paid. ASU 2023-09 is effective on a prospective basis for annual periods beginning after December 15, 2024, with retrospective applicationpermitted. ASU 2023-09 will result in the required disclosures being included in the Company’s consolidated financial statements, once adopted.F-43Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)3.CONCENTRATION OF RISKS(a)Credit riskFinancial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cashequivalents, restricted cash, accounts receivable, other receivables, securities purchased under agreements to resell, loans receivable, held-to-maturity investments, available-for-sale investments, and amounts due from related parties. As of December 31, 2022 and 2023, substantially all ofthe Company’s cash and cash equivalents were held at major financial institutions in their respective locations. Management believes that thesefinancial institutions are of high credit quality and continually monitors the credit worthiness of these financial institutions. Due to the relativelysmall dollar amount of individual loans receivable, the Company generally does not require collateral on these balances. As of December 31, 2022and 2023, no single loan customer’s balance accounted for more than 5% of net loans receivable.(b)Business, supplier, customer and economic riskThe Company participates in relatively dynamic and competitive industries that are heavily reliant on operational excellence. The Company believesthat changes in any of the following areas could have a material adverse effect on the Company’s future financial position, results of operations orcash flows:(i)Business risk – The Company mainly derives its net revenues from its e-commerce, digital financial services and digital entertainmentoperations. If competitors introduce new marketplace platforms, credit product offerings and services or new online games that competewith, or surpass the Company’s offerings, the Company’s operating performance will be affected.(ii)Supplier risk – The Company’s e-commerce and digital financial service businesses engage third-party logistics service providers,payment channels and other third parties as its service providers. The Company’s digital entertainment business licenses certain gamesfrom third-party game developers. The term of the game license agreements with the game developers typically ranges from two to nineyears, renewable upon both parties’ consent. The Company may not be able to develop or procure new games or renew existing licenses onterms acceptable to both parties. The Company’s game developer partners may terminate its agreements prior to their expiration if theCompany is not in compliance with the relevant terms or conditions and the Company may fail to remedy such non-compliance in time, orthe game developer partners may refuse to renew the agreements. No individual third-party logistics services provider, third-party gamedeveloper or other third-party business partner accounted for more than 10% of the Company’s net cost of revenue for the years endedDecember 31, 2021, 2022 and 2023.F-44Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)3.CONCENTRATION OF RISKS (continued)(b)Business, supplier, customer and economic risk (continued)(iii)Customer risk – No individual customer accounted for more than 10% of net revenues for the years ended December 31, 2021, 2022 and2023. The Company relied on several distribution channels to publish its mobile games. Revenue generated through one of the distributionchannels accounted for approximately 19%, 13% and 6% of the Company’s net revenues for the years ended December 31, 2021, 2022 and2023, respectively.(iv)Political, economic, social, legal and regulatory uncertainties – The Company’s businesses could be adversely affected by the varyingpolitical, economic, social, legal and regulatory uncertainties in the diverse markets that it operates in. In addition, the Company may beunsuccessful in adapting its business practices, culture and operations in new markets.(v)Regulatory restrictions – Complex laws, rules and regulations including but not limited to those relating to game operations, e-commerce,digital platforms, payments, lending, banks and data privacy, in all markets where the Company operates. Laws and regulations and theirenforcement vary from jurisdiction to jurisdiction and are often evolving, unclear or inconsistent with other applicable laws which may inturn cause uncertainty to our business operations. The Company may require more time than expected to adapt to these new requirementsand may face delays during the implementation period.(c)Currency convertibility riskA significant portion of the Company’s revenue and expenses are denominated in currencies subject to exchange control. If revenue denominated insuch currencies increase or expenses denominated in such currencies decrease in the future, the Company may need to convert a portion of itsrevenue into other currencies to meet its foreign currency obligations. Currently, in Taiwan, a single remittance by a company for an amount over $1million or its equivalent in foreign currency shall be reported and documents supporting the accuracy of such report shall be provided to the bankhandling such remittance before the remittance is conducted. In addition, remittances by a company in annual aggregate amount exceeding $50million or its equivalent in foreign currency may not be processed without the approval of the Central Bank of the Republic of China (Taiwan). InVietnam, exchanging Vietnamese dong into foreign currency must be conducted at a licensed credit institution such as a licensed commercial bank.Conversion of Thai baht to another currency is subject to regulations promulgated by the Ministry of Finance and Bank of Thailand. Conversion ofIndonesian rupiah into any foreign currency that exceeds a certain specific threshold is required to have an underlying transaction and supportedby underlying transaction documents. In Malaysia, the foreign exchange policy requires the approval of the Central Bank of Malaysia (“BNM”) forcross border remittances which are either set out in the foreign exchange policy notices or applied for on an ad hoc basis. BNM has the discretionwhether to grant its approval, and to impose any condition on such approval so there is no assurance that its approval will be granted. TheCompany may be unable to convert such local currencies into U.S. dollars or other foreign currencies to pay dividends or for other purposes on atimely basis or at all.F-45Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)3.CONCENTRATON OF RISKS (continued)(d)Foreign currency riskThe Company operates in multiple markets, which exposes it to the effects of fluctuations in currency exchange rates as it reports its financials andkey operational metrics in USD. The Company earns revenue denominated in local currencies of Southeast Asia, Taiwan and Brazil, among othercurrencies, while some of its costs and expenses are paid in other foreign currencies. The Company generally pays license fees to game developersin USD and incur operating expenses in the local currencies in the markets in which it operates. Fluctuations in the exchange rates among thevarious currencies that the Company uses could cause fluctuations in its operational and financial results.4.GOODWILLThe changes in the carrying amount of goodwill are as follows: Digital Entertainment Digital Financial Services OtherServices Total $ $ $ $ Balance as of January 1, 2022 168,731 56,102 314,791 539,624 Acquisitions 11,715 48,980 – 60,695 Impairment (177,663) – (177,280) (354,943)Foreign currency translation (2,783) (7,868) (4,517) (15,168)Balance