View:
United States securities and exchange commission logo
May 5, 2023
Chenggang Zhou
Chief Executive Officer
New Oriental Education & Technology Group Inc.
No. 6 Hai Dian Zhong Street
Haidian District
Beijing 100080
People s Republic of China
Re: New Oriental
Education & Technology Group Inc.
Form 20-F for
Fiscal Year Ended May 31, 2022
Filed September 29,
2022
File No. 001-32993
Dear Chenggang Zhou:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 20-F for Fiscal Year Ended May 31, 2022
Item 3. Key Information, page 3
1. We note your disclosure
on page 1 where the defined terms "we" and "our" are used to
describe the
"operations" of the VIEs. In future filings, please ensure that references to
the
VIEs make clear that
while the VIEs conduct operations in China, that the VIEs
are consolidated for
accounting purposes and that the holding company does not conduct
operations. In
addition, we note your definition of "China" does not include Hong Kong.
Please revise the
definition to clarify that the legal and operational risks associated with
operating in China also
apply to any operations in Hong Kong. We also note that you have
a school located in
Hong Kong and are listed on the Hong Kong Stock Exchange; please
discuss in future
filings, the applicable laws and regulations in Hong Kong as well as the
related risks and
consequences. Examples of applicable laws and regulations include, but
Chenggang Zhou
FirstName LastNameChenggang Zhou Group Inc.
New Oriental Education & Technology
Comapany
May 5, 2023NameNew Oriental Education & Technology Group Inc.
May 5,
Page 2 2023 Page 2
FirstName LastName
are not limited to:
Enforceability of civil liabilities in Hong Kong;
China s Enterprise Tax Law ("EIT Law");
Regulatory actions related to data security or anti-monopoly
concerns in Hong Kong
and their potential impact on your ability to conduct business,
accept foreign
investment or list on a U.S./foreign exchange; and
Risk factor disclosure explaining whether there are
laws/regulations in Hong Kong
that result in oversight over data security, how this oversight
impacts the company s
business, and to what extent the company believes that it is
compliant with the
regulations or policies that have been issued.
2. We note that on pages 81 to 84 you provide a description of your
contractual
arrangements with New Oriental China and Beijing Xuncheng. In future
filings, please
also provide such disclosure in this section. Additionally, with
respect to the included
structure chart, please identify the persons that own the equity of
Seven Limited
Partnerships and Linzhi Tencent Technology Co., Ltd.
Permissions Required from the PRC Authorities for Our Operations, page 6
3. In future filings, disclose each permission or approval that you, your
subsidiaries, or the
VIEs are required to obtain from Chinese authorities to operate your
business. As one
example only, you state on page 29 that your new business segment
"DONG FANG
ZHEN XUAN" requires permissions under the PRC Food Safety Law and PRC
Product
Quality Law. In addition, we note that you do not appear to have
relied upon an opinion of
counsel with respect to your conclusions that you have obtained the
requisite permissions
and approvals to operate your business. If true, state as much and
explain why such an
opinion was not obtained.
4. We note your disclosure that you "believe [your] PRC subsidiaries and
the consolidated
affiliated entities have obtained the requisite licenses and permits
from the PRC
government authorities that are material for the business operations
in China, including,
among others, the private school operation permits and license for
internet information
services, or ICP license." The disclosure here should not be qualified
by materiality. In
future filings, please make appropriate revisions to your disclosure.
5. We note that the CSRC has recently announced regulations that outline
the terms under
which China-based companies can conduct offerings and/or list
overseas. In future filings,
please revise your disclosure to reflect these recent events and
explain how the regulations
apply to you and your ability to operate and offer securities.
Cash and Asset Flows through our Organization, page 7
6. In future filings, please amend your disclosure here and in the risk
factors section to state
that, to the extent cash or assets in the business is in the PRC/Hong
Kong or a PRC/Hong
Kong entity, the funds or assets may not be available to fund
operations or for other use
outside of the PRC/Hong Kong due to interventions in or the imposition
of restrictions
Chenggang Zhou
New Oriental Education & Technology Group Inc.
May 5, 2023
Page 3
and limitations on the ability of you, your subsidiaries, or the
consolidated VIEs by the
PRC government to transfer cash or assets. In this section, provide
cross-references to
these other discussions and to the condensed consolidating schedule
and the consolidated
financial statements.
