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August 16, 2022
Sizhen Wang
Chief Executive Officer
Genetron Holdings Limited
1-2/F, Building 11, Zone 1
No. 8 Life Science Parkway
Changping District, Beijing, 102206
People s Republic of China
Re: Genetron Holdings
Limited
Annual Report on
Form 20-F
Filed April 29,
2022
File No. 001-39328
Dear Mr. Wang:
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 the Fiscal Year Ended December 31, 2021
Introduction, page iii
1. We note that your
definition of "China" and the "PRC" specifically excludes Hong Kong
and Macau for the
purpose of your annual report. Please clarify that the "legal and
operational" risks
associated with operating in China also apply to operations in Hong
Kong and Macau. Please
revise the definitions of "China" and the "PRC" to include Hong
Kong and Macau;
however, you may clarify that "China" or the "PRC" does not include
Hong Kong or Macau when
you reference specific laws and regulations adopted by the
PRC. Additionally,
please ensure that you address throughout your filing material legal
and regulatory risks
associated with your operations in Hong Kong and Macau as
applicable.
Sizhen Wang
FirstName LastNameSizhen
Genetron Holdings Limited Wang
Comapany
August 16, NameGenetron
2022 Holdings Limited
August
Page 2 16, 2022 Page 2
FirstName LastName
Explanatory Note, page 3
2. We note your statement that you face legal and operational risks and
uncertainties as a
company based in China. Your disclosure should make clear that your
structure involves
unique risks to investors and should make clear whether these risks
could result in a
material change in your operations and/or the value of your securities
or could
significantly limit or completely hinder your ability to offer or
continue to offer securities
to investors. Your disclosure should also address how recent
statements and regulatory
actions by China s government, such as those related to the use of
variable interest entities
and data security or anti-monopoly concerns, have or may impact the
company s ability to
conduct its business, accept foreign investments, or list on a U.S. or
other foreign
exchange.
3. Please prominently disclose whether your auditor is subject to the
determinations
announced by the PCAOB on December 16, 2021 and whether and how the
Holding
Foreign Companies Accountable Act ("HFCAA") and related regulations
will affect your
company. In addition, disclose that trading in your securities may be
prohibited under the
Holding Foreign Companies Accountable Act if the PCAOB determines that
it cannot
inspect or investigate completely your auditor, and that as a result
an exchange may
determine to delist your securities. In your revisions, please also
disclose here and
throughout, as appropriate that you were identified by the Commission
on May 26, 2022
under the HFCAA. Refer to https://www.sec.gov/hfcaa. Please also
revise to reflect your
disclosure elsewhere in the document that the potential enactment of
the Accelerating
Holding Foreign Companies Accountable Act would decrease the number of
non-
inspection years from three years to two, which could reduce the
period before your ADSs
could be prohibited from trading and/or delisted.
4. Please revise this section to provide a diagram of the company's
corporate structure,
identifying the person or entity that owns the equity in each depicted
entity. We note your
disclosure that you are the primary beneficiary of the VIEs. However,
neither the
investors in the holding company nor the holding company itself have
an equity
ownership in, direct foreign investment in, or control of, through
such ownership or
investment, the VIEs. Accordingly, please refrain from implying that
the contractual
agreements are equivalent to equity ownership in the business of the
VIE. Any references
to control, effective control or benefits that accrue to you because
of the VIE 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.
5. Provide a clear description of how cash is transferred through your
organization. Disclose
your intentions to distribute earnings or settle amounts owed under
the VIE agreements.
Quantify any cash flows and transfers of other assets by type that
have occurred between
the holding company, its subsidiaries, and the consolidated VIEs, and
direction of
transfer. Quantify any dividends or distributions that a subsidiary or
consolidated VIE
Sizhen Wang
FirstName LastNameSizhen
Genetron Holdings Limited Wang
Comapany
August 16, NameGenetron
2022 Holdings Limited
August
Page 3 16, 2022 Page 3
FirstName LastName
have made to the holding company and which entity made such transfer,
and their tax
consequences. Similarly quantify dividends or distributions made to
U.S. investors, the
source, and their tax consequences. Your disclosure should make clear
if no transfers,
dividends, or distributions have been made to date. Describe any
restrictions on foreign
exchange and your ability to transfer cash between entities, across
borders, and to U.S.
investors. Describe any restrictions and limitations on your ability
to distribute earnings
from the company, including your subsidiaries and/or the consolidated
VIEs, to the parent
company and U.S. investors as well as the ability to settle amounts
owed under the VIE
agreements.