as of December 31, 2022 – 97,214 132,994 230,208 Impairment – – (117,875) (117,875)Foreign currency translation – 873 (424) 449 Balance as of December 31, 2023 – 98,087 14,695 112,782 As of December 31, 2022, due to the negative events, trends in the broader market environment and management’s business decision, the Companydetermined that the carrying amount of three reporting units within the Company’s digital entertainment segment and two reporting units within the Otherservices segment exceeded its respective fair values and recorded impairment losses of $354,943. For one of the reporting units within Other services, theCompany determined the fair value using the market approach. The key valuation inputs used were valuation multiples derived from comparable companiesthat were applied to operating performance of the reporting unit. For the remaining reporting units, the Company made a strategic decision to shut down ordispose the businesses and as a result, the Company recorded a full impairment on the goodwill.As of December 31, 2023, due to change in business strategy, the Company determined that the carrying amount of one reporting unit within the Otherservices segment exceeded its respective fair value and recorded a full impairment on the goodwill of $117,875. The reporting unit was subsequently disposedduring the year.F-46Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)4.GOODWILL (continued)Gross goodwill balances were $585,151 and $112,782 as of December 31, 2022 and 2023, respectively. Accumulated impairment losses on goodwill were$354,943 and nil as of December 31, 2022 and 2023, respectively.5.PREPAID EXPENSES AND OTHER ASSETS As of December 31, 2022 2023 $ $ Current Other receivables 782,022 1,153,627 Taxes receivable 168,266 207,172 Deferred payment channel costs 271,194 197,814 Securities purchased under agreements to resell 390,002 160,289 Prepaid expenses 121,049 111,986 Security deposits 16,828 14,898 Assets held for sale 25,954 – Others 23,336 16,056 1,798,651 1,861,842 Non-current Security deposits 47,314 41,984 Prepayment of long-lived assets (including renovation-in-progress) 61,733 24,318 Deferred payment channel costs 8,476 12,089 Other receivables 6,821 2,652 Others 11,272 6,662 135,616 87,705 F-47Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)6.LOANS RECEIVABLE, NETConsumer and Small Medium sized Enterprises (“SME”) loans primarily consist of loans receivable provided to both Shopee buyers and sellers. On the buyerside, the Company offers consumption loans (SPayLater) which gives users the ability to complete their purchase first and make the payment later or ininstalments, and cash loans which allows users to meet their short-term borrowing needs. On the seller side, the Company offers unsecured SME loans tohelp sellers expand their operations and fast escrow services to help sellers receive their funds faster and improve cash flow management.The Company monitors credit quality for all loans receivable on a recurring basis by evaluating the customers’ prior repayment history available internallyand external sources information, where applicable. The Company uses delinquency status and trends to assist in making new and ongoing credit decisions,and to plan its collection practices and strategies. The following table presents the loans receivable by each of the loan portfolio:As of December 31, 2022$ 2023$ Consumer and SME loans 2,268,844 2,656,484 Other loans 45,405 150,297 2,314,249 2,806,781 Allowance for credit losses (238,819) (321,568) 2,075,430 2,485,213 Transfers of loans receivable that do not qualify for sale accounting continue to be reported on the Company’s consolidated balance sheets. As of December31, 2022 and 2023, $39,001 and $133,578, respectively, of such loans receivable remained outstanding (see Note 12).F-48Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)6.LOANS RECEIVABLE, NET (continued)The following table is a summary of the delinquency status of the loans receivable by year of origination: As of December 31, 2022 Year of origination 2022 2021 2020 2019 2018 Prior Total Consumer and SME loans $ $ $ $ $ $ $ Delinquency: Current 2,050,721 641 807 2,790 1,702 786 2,057,447 Past due - 1 to 30 days 70,761 206 143 97 66 14 71,287 - 31 to 60 days 49,493 341 96 490 560 190 51,170 - 61 to 90 days 44,065 581 18 16 22 – 44,702 - More than 90 days 26,308 16,718 913 146 39 114 44,238 2,241,348 18,487 1,977 3,539 2,389 1,104 2,268,844 Other loans Delinquency: Current 918 6,159 30,778 4,134 1,282 923 44,194 Past due - 1 to 30 days 10 37 117 148 13 – 325 - 31 to 60 days – – 38 249 32 – 319 - 61 to 90 days – 22 – 1 42 2 67 - More than 90 days – 64 105 212 79 40 500 928 6,282 31,038 4,744 1,448 965 45,405 F-49Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)6.LOANS RECEIVABLE, NET (continued) As of December 31, 2023 Year of origination 2023 2022 2021 2020 2019 Prior Total Consumer and SME loans $ $ $ $ $ $ $ Delinquency: Current 2,448,363 4,934 – – – – 2,453,297 Past due - 1 to 30 days 64,015 1,054 – – – – 65,069 - 31 to 60 days 49,419 925 – – – – 50,344 - 61 to 90 days 42,239 2,054 – – – – 44,293 - More than 90 days 41,843 1,638 – – – – 43,481 2,645,879 10,605 – – – – 2,656,484 Current period grosswrite-off 182,145 358,503 4,834 – – – 545,482 Other loans Delinquency: Current 104,770 927 399 30,769 3,132 2,214 142,211 Past due - 1 to 30 days 4,660 8 6 98 86 17 4,875 - 31 to 60 days 1,776 4 30 38 260 275 2,383 - 61 to 90 days 10 9 – 28 51 16 114 - More than 90 days 69 52 17 210 242 124 714 111,285 1,000 452 31,143 3,771 2,646 150,297 Current period grosswrite-off – 16 12 205 775 220 1,228 F-50Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)6.LOANS RECEIVABLE, NET (continued)An analysis of the loans receivable’s allowance for credit losses by portfolio segment is as follows: Consumerand SMEloans$ Other loans$ Total$ Balance as of January 1, 2022 89,977 7,699 97,676 Provision for credit losses 494,815 (1,202) 493,613 Write-off of loans receivable (331,401) (4,772) (336,173)Exchange differences (16,012) (285) (16,297)Balance as of December 31, 2022 237,379 1,440 238,819 Provision for credit losses 624,143 3,785 627,928 Write-off of loans receivable (545,482) (1,228) (546,710)Exchange differences 1,518 13 1,531 Balance as of December 31, 2023 317,558 4,010 321,568 7.INVESTMENTSThe following table sets forth a breakdown of the categories of short-term and long-term investments held by the Company: As of December 31, 2022 2023 $ $ Short-term investments Debt securities: Held-to-maturity 557,249 1,731,154 Available-for-sale 304,453 792,908 Equity securities 2,556 23,582 864,258 2,547,644 Long-term investments Debt securities: Held-to-maturity 64,790 49,726 Available-for-sale 292,724 3,405,098 Equity securities 521,742 612,729 Equity method investments 196,104 195,009 Investments carried at fair value 178,233 – 1,253,593 4,262,562 F-51Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)7.INVESTMENTS (continued)Debt securitiesHeld-to-maturity investments include time deposits placed with financial institutions and sovereign bonds. Available-for-sale investments include sovereignbonds, convertible loans, corporate bonds and redeemable preference shares of investees.Marketable equity securitiesThe net unrealized fair value (loss) gain of ($63,434), $146 and ($2,069) related to the marketable equity securities had been recognized in the consolidatedstatements of operations as “Net investment loss” during the years ended December 31, 2021, 2022 and 2023, respectively.Non-marketable equity securitiesAs of December 31, 2022 and 2023, the Company determined an impairment indicator existed due to the