New Stock News | Cainiao Smart Logistics Plans for Hong Kong IPO. China Securities Regulatory Commission Requires Explanation of Equity Structure and Standardized Operation, Etc.

On November 10th, the China Securities Regulatory Commission (CSRC) released supplementary material requirements for overseas issuance and listing registration (November 3rd to November 9th, 2023), including supplementary material requirements for Cainiao Intelligent Logistics. The company is required to explain matters related to its equity structure and standardized operations. According to the Hong Kong Exchange's disclosure on September 26th, Cainiao Intelligent Logistics Network Limited has submitted an application for listing on the Hong Kong Main Board, with Citigroup, CITIC Securities, and JPMorgan Chase serving as its joint sponsors. Specifically, the CSRC publication pointed out that Cainiao Intelligent Logistics is requested to provide supplementary explanations on the following matters, and legal practitioners should verify and provide clear legal opinions: 1. Regarding the equity structure: (1) the reasons why Alibaba Group and Shen Guojun hold shares of the company through multiple overseas holding platforms, and an explanation of the specific situation of Guojun Evergreen Trust in accordance with regulatory guidelines; (2) a list explaining the transfer prices, pricing basis, payment of consideration, and tax payment related to Profit Reach, Elite Data, and Stater Investment Holdings Limited; (3) the reasons for Ali KB Investment to hold shares on behalf of Elite Data and the restoration of such holdings. 2. Regarding equity incentives: (1) the compliance of the equity incentive plan, including but not limited to the fulfillment of domestic individuals' overseas equity entities' foreign exchange management and other domestic regulatory procedures, and an explanation of whether there are unclear beneficiaries, as well as the compliance of individuals directly holding overseas shares of the issuer through equity incentives; (2) verification and explanation of the specific situation of consultants and non-issuer group employees as equity incentive beneficiaries in accordance with regulatory guidelines, including reasons and background for participation, pricing basis, source of funds, etc., and whether there are subjects prohibited by domestic laws and regulations from holding shares, as well as the existence of interest transfer. 3. Regarding control architecture: (1) consideration, pricing basis, and tax payment for the two share transfers by the major domestic operating entities Cainiao Network, Hangzhou Cainiao Logistics, two share transfers from the 10th to 17th by Zhejiang Xinyi, the 6th share transfer by Zhejiang Daniao, and the first and second share transfers by Zhejiang Yizhan; (2) reasons for signing two sets of agreements between Zhejiang Cainiao and Hangzhou Cainiao and their shareholders, an explanation of the specific background of Hangzhou Yuehu's shareholders, the reasons for their non-holding at the issuer level, the existence of nominee holdings, and the risks and countermeasures related to control stability and potential defaults by relevant entities; (3) listing and explaining the fulfillment of foreign investment management procedures for the acquisition of assets and equity of domestic enterprises. 4. Regarding standardized operations: (1) the scale of customer information collected and stored by the company's developed and operated websites, apps, mini programs, etc., the use of data, whether it involves providing personal user data to third parties or overseas, and whether it complies with relevant laws and regulations concerning the outbound transfer of personal information, as well as arrangements or measures for personal information protection and data security before and after listing; (2) whether business operations involve the "Domestic Express Delivery Business" specified in the "Special Management Measures (Negative List) for the Access of Foreign Investment," and provide clear basis; (3) compliance of generative artificial intelligence with the "Interim Measures for the Administration of Generative Artificial Intelligence Services" and other regulations. 5. Regarding independence: (1) the independence of the issuer from its parent company Alibaba in terms of business, assets, personnel, organizations, finances, etc.; (2) providing a breakdown of specific circumstances and proportion of related-party transactions, the stages at which related-party transactions occur, their fairness and substitutability, and (3) the proportion of customers and suppliers that overlap with the parent company. 6. Regarding spin-off arrangements: the main considerations, principles, and overall arrangements for the listing of assets or businesses controlled by Alibaba Group, and the independence of each (intended) spin-off business segment, as well as the names, planned listing places and times, and current stages of each (intended) spin-off business segment. Cainiao Intelligent Logistics' prospectus shows that the company is a global leader in the e-commerce logistics industry. According to data from the independent industry consultant Zhaoshi Consultancy commissioned by the company, it is the world's largest cross-border e-commerce logistics service enterprise and a leader in domestic logistics services. With its profound insights into the e-commerce industry and technological strength, the company has established an end-to-end logistics network with intelligent capabilities on a global scale. Cainiao was founded in 2013 by Alibaba (09988) and other partners to meet the growing and changing logistics needs of buyers and sellers on Alibaba Group's e-commerce platforms. The company is an open technology platform that operates within the world's largest e-commerce ecosystem. This tradition has injected the company with a unique "e-commerce x technology" DNA. As of June 30th, 2023, the company's global network covers more than 200 countries and regions, including two e-Hubs with a total construction area of over 150,000 square meters, over 1,100 warehouses with a total construction area of approximately 16.5 million square meters, and over 380 sorting centers. This network is connected to charter flights, chartered boats, and transportation routes to and from China and major overseas destinations (averaging about 170 charter flights and chartered boats per week in June 2023, with over 2,700 transportation routes as of June 30th, 2023). The network is also connected to a large terminal network consisting of over 4,400 stations and over 170,000 outlets as of June 30th, 2023.