The Holding Foreign Companies Accountable Act, page 7
7. We note your disclosure in paragraph 4 of page 5 that you are subject
to complex and
evolving PRC laws and regulations as well as your disclosure here
regarding your and
your auditor's compliance with the Holding Foreign Companies
Accountable Act. In
future filings, please also disclose here, the location of your
auditor's headquarters as well
as updates to account for the changes to the Holding Foreign Companies
Accountable Act
made in the Consolidated Appropriations Act, 2023.
D. Risk Factors
Summary of Risk Factors, page 14
8. In future filings, in the summary of risk factors, specifically
discuss risks arising from the
risk that the Chinese government may exert more control over offerings
conducted
overseas and/or foreign investment in China-based issuers, which could
result in a
material change in your operations and/or the value of your
securities. Acknowledge any
risks that any actions by the Chinese government to exert more
oversight and control over
offerings that are conducted overseas and/or foreign investment in
China-based issuers
could significantly limit or completely hinder your ability to offer
or continue to offer
securities to investors and cause the value of such securities to
significantly decline or be
worthless. With respect to the summarized risk factors, include
specific cross-references
to the more detailed discussion of these risks in the filing.
Risks Related to our Business
Failure to comply with governmental regulation and other legal obligations
concerning privacy,
data protection and cybersecurity may..., page 25
9. In light of recent events indicating greater oversight by the Cyberspace
Administration of
China (CAC) over data security, particularly for companies seeking to
list on a foreign
exchange, please revise your disclosure to explain how this oversight
impacts your
business and to what extent you believe that you are compliant with the
regulations or
policies that have been issued by the CAC to date. In addition, we note
that you do not
FirstName LastNameChenggang Zhou
appear to have relied upon an opinion of counsel with respect to your
conclusions that you
Comapany NameNewwith
are compliant Oriental Education &
the permissions Technology
and Group
approvals of Inc. If
true, state as much and
the CAC.
May 5,explain why3such an opinion was not obtained.
2023 Page
FirstName LastName
Chenggang Zhou
FirstName LastNameChenggang Zhou Group Inc.
New Oriental Education & Technology
Comapany
May 5, 2023NameNew Oriental Education & Technology Group Inc.
May 5,
Page 4 2023 Page 4
FirstName LastName
Risks Related to Doing Business in China
Our ADSs will be prohibited from trading in the United States under the Holding
Foreign
Companies Accountable Act, or the HFCAA, in 2024..., page 45
10. We note your disclosure about the Holding Foreign Companies
Accountable Act. In future
filings, please expand your risk factors to disclose that the Holding
Foreign Companies
Accountable Act, as amended by the Consolidated Appropriations Act,
2023, decreases
the number of consecutive non-inspection years from three years
to two years, and thus
reduces the time before your securities may be prohibited from trading
or delisted. In
addition, please disclose that the Commission conclusively identified
you as
a Commission Identified Issuer on October 21, 2022. Your revised
disclosure should
explain why you were identified and provide any additional context
necessary for
investors to understand the meaning and significance to your
operations of this
determination. Update your disclosure to describe the potential
consequences to you if the
PRC adopts positions at any time in the future that would prevent the
PCAOB from
continuing to inspect or investigate completely accounting firms
headquartered in
mainland China or Hong Kong.
General
11. In future filings, please refrain from implying that the contractual
agreements are
equivalent to equity ownership in the businesses of the VIEs. Any
references to control or
benefits that accrue to you because of the VIEs should be limited to a
clear description of
the conditions you have satisfied for consolidation of the VIE under
U.S. GAAP.
Additionally, your disclosure should clarify that you are the primary
beneficiary of the
VIE for accounting purposes. Some non-exclusive examples include:
On page 3, you state that you rely on the VIE contracts to
"control the business
operations" of the VIE entities;
On page 30, you reference being enabled by the VIE contracts to
"have power to
direct the activities" of the VIE entities;
On page 32, you suggest contractual agreements could be as
effective as equity
ownership by stating that they "may" not be as effective as
equity ownership;
On page 81, you refer to having the "power to direct the
activities" of New Oriental
China;
On page 82, you refer to having the "power to direct the
activities" of Beijing
Xuncheng; and
On page 119, you state that you "control" the "management
decisions" of the VIE
entities.
Chenggang Zhou
FirstName LastNameChenggang Zhou Group Inc.
New Oriental Education & Technology
Comapany
May 5, 2023NameNew Oriental Education & Technology Group Inc.
May 5,
Page 5 2023 Page 5
FirstName LastName
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Suying Li at 202-551-3335 or Angela Lumley at
202-551-3398 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Nicholas Nalbantian at 202-551-7470 or Donald Field at 202-551-3680
with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of Trade &
Services
cc: Haiping Li