deterioration in economic and market conditions andthe fair value of certain investments was less than their carrying amount.Impairment lossesImpairment losses are included in net investment loss in the consolidated statements of operations: Years ended December 31, 2021 2022 2023 $ $ $ Impairment losses Non-marketable equity securities – 104,645 86,076 Equity method investments – 4,201 10,608 F-52Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)7.INVESTMENTS (continued)The following table summarizes the cost or amortized cost, gross unrecognized gains and losses, gross unrealized gains and losses, and fair value of theCompany’s debt securities and investments carried at fair value as of December 31, 2022 and 2023: As of December 31, 2022 Cost oramortizedcost Grossunrecognizedgains Grossunrecognizedlosses Grossunrealizedgains Grossunrealizedlosses Fair value $ $ $ $ $ $ Short-term investments Debt securities: Held-to-maturity 557,249 4 (2) – – 557,251 Available-for-sale 304,649 – – 26 (222) 304,453 Long-term investments Debt securities: Held-to-maturity 64,790 551 (756) – – 64,585 Available-for-sale 301,020 – – 151 (8,447) 292,724 Investments carried at fair value 225,709 – – 27,071 (74,547) 178,233 1,453,417 555 (758) 27,248 (83,216) 1,397,246 As of December 31, 2023 Cost oramortizedcost Grossunrecognizedgains Grossunrecognizedlosses Grossunrealizedgains Grossunrealizedlosses Fair value $ $ $ $ $ $ Short-term investments Debt securities: Held-to-maturity 1,731,154 9 (23) – – 1,731,140 Available-for-sale 792,431 – – 885 (408) 792,908 Long-term investments Debt securities: Held-to-maturity 49,726 632 (193) – – 50,165 Available-for-sale 3,407,262 – – 15,002 (17,166) 3,405,098 5,980,573 641 (216) 15,887 (17,574) 5,979,311 F-53Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)8.PROPERTY AND EQUIPMENT, NET As of December 31, 2022 2023 $ $ Computers 1,381,797 1,472,199 Office equipment, furniture and fittings 62,262 65,355 Leasehold improvements 381,443 350,194 Transportation assets 123,835 64,022 Warehouse equipment 36,023 140,829 Land 272,042 278,756 Building 14,702 40,830 Construction-in-progress 51,575 44,884 2,323,679 2,457,069 Less: accumulated depreciation (935,784) (1,249,371) 1,387,895 1,207,698 Depreciation expenses recognized for each of the years ended December 31, 2021, 2022 and 2023 were included in the following captions: Year ended December 31, 2021$ 2022$ 2023$ Cost of revenue 180,140 261,582 297,406 Sales and marketing expenses 7,960 10,733 8,665 General and administrative expenses 64,187 117,593 93,972 Research and development expenses 8,395 15,019 12,193 260,682 404,927 412,236 F-54Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)9.LEASESThe Company has entered into commercial operating leases for the use of offices, warehouses and data centers as lessee. These leases have terms notexceeding 15 years. These leases have varying terms, escalation clauses and renewal rights.Information pertaining to lease amounts recognized in the Company’s consolidated financial statements is summarized as follows: Year ended December 31, 2021$ 2022$ 2023$ Lease cost Operating lease cost 138,766 257,359 295,501 Short-term lease cost 14,831 24,507 23,172 153,597 281,866 318,673 Supplemental cash flow information Operating cash flows from operating leases 128,751 228,604 292,781 ROU assets obtained in exchange for new operating lease liabilities 520,354 596,887 279,526 As of December 31, 2022 2023 Weighted-average remaining lease term Operating leases 5.66 years 6.15 years Weighted-average discount rate Operating leases 7.8% 8.3% Maturities of operating lease liabilities as of December 31, 2023 were as follows: $ 2024 298,070 2025 250,365 2026 215,008 2027 156,217 2028 119,121 Thereafter 365,164 Total lease payments 1,403,945 Less: imputed interest (323,643)Present value of lease liabilities 1,080,302 The Company has additional operating leases, primarily for offices, warehouses and data centers that have not yet commenced of $810,652 with lease termsnot exceeding 14 years and $518,265 with lease terms not exceeding 14 years, as of December 31, 2022 and 2023, respectively.F-55Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)10.INTANGIBLE ASSETS, NET As of December 31, 2022$ 2023$ Licensing fee 18,629 21,802 IP right 42,943 44,894 Trademarks 10,679 10,679 Software, including internal use software under development 66,117 73,231Others 5,267 5,271 Total intangible assets, gross 143,635 155,877 Accumulated amortization: Licensing fee (15,713) (16,280)IP right (37,538) (40,699)Trademarks (5,873) (6,941)Software (17,203) (38,200)Others (2,289) (2,936)Total accumulated amortization (78,616) (105,056)Total intangible assets, net 65,019 50,821 The estimated aggregate amortization expenses of intangible assets, excluding internal use software under development, for each of the five succeeding fiscalyears and thereafter are as follows: $ 2024 26,642 2025 17,031 2026 5,168 2027 1,669 2028 281 Thereafter 30 50,821 Amortization expenses related to intangible assets was $18,350, $23,417 and $28,609 for the years ended December 31, 2021, 2022 and 2023, respectively.F-56Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)11.ACCRUED EXPENSES AND OTHER PAYABLESThe components of accrued expenses and other payables are as follows: As of December 31, 2022 2023 $ $ Current Accrued cost of revenue and operating expenses 768,312 1,066,988 Accrued payroll and welfare expenses 213,369 316,397 Business and other taxes payables 133,636 246,164 Other payables 173,560 116,338 Payables and accruals for long-lived assets 38,473 32,724 Accrued interest for convertible notes 3,917 3,737 Finance lease liabilities 3,138 3,715 Liabilities directly associated with the assets held for sale 12,020 – Others 50,188 48,744 1,396,613 1,834,807 Non-current Finance lease liabilities 11,844 10,828 Others 75,228 68,429 87,072 79,257 12.BORROWINGSBank borrowingsDuring the years ended December 31, 2022 and 2023, the Company entered into revolving credit facilities that allowed the Company to borrow up to $475,000and $400,000, respectively. As of December 31, 2022, the Company had $49,000 outstanding balance and $426,000 of undrawn revolving credit facilities. Theamount drawn down bears a weighted average interest of 3.98% per annum. As of December 31, 2023, the Company had nil outstanding balance and $400,000of undrawn revolving credit facilities.Secured borrowingsSale proceeds from transfers of loans receivable that do not qualify for sale accounting are reported as secured borrowings. As of December 31, 2022 and2023, $39,410 and $146,661, respectively, remained outstanding. Net cash proceeds received from these transfers are presented in “Proceeds from securedborrowings, net” in the consolidated statements of cash flows.Borrowings under securitization transactionsAs of December 31, 2022 and 2023, nil and $119,323, respectively, remained outstanding. As of December 31, 2023, the borrowings bear an interest rate of5.3% to 7.8% and the maturity of the borrowings range from April 2026 to August 2026.F-57Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)13.CONVERTIBLE NOTES As of December 31, 2022 2023 $ $ 2023 Convertible Notes 31,237 – 2024 Convertible Notes 151,459 151,764 2025 Convertible Notes 1,144,794 1,146,369 2026 Convertible Notes 2,042,497 1,803,416 3,369,987 3,101,549 The Company issued the following convertible notes and the terms are as follows: 2023 Convertible Notes2024 Convertible Notes2025 Convertible Notes2026 Convertible NotesIssuance date June 18, 2018November 18, 2019May 22, 2020September 14, 2021Maturity date July 1, 2023December 1, 2024December 1, 2025September 15, 