Item 3. Key Information
3.D. Risk Factors, page 11
6. In your summary of risk factors, disclose the risks that your
corporate structure and being
based in or having the majority of the company s operations in China
poses to investors.
In particular, describe the significant regulatory, liquidity, and
enforcement risks. For
example, specifically discuss risks arising from the legal system in
China, including risks
and uncertainties regarding the enforcement of laws and that rules and
regulations in
China can change quickly with little advance notice; and the risk that
the Chinese
government may intervene or influence your operations at any time, or
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 the
securities you have previously registered for sale. 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 your securities to significantly decline or be
worthless.
7. Please revise your summary of risk factors to reflect your disclosure
on page 53 indicating
that your senior officers and directors reside in China "for a
significant portion of the
time" and that it may be difficult to bring any actions against, or to
enforce any judgments
obtained from foreign courts against, the company or the company's
officers and directors
in China.
8. 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 your securities and to what extent you believe that you
are compliant with
the regulations or policies that have been issued by the CAC to date.
Item 4. Information on the Company, page 72
9. Please revise your disclosure on pages 132-34 to describe how this
type of corporate
structure may affect investors and the value of their investment,
including how and why
the contractual arrangements may be less effective than direct
ownership and that the
Sizhen Wang
FirstName LastNameSizhen
Genetron Holdings Limited Wang
Comapany
August 16, NameGenetron
2022 Holdings Limited
August
Page 4 16, 2022 Page 4
FirstName LastName
company may incur substantial costs to enforce the terms of the
arrangements. Disclose
the uncertainties regarding the status of the rights of the Cayman
Islands holding company
with respect to its contractual arrangements with the VIEs, its
founders and owners, and
the challenges the company may face enforcing these contractual
agreements due to legal
uncertainties and jurisdictional limits.
10. Disclose each permission or approval that you, your subsidiaries, or
the VIEs are required
to obtain from Chinese authorities to operate your business. State
whether you, your
subsidiaries, or VIEs are covered by permissions requirements from the
China Securities
Regulatory Commission (CSRC), Cyberspace Administration of China (CAC)
or any
other governmental agency that is required to approve the VIE s
operations, and state
affirmatively whether you have received all requisite permissions or
approvals and
whether any permissions or approvals have been denied. Please also
describe the
consequences to you and your investors if you, your subsidiaries, or
the VIEs: (i) do not
receive or maintain such permissions or approvals, (ii) inadvertently
conclude that such
permissions or approvals are not required, or (iii) applicable laws,
regulations, or
interpretations change and you are required to obtain such permissions
or approvals in the
future.
Item 5. Operating and Financial Review and Prospects
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020
Research and development expenses, page 141
11. We note the significant increase in your research and development
expenses during 2021,
and during the subsequent quarter, and that you appear to have
multiple programs/research
projects in varying stages of development. Please confirm that you
will revise future
filings to include more details about your research and development
expenses for each
period presented, including but not limited to, a breakdown by
program/research project
area as well as by the nature of the expenses. In addition, in
discussing the specific factors
that resulted in significant changes during each reporting period,
please quantify each
factor cited so that investors may understand the magnitude and
relative impact of each
factor. Please provide us with the proposed presentation you intend to
include in future
filings.
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 Ibolya Ignat at 202-551-3636 or Angela Connell at
202-551-3426 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Alan Campbell at 202-551-4224 or Tim Buchmiller at 202-551-3635 with
any other
questions.
Sizhen Wang
Genetron Holdings Limited
August 16, 2022
Page 5
Sincerely,
FirstName LastNameSizhen Wang
Division of Corporation Finance
Comapany NameGenetron Holdings Limited
Office of Life Sciences
August 16, 2022 Page 5
cc: Xuelin Wang, Ph.D.
FirstName LastName