United States securities and exchange commission logo
August 19, 2022
Han Gengchen
Chairman and Chief Executive Officer
Origin Agritech Limited
No. 21 Sheng Ming Yuan Road
Changping District, Beijing 102206
People's Republic of China
Re: Origin Agritech
Limited
Amendment No. 1 to
Form 20-F for Fiscal Year Ended September 30, 2021
Filed August 8,
2022
File No. 000-51576
Dear Dr. Gengchen:
We have reviewed your August 8, 2022 response to our comment
letter 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. Unless we note otherwise, our references to prior comments are
to comments in our
July 8, 2022 letter.
Amendment No. 1 to Form 20-F for Fiscal Year Ended September 30, 2021
Introduction
Corporate Structure, page 3
1. We note disclosure
stating that you are a holding company incorporated in the British
Virgin Islands with all
of your operations located in China. We also note that some of
these operations are
conducted through a variable interest enterprise, or VIE. Please
include a
cross-reference to your detailed discussion of risks facing the company as a
result of your
operating structure.
2. Please revise to
discuss how recent statements and regulatory actions by China s
government, such as
those related to the use of variable interest entities and data security
Han Gengchen
FirstName LastNameHan
Origin Agritech Limited Gengchen
Comapany
August 19, NameOrigin
2022 Agritech Limited
August
Page 2 19, 2022 Page 2
FirstName LastName
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. Please
also 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 and related regulations will affect your company.
3. Please revise to provide a more detailed description of how cash is
transferred through
your organization and disclose your intentions to distribute earnings.
Discuss whether you
have specific cash management policies and procedures in place that
dictate how funds are
transferred through your organization. If you have cash management
policies and
procedures, please add a related description here. Please also provide
cross-references to
the condensed consolidating schedule and the consolidated financial
statements.
4. Please refrain from implying that the contractual agreements are
equivalent to equity
ownership in the business of the VIE. Any references to 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.
Please also disclose, if true, that the VIE agreements have not been
tested in a court of
law.
Corporate Structure , page 3
5. We note that the consolidated VIEs constitute a material part of your
consolidated
financial statements. Please provide in tabular form a condensed
consolidating schedule
that disaggregates the operations and depicts the financial position,
cash flows, and results
of operations as of the same dates and for the same periods for which
audited consolidated
financial statements are required. The schedule should present major
line items, such as
revenue and cost of goods/services, and subtotals and disaggregated
intercompany
amounts, such as separate line items for intercompany receivables and
investment in
subsidiary. The schedule should also disaggregate the parent company,
the VIEs and its
consolidated subsidiaries, the WFOEs that are the primary beneficiary
of the VIEs, and an
aggregation of other entities that are consolidated. The objective of
this disclosure is to
allow an investor to evaluate the nature of assets held by, and the
operations of, entities
apart from the VIE, as well as the nature and amounts associated with
intercompany
transactions. Any intercompany amounts should be presented on a gross
basis and when
necessary, additional disclosure about such amounts should be included
in order to make
the information presented not misleading.
Item 3. Key Information
Risk Factors