2026Principal amount $575,000$1,150,000$1,150,000$2,875,000Interest rate 2.25%1.00%2.375%0.25%Initial conversion rate 50.5165 American Depositary Shares(“ADSs”) per $1 principal amount,equivalent to $19.80 per ADS19.9475 ADSs per $1 principal amount,equivalent to $50.13 per ADS11.0549 ADSs per $1 principal amount,equivalent to $90.46 per ADS2.0964 ADSs per $1 principal amount,equivalent to $477.01 per ADSAgreed conversion date January 1, 2023June 1, 2024September 1, 2025June 15, 2026The Convertible Notes holders (the “Holders”) have the right, at their option, to convert the outstanding principal amount of the convertible notes, in wholeor in part in integral multiples of $1 principal amount (i) upon satisfaction of one or more of the conversion conditions as defined in the indenture prior to theclose of business day immediately preceding the agreed conversion date; or (ii) anytime on or after the agreed conversion date until the close of business onthe second scheduled trading day immediately preceding the maturity date (the “Conversion Option”).F-58Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)13.CONVERTIBLE NOTES (continued)The conversion is subject to the anti-dilution and make-whole fundamental change adjustments. Upon conversion, the Company has the right, at its option,to pay or deliver, either cash, ADSs, or a combination of cash and ADSs to the Holders.If certain events of default, changes in tax laws of the relevant taxing jurisdiction or fundamental change, optional redemption or clean up redemption asdefined in the indenture were to occur, of which the optional redemption and clean up redemption only applies to the 2024 Convertible Notes, 2025Convertible Notes and 2026 Convertible Notes, the outstanding obligations under the respective convertible notes could be immediately due and payable(the “Contingent Redemption Options”).The Company evaluated the Conversion Option and Contingent Redemption Options in accordance with ASC 815, Derivatives and Hedging, to determine ifthese features require bifurcation and accounted for as a derivative at fair value with changes in fair value recorded in earnings. The Conversion Option andContingent Redemption Options were not required to be bifurcated in accordance with ASC 815 and the Convertible Notes were accounted for as a singleliability measured at amortized cost.The following table presents the carrying amount of the Convertible Notes: As of December 31, 2022 As of December 31, 2023 2023ConvertibleNotes 2024ConvertibleNotes 2025ConvertibleNotes 2026 ConvertibleNotes Total 2024ConvertibleNotes 2025ConvertibleNotes 2026ConvertibleNotes Total $ $ $ $ $ $ $ $ $ Principal 31,300 152,048 1,149,500 2,057,784 3,390,632 152,048 1,149,500 1,813,273 3,114,821 Less: unamortized issuance costand debt discount (63) (589) (4,706) (15,287) (20,645) (284) (3,131) (9,857) (13,272)Net carrying amount 31,237 151,459 1,144,794 2,042,497 3,369,987 151,764 1,146,369 1,803,416 3,101,549 F-59Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)13.CONVERTIBLE NOTES (continued)During the years ended December 31, 2021, 2022 and 2023, the Company recognized total interest expense for coupon interest of $36,191, $36,544 and$34,309, respectively, and amortization of discount and debt issuance costs on the liability component amounted to $100,141, $7,536 and $6,034, respectively.As a result of the adoption of ASU 2020-06, remaining discount on liability component had been derecognized and therefore amortization of discount on theliability component is no longer recognized.As of December 31, 2022, the if-converted value of 2023 and 2024 Convertible Notes exceeded the principal amount by $50,968 and $5,758, respectively. As ofDecember 31, 2023, the if-converted value of the Convertible Notes did not exceed the principal amount.Capped call transactionsIn connection with the offering of 2024 Convertible Notes and 2025 Convertible Notes, the Company entered into separately negotiated capped calltransactions with certain counterparties (collectively, the “Capped Calls”). The details of the Capped Calls are as follows: 2024 ConvertibleNotes 2025 ConvertibleNotes Initial strike price per share $50.13 $90.46 Initial cap price per share $70.36 $136.54 The Capped Calls are generally intended to reduce or offset the potential economic dilution to the Class A ordinary shares upon any conversion of the 2024Convertible Notes and 2025 Convertible Notes, respectively, with such reduction or offset, as the case may be, subject to a cap based on the cap price. Asthe Capped Calls are considered indexed to the Company’s own stock and are equity classified, they are recorded in shareholders’ equity and are notaccounted for as derivative. The costs of $97,060 and $135,700 incurred in connection with the Capped Calls of the 2024 Convertible Notes and 2025Convertible Notes, respectively, were recorded as reductions to additional paid-in capital. Capped Calls are excluded from the calculation of diluted earningsper share, as they would be anti-dilutive under treasury stock method.Repurchase of convertible notesSubsequent to December 31, 2023, the Company repurchased 2026 Convertible Notes of $171,893, and recorded a $27,112 gain on debt extinguishment.F-60Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)14.SHARE-BASED COMPENSATIONWith effect on January 1, 2024, the maximum number of shares which may be issued pursuant to all awards under its 2009 share incentive plan (the “Plan”)increased to 210,888,606 Class A ordinary shares. The Company amended the Plan in April 2022 to automatically increase on January 1 of each of 2023, 2024,2025 and 2026 by 3% of the total number of ordinary shares of all classes of the Company outstanding on that day immediately before the increase. Under thePlan, the Company may grant options, restricted share award (“RSA”), restricted share unit (“RSU”) or share appreciation right (“SAR”) to its officers,employees, directors and other eligible persons (collectively known as “Eligible Persons”). The Plan is administered by an authorized administrator appointedby the Board of Directors of the Company set forth in the Plan (the “Plan Administrator”).All options granted have a contractual term of ten years. The options vest according to the stated vesting period in the grantee’s option agreement. TheRSUs and SARs generally vest 25% on the first anniversary year from the stated vesting commencement date and the remaining 75% will vest in 12substantially equal quarterly instalments.On April 17, 2022, 4,000,000 existing options were cancelled and 4,000,000 new options were granted concurrently to the same grantee with an exercise priceof US$120 per share on the same date. The new options will vest every three months over a period of five years commencing April 30, 2022 and will expire 10years after the grant date. This is accounted for as a modification and resulted in an incremental share-based compensation cost of US$99,198, which shall berecognised over the new vesting period of the new options of five years commencing April 30, 2022.F-61Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)14.SHARE-BASED COMPENSATION (continued)(a)Option granted to Eligible PersonsThe following table summarizes the Company’s share option activity under the Plan: Number ofoptions Weightedaverageexerciseprice Weightedaverageremainingcontractualterm Aggregateintrinsicvalue $ Years $ Outstanding, January 1, 2021 47,465,720 14.76 Granted 4,162,121 269.09 Exercised (5,405,228) 14.44 Forfeited – Outstanding, December 31, 2021 46,222,613 37.70 6.89 8,822,987 Vested and expected to vest at December 31, 2021 46,222,613 37.70 Exercisable as of December 31, 2021 30,707,210 14.13 6.32 6,435,641 Outstanding, January 1, 2022 46,222,613 37.70 Granted 30,000,000 120.00 Cancelled or forfeited (4,012,516) 279.17 Exercised (3,676,911) 13.82 Outstanding, December 31, 2022 68,533,186 60.87 7.30 1,433,420 Vested and expected to vest at December 31, 2022 68,533,186 60.87 Exercisable as of December 31, 2022 36,880,548 22.99 5.97 1,274,793 Outstanding, January 1, 2023 68,533,186 Granted 1,925,000 60.00 Cancelled or forfeited (9,292,295) 104.02 Exercised (1,336,980) 7.19 Outstanding, December 31, 2023 59,828,911 55.34 6.18 944,611 Vested and expected to vest at December 31, 2023 59,828,911 55.34 Exercisable as of December 31, 2023 42,877,386 35.29 5.51 887,174 The aggregate intrinsic value is calculated to be the difference between the exercise price of the underlying awards and the fair value of theunderlying stock at each reporting date, for those awards that have an exercise price below the estimated fair value of the Company’s ordinaryshares.F-62Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)14.SHARE-BASED COMPENSATION (continued)(a)Option granted to Eligible Persons (continued)The Company calculated the estimated fair value of the options on the respective grant dates using the Black-Scholes Option Pricing Model withthe following assumptions: Granted in 2021 Granted in 2022 Granted in 2023 Risk-free interest rates 0.74% – 1.07% 2.79% – 2.84% 3.60% – 4.10%Expected term 5.6 – 7.5 years 5.1 – 7.5 years 6.5 – 7 yearsExpected volatility 32.1% – 33.0% 48.7% – 55.9% 60.2% – 62.0%Expected dividend yield – – –The risk-free interest rate for periods within the contractual life of the option is based on the US Treasury Yields at the time of grant. The Companyhas used the simplified method to determine the expected term due to insufficient relevant historical exercise data to provide a reasonable basis toestimate expected term. The Company estimated expected volatility primarily based on the weighted-average historical share price volatility of theCompany’s ADS. The Company’s management is ultimately responsible for the determination of the estimated fair value of its ordinary shares.The weighted-average grant-date fair value of share options granted during the years of December 31, 2021, 2022 and 2023 were $75.83, $57.74 and$40.62, respectively. The total fair value of share options vested during the years ended December 31, 2021, 2022 and 2023 was $88,507, $389,734 and$325,183, respectively. The aggregate intrinsic value of options exercised during the years ended December 31, 2021, 2022 and 2023 was $1,361,800,$143,176 and $72,072, respectively.As of December 31, 2023, there were $829,528 total unrecognized share-based compensation cost related to unvested options which is expected tobe recognized over a weighted-average period of 3.31 years. Total unrecognized compensation cost may be adjusted for future changes in actualforfeitures.F-63Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)14.SHARE-BASED COMPENSATION (continued)(b)RSAs/RSUs granted to Eligible PersonsThe following table summarizes the Company’s RSAs/RSUs activity under the Plan: Number ofRSAs/RSUs Weightedaverage grantdate fair value Weightedaverageremainingcontractual life Aggregateintrinsicvalue $ Years $ Unvested, January 1, 2021 9,341,928 46.36 8.64 1,859,511 Granted 3,551,491 258.97 Vested (4,127,006) 40.59 Forfeited (637,193) 102.92 Unvested, December 31, 2021 and January 1, 2022 8,129,220 137.76 8.47 1,818,588 Granted 7,320,443 99.25 Vested (3,864,257) 110.34 Forfeited (1,933,175) 133.12 Unvested, December 31, 2022 and January 1, 2023 9,652,231 120.48 8.81 502,206 Granted 7,119,505 63.46 Vested (4,130,583) 109.11 Forfeited (1,786,921) 116.01 Unvested, December 31, 2023 10,854,232 90.02 8.86 439,596 Share-based compensation cost for RSAs and RSUs is measured based on the fair value of the Company’s ordinary shares on the date of grant.The weighted-average grant-date fair value of RSAs and RSUs granted during the years ended December 31, 2021, 2022 and 2023 was $258.97,$99.25 and $63.46, respectively. The total fair value of RSAs and RSUs vested during the years ended December 31, 2021, 2022 and 2023 was$167,507, $426,398 and $450,703, respectively.As of December 31, 2023, there was $977,151 of unrecognized share-based compensation cost related to RSAs and RSUs which is expected to berecognized over a weighted-average vesting period of 2.55 years. Total unrecognized compensation may be adjusted for future changes in actualforfeitures.(c)SARs granted to Eligible PersonsDuring the years ended December 31, 2022 and 2023, the Company granted 54,186 and 64,295 SARs, respectively, to the Eligible Persons. Fair valueof the SARs is measured based on the fair value of the Company’s ordinary shares at the end of each reporting period.F-64Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)14.SHARE-BASED COMPENSATION (continued)Total compensation expense relating to share options, RSAs, RSUs and SARs granted to employees after deducting forfeitures recognized for the yearsended December 31, 2021, 2022 and 2023 is as follows: Year ended December 31, 2021 2022 2023 $ $ $ Share options: Cost of revenue 390 – – Sales and marketing expenses 5 – – General and administrative expenses 207,204 313,917 253,408 Research and development expenses 33 254 44 207,632 314,171 253,452 Cash received for the exercise in the respective years 77,639 50,211 10,643 RSAs/ RSUs: Cost of revenue 8,318 11,104 12,727 Sales and marketing expenses 23,350 36,812 35,988 General and administrative expenses 67,421 67,388 99,048 Research and development expenses 148,592 283,747 282,381 247,681 399,051 430,144 SARs: Cost of revenue 3,389 (1,928) 383 Sales and marketing expenses 6,850 (1,762) 710 General and administrative expenses 3,658 (2,993) 200 Research and development expenses 1,114 (643) 141 15,011 (7,326) 1,434 F-65Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)15.ORDINARY SHARESThe Company has $7,500,000 authorized share capital which divided into (i) 14,800,000,000 Class A ordinary shares with a par value of $0.0005 each and (ii)200,000,000 Class B ordinary shares with par value of $0.0005 each. Holders of Class A ordinary shares and Class B ordinary shares shall at all times votetogether as one class on all resolutions submitted to a vote for shareholders’ approval or authorization, except for certain class consents required under theMemorandum and Articles of Association. Each Class A ordinary share shall be entitled to one vote, and each Class B ordinary share shall be entitled tofifteen votes, on all matters subject to the vote at general meetings of the Company. During the year ended December 31, 2022, 102,447,910 outstanding ClassB ordinary shares were converted to 102,447,910 Class A ordinary shares.The Company completed the follow-on offering in September 2021, and issued an aggregate of 12,650,000 ADSs, representing 12,650,000 Class A ordinaryshares for total proceeds, net of issuance costs of $3,972,416. The Company’s shareholders approved as a special resolution to increase the voting power ofeach Class B ordinary share from three votes to fifteen votes on all matters subject to vote at general meetings of the Company in February 2022.16.ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)The changes in accumulated other comprehensive income (loss) by component, net of tax, are as follows: Unrealizedfair valuegain (loss)on available-for-saleinvestments Foreigncurrencytranslation Total $ $ $ Balance as of January 1, 2021 981 3,700 4,681 Current year other comprehensive loss (1,278) (32,263) (33,541)Transactions with non-controlling interests – 341 341 Balance as of December 31, 2021 (297) (28,222) (28,519)Current year other comprehensive loss (6,263) (78,297) (84,560)Capital contributed by non-controlling interest – 1,864 1,864 Balance as of December 31, 2022 (6,560) (104,655) (111,215)Current year other comprehensive income (loss) 4,512 (1,297) 3,215 Balance as of December 31, 2023 (2,048) (105,952) (108,000)F-66Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)17.RESTRICTED NET ASSETSCertain of the Company’s subsidiaries and VIEs are restricted in their ability to transfer a portion of their net assets to the Company in accordance with thelocal laws and regulations.Certain jurisdictions where the Company has subsidiaries or VIEs require those subsidiaries or VIEs to establish and fund statutory reserves, details of whichare listed below:Statutory reserveThe changes in statutory reserve are as follows: Year ended December 31, 2022$ 2023$ At the beginning of the financial year 6,144 12,490 Transferred from retained earnings 6,346 4,491 At the end of the financial year 12,490 16,981 TaiwanThe subsidiaries in Taiwan are required to set aside 10% of its profit after tax to legal reserve in accordance with Taiwanese regulations until the legal reserveamount equals to their total paid-up capital. In the event that the subsidiaries incurred no loss, the portion of legal reserve exceeding 25% of the paid-upcapital can be used for distribution to shareholders in the form of new shares or cash.ThailandThe Thailand regulations require that a private limited liability company shall allocate not less than 5% of its retained earnings to a legal reserve at the timethe dividend is paid, until this account reaches an amount not less than 10% of the registered authorized capital. The legal reserve is not available fordividend distribution.The PRCThe PRC subsidiaries of the Company are required to provide for certain statutory reserves, namely a general reserve, an enterprise expansion fund and astaff welfare and bonus fund.IndonesiaThe Indonesian regulations require a limited liability company to reserve a certain amount from its net income each year as a reserve fund until such fundamounts to at least 20% of its issued and paid-up capital.F-67Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)18.TAXATIONEnterprise income taxCayman IslandsThe Company is a company incorporated in the Cayman Islands and conducts its primary business operations through its subsidiaries and its ConsolidatedVIEs. Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gains.SingaporeSubsidiaries incorporated in Singapore are subject to the Singapore Corporate Tax rate of 17% for the years ended December 31, 2021, 2022 and 2023. GarenaOnline was granted an additional five-year Development and Expansion Incentive (“DEI”) by the Singapore Economic Development Board (the “EDB”)commencing from January 1, 2017, with another five-year extension commencing from January 1, 2022, which grant a concessionary tax rate of 10% fromJanuary 1, 2017 to December 31, 2021 and 10.5% from January 1, 2022 to December 31, 2026 on qualifying income, subject to certain terms and conditionsimposed by the EDB.OthersSubsidiaries incorporated in other countries are subject to the respective applicable corporate income tax rates of the countries where they are resident.In March 2021, the Philippines reduced its corporate income tax rate from 30% to 25%, effective retroactively from July 1, 2020.F-68Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)18.TAXATION (continued)Enterprise income tax (continued)Income tax expense comprises: Year ended December 31, 2021$ 2022$ 2023$ Current income tax 289,998 272,070 317,893 Deferred tax (975) (140,553) (94,551)Withholding tax expense 43,842 36,878 39,338 332,865 168,395 262,680 The reconciliation of tax computed by applying the tax rate of 17% which is also the statutory corporate income tax rate for its Singapore’s corporate officefor the years ended December 31, 2021, 2022 and 2023 is as follows: Year ended December 31, 2021$ 2022$ 2023$ (Loss) Income before income tax and share of results of equity investees (1,715,184) (1,500,533) 432,394 Tax expense computed at tax rate of 17% (291,581) (255,091) 73,507 Changes in valuation allowance 828,141 389,129 44,491 Non-taxable and non-deductible items 17,586 25,387 (11,306)Effect of concessionary tax rate and tax reliefs (183,962) (117,558) (42,696)Withholding tax expense 43,842 36,878 39,338 Foreign tax effects (82,388) 85,204 154,756 Changes in unrecognized tax benefits – – 6,000 Others 1,227 4,446 (1,410) 332,865 168,395 262,680 F-69Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)18.TAXATION (continued)Deferred taxThe significant components of deferred taxes are as follows: As of December 31, 2022$ 2023$ Deferred tax assets Property and equipment 11,039 16,094 Deferred revenue 93,163 161,981 Unutilized tax losses and unused capital allowances 2,049,196 2,197,209 Provision and accrued expenses 58,650 74,330 Allowance for credit losses 41,002 56,308 Others 19,844 19,437 Valuation allowance (2,013,288) (2,159,905)Total deferred tax assets 259,606 365,454 Deferred tax liabilities Property and equipment (14,456) (7,853)Deferred payment channel costs (7,111) (24,483)Others (2,780) (4,290)Total deferred tax liabilities (24,347) (36,626)Net deferred tax assets 235,259 328,828 The use of these tax losses and capital allowances is subject to the agreement of the tax authorities and compliance with certain provisions of the taxlegislation of the jurisdiction in which the entity operates. These tax losses have no expiry date except tax losses approximating to $3,473,098, $2,661,916 and$2,189,029 as of December 31, 2021, 2022 and 2023, respectively. The tax losses of $2,189,029 as of December 31, 2023 will expire from 2024 to 2035.The utilization of deferred tax assets recognized by the group is dependent upon future taxable income in excess of income arising from the reversal ofexisting taxable temporary differences.As of December 31, 2023, no deferred tax liability has been recognised on the undistributed earnings of its foreign subsidiaries as the Company either intendsto permanently reinvest the undistributed earnings to fund its future operations or no withholding tax is imposed on the remittance of undistributed earningsin certain jurisdiction.F-70Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)19.(LOSS) EARNINGS PER SHAREBasic (loss) earnings per share for each of the periods presented is calculated as follows:Year ended December 31, 2021$ 2022 $ 2023 $ Numerator: Net (loss) income attributable to ordinary shareholders (2,046,759) (1,651,421) 150,726 Denominator: Weighted-average number of shares outstanding – basic 532,705,796 558,119,948 566,612,815 Basic (loss) earnings per share: (3.84) (2.96) 0.27 Dilutive (loss) earnings per share for each of the periods presented is calculated as follows: Year ended December 31, 2021$ 2022$ 2023$ Numerator: Net (loss) income attributable to ordinary shareholders (2,046,759) (1,651,421) 150,726 Denominator: Weighted-average number of shares outstanding – basic 532,705,796 558,119,948 566,612,815 Add: share options – – 27,486,226 Add: RSAs and RSUs – – 306,563 Weighted-average number of shares outstanding – diluted 532,705,796 558,119,948 594,405,604 Diluted (loss) earnings per share: (3.84) (2.96) 0.25 F-71Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)19.(LOSS) EARNINGS PER SHARE (continued)The following potential common shares were excluded from calculation of diluted net (loss) earnings per share because their effect would have been anti-dilutive for the periods presented: Year ended December 31, 2021 2022 2023 Share options 46,225,613 68,800,110 32,342,730 RSAs/RSUs 8,129,220 9,652,231 10,547,669 Convertible notes 23,349,154 21,635,690 20,588,810 77,703,987 100,088,031 63,479,209 The denominator for diluted (loss) earnings per share for the years ended December 31, 2021, 2022 and 2023 does not include any effect from the CappedCalls (Note 13) because it would be anti-dilutive. In the event of conversion of any or all of the 2024 Convertible Notes and 2025 Convertible Notes, theshares that would be delivered to the Company under the Capped Calls are designed to neutralize the dilutive effect of the shares that the Company wouldissue under the convertible notes.During the years ended December 31, 2022 and 2023, respectively, the Company issued 7,000,000 and 6,000,000 Class A ordinary shares to its sharedepositary bank which will be used to settle share incentive awards. No consideration was received by the Company for this issuance of Class A ordinaryshares. These Class A ordinary shares are legally issued and outstanding but are treated as escrowed shares for accounting purposes and therefore, havebeen excluded from the computation of (loss) earnings per share. Any Class A ordinary shares not used in the settlement of share incentive awards will bereturned to the Company.F-72Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)20.RELATED PARTY TRANSACTIONSThe Company has transactions with a certain shareholder and its affiliates, and an investee in the ordinary course of business.The Company had the following significant related party transactions for the years ended December 31, 2021, 2022 and 2023: Year ended December 31, 2021$ 2022$ 2023$ Services provided by: - Shareholder and its affiliates(1) 164,911 109,422 – - Investee(2) – – 11,327 Services provided to: - Investee(2) – – 8,624 The Company had the following significant related party balances as of December 31, 2022 and 2023: As of December 31, 2022$ 2023$ Amounts due from: - Investee(2) – 281,485 Amounts due to: - Investee(2) – 63,419 (1)On September 5, 2022, the director who is an executive officer of Tencent Limited (“Tencent”) resigned from the Board of Directors of the Company andTencent granted an irrevocable voting proxy with respect to all its shares in the Company to the Board of Directors of the Company to vote on mattersthat are subject to the vote of shareholders of the Company. Accordingly, Tencent is no longer a related party of the Company.(2)In October 2023, the Company deconsolidated a subsidiary. The Company retained significant influence and the retained investment is accounted forusing the equity method. Accordingly, the investee continues to be considered as a related party of the Company. Gain on deconsolidation is notmaterial to the consolidated financial statements.F-73Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)21.SEGMENT REPORTINGThe Company has three reportable segments, namely e-commerce, digital financial services and digital entertainment. The CODM reviews the performance ofeach segment based on revenue and certain key operating metrics of the operations and uses these results for the purposes of allocating resources to andevaluating financial performance of each segment. The Company does not allocate assets to its segments as the CODM does not evaluate the performance ofsegments using asset information.Description of Reportable SegmentsE-commerce – Shopee’s platform is a mobile-centric, social-focused marketplace. It provides users with a convenient, safe, and trusted shopping environmentwith integrated payment, logistics infrastructure and comprehensive seller services. Products from manufacturers and third parties are also purchased andsold directly to buyers on the Shopee platform.Digital financial services – SeaMoney provides a variety of payment services and loans to individuals and businesses. It is an important paymentinfrastructure supporting the Company’s digital entertainment and e-commerce businesses. In addition, SeaMoney also integrates with third-party merchantpartners and covers a broad set of consumption use cases. Revenue from the Company’s digital financial services segment primarily consists of interestearned from Consumer and SME loans provided to both Shopee buyers and sellers.Digital entertainment – Garena offers mobile and PC online games and develops mobile games for the global market. Garena also promotes eSports.A combination of multiple business activities that does not meet the quantitative thresholds to qualify as reportable segments are grouped together as“Other services”.F-74Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)21.SEGMENT REPORTING (continued)Information about segments for the years ended December 31, 2021, 2022 and 2023 presented were as follows: Year ended December 31, 2021 E-Commerce$ DigitalFinancialServices$ DigitalEntertainment$ OtherServices$ Unallocatedexpenses(1)$ Consolidated$ Revenue 5,122,959 469,774 4,320,013 42,444 – 9,955,190 Operating (loss) income (2,766,566) (640,422) 2,500,081 (177,633) (498,520) (1,583,060)Non-operating loss, net (132,124)Income tax expense (332,865)Share of results of equity investees 5,019 Net loss (2,043,030) Year ended December 31, 2022 E-Commerce$ DigitalFinancialServices$ DigitalEntertainment$ OtherServices$ Unallocatedexpenses(1)$ Consolidated$ Revenue 7,288,677 1,221,996 3,877,163 61,869 – 12,449,705 Operating (loss) income (2,013,360) (277,264) 1,971,416 (252,162) (916,138) (1,487,508)Non-operating loss, net (13,025)Income tax expense (168,395)Share of results of equity investees 11,156 Net loss (1,657,772)F-75Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)21.SEGMENT REPORTING (continued) Year ended December 31, 2023 E-Commerce$ DigitalFinancialServices$ DigitalEntertainment$ OtherServices$ Unallocatedexpenses(1)$ Consolidated$ Revenue 9,000,848 1,759,422 2,172,009 131,281 – 13,063,560 Operating (loss) income (550,470) 490,209 1,177,871 (56,728) (836,104) 224,778 Non-operating income, net 207,616 Income tax expense (262,680)Share of results of equity investees (7,032)Net income 162,682 (1)Unallocated expenses are mainly relating to share-based compensation, impairment of goodwill of prior acquisitions that are not under the Company’sreportable segments, and general and corporate administrative costs such as professional fees and other miscellaneous items that are not allocated tosegments. These expenses are excluded from segments results as they are not reviewed by the CODM as part of segment performance.F-76Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)21.SEGMENT REPORTING (continued)Revenue from external customers is classified based on the geographical locations where the services were provided. Year ended December 31, 2021$ 2022$ 2023$ Revenue Southeast Asia 6,316,782 8,321,249 9,179,527 Latin America 1,850,861 2,043,918 2,193,758 Rest of Asia 1,394,342 1,727,187 1,496,433 Rest of the world 393,205 357,351 193,842 Consolidated revenue 9,955,190 12,449,705 13,063,560 Long-lived assets consist of property and equipment, operating lease ROU assets and intangible assets. As of December 31, 2022$ 2023$ Long-lived assets Southeast Asia 1,804,846 1,699,461 Rest of Asia 348,116 258,078 Rest of the world 257,792 316,962 2,410,754 2,274,501 22.FAIR VALUE MEASUREMENTSFair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants atthe measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used tomeasure fair value:Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active marketsLevel 2 – Inputs that are based on quoted prices and market observable data of similar instruments in active marketsLevel 3 – Unobservable inputs that are supported by little or no market activitiesThe fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Derivative instruments are categorized within Level 2 of the fair value hierarchy because the valuation inputs are based on quoted prices and marketobservable data of similar instruments in active markets, such as currency spot and forward rates.F-77Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)22.FAIR VALUE MEASUREMENTS (continued)As of December 31, 2022 and 2023, assets and liabilities categorized within Level 3 of the fair value hierarchy included investments in convertible loan,investments in sovereign bonds, investments carried at fair value, investments in equity securities accounted under measurement alternative, redeemablepreference shares of investees and other assets.Investments in debt securities – the carrying amount approximates fair value due to its short-term nature.Investments carried at fair value or measurement alternative – the Company used Market Adjusted Option Pricing Model Backsolve, which is determinedby using information including but not limited to the pricing of recent rounds of financing of the investees, liquidity factors and a selection of comparablecompanies.The significant unobservable input used to determine the fair value of investments carried at fair value or measurement alternative under the market adjustedOption Pricing Model Backsolve is as follows: As of December 31, 2022 As of December 31, 2023 Unobservable input(1)Weightedaverage(2) Range Weightedaverage(2) Range Market adjustment(20%)(90%) to 7% (54%)(54%) (1)Significant increase (decrease) in the input would result in a significantly higher (lower) fair value measurement, depending on the materiality of theinvestment. (2)Input was weighted based on the fair value of the investments included in the range.Convertible Notes – the Company used commonly accepted valuation methodology to determine the fair value. The valuation methodology takes intoaccount the volatility and implied credit yield.Other assets – the Company used market approach to determine the fair value of certain assets by comparing to the sale and purchase transactions ofcomparable assets in the market, adjusted with differences such as size, physical condition, location and etc.F-78Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)22.FAIR VALUE MEASUREMENTS (continued)Assets and liabilities measured or reported at fair value on a recurring basis are summarized below: As of December 31, 2022 Quoted prices inactive markets foridentical assets(Level 1)$ Significant otherobservable inputs(Level 2)$ Unobservableinputs(Level 3)$ Total$ Held-to-maturity investments 621,346 – 490 621,836 Available-for-sale investments 562,051 – 35,126 597,177 Equity securities 2,008 548 – 2,556 Investments carried at fair value – – 178,233 178,233 Other assets – – 9,668 9,668 Derivative assets(1) – 3 – 3 Derivative liabilities(2) – (2,277) – (2,277)Share appreciation rights (5,420) – – (5,420)2023 Convertible Notes – – (82,666) (82,666)2024 Convertible Notes – – (190,646) (190,646)2025 Convertible Notes – – (1,148,639) (1,148,639)2026 Convertible Notes – – (1,454,421) (1,454,421) 1,179,985 (1,726) (2,652,855) (1,474,596) As of December 31, 2023 Quoted prices inactive markets foridentical assets(Level 1)$ Significant otherobservable inputs(Level 2)$ Unobservableinputs(Level 3)$ Total$ Held-to-maturity investments 1,780,898 – 407 1,781,305 Available-for-sale investments 4,177,564 – 20,442 4,198,006 Equity securities 23,495 87 – 23,582 Other assets – – 9,465 9,465 Derivative assets(1) – 13 – 13 Derivative liabilities(2) – (2,818) – (2,818)Share appreciation rights (5,522) – – (5,522)2024 Convertible Notes – – (168,410) (168,410)2025 Convertible Notes – – (1,179,739) (1,179,739)2026 Convertible Notes – – (1,556,532) (1,556,532) 5,976,435 (2,718) (2,874,367) 3,099,350 (1)Included in prepaid expenses and other assets in the consolidated balance sheets and not designated as hedges. (2)Included in accrued expenses and other payables in the consolidated balance sheets and not designated as hedges.Certain long-term equity securities that were accounted for using measurement alternative were measured at fair value on a non-recurring basis and werecategorized within Level 3 of the fair value hierarchy because significant unobservable inputs were used to estimate its fair value. Assets remeasured at fairvalue within Level 3 of the fair value hierarchy on a non-recurring basis were $264,899 and $251,232 as of December 31, 2022 and 2023, respectively.F-79Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)22.FAIR VALUE MEASUREMENTS (continued)Reconciliations of assets and liabilities measured at fair value on a recurring basis and are categorized within Level 3 of the fair value hierarchy are as follows: $ Available-for-sale investments Balance as of January 1, 2021 21,357 Additions 35,298 Conversion into ordinary shares of investees (21,340)Net unrealized loss included in other comprehensive income (958)Translation gain included in other comprehensive income 19 Balance as of December 31, 2021 34,376 Additions 3,198 Settlement (1,266)Net unrealized loss included in other comprehensive income (1,193)Translation gain included in other comprehensive income 11 Balance as of December 31, 2022 35,126 Settlement (278)Impairment (3,873)Conversion into ordinary shares of investee (9,945)Net unrealized loss included in other comprehensive income (588)Balance as of December 31, 2023 20,442 Investments carried at fair value Balance as of January 1, 2021 – Additions 151,227 Net investment gain included in earnings 27,071 Balance as of December 31, 2021 178,298 Additions 74,482 Net investment loss included in earnings (74,547)Balance as of December 31, 2022 178,233 Transfer out of Level 3 due to change in status(1) (178,233)Balance as of December 31, 2023 – (1)See note 2(l) for more information.F-80Table of ContentsSEA LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts expressed in thousands of US dollars (“$”) except for number of shares and per share data)22.FAIR VALUE MEASUREMENTS (continued) $ Other assets Balance as of January 1, 2021 19,024 Additions 186 Disposals (3,513)Write-down included in earnings (3,627)Translation loss included in other comprehensive income (359)Balance as of December 31, 2021 11,711 Additions 56 Disposals (679)Write-down included in earnings (476)Translation loss included in other comprehensive income (944)Balance as of December 31, 2022 9,668 Additions 122 Disposals (464)Write-down included in earnings 40 Translation gain included in other comprehensive income 99 Balance as of December 31, 2023 9,465 23.COMMITMENTS AND CONTINGENCIESPurchase commitmentsThe Company has commitments to purchase property and equipment and hosting services of $99,050 and $40,893, committed licensing fee payable for thelicensing of game titles of $13,677 and $6,800 and commitments to invest in certain companies of $125,733 and $90,100 as of December 31, 2022 and 2023,respectively.Minimum guarantee commitmentsThe Company has commitments to pay minimum guarantee of royalty fee to game developers for certain online games it licensed from those gamedevelopers. As of December 31, 2022 and 2023, the minimum guarantee commitments amounted to $45,257 and $10,400, respectively, for its launched games aswell as licensed but yet to be launched games.OthersThe Company has commitments to extend credit to customers under committed facilities granted. As of December 31, 2022 and 2023, the customers can drawdown on a total undrawn credit limit of $233 and $1,199, respectively, under such committed facilities.F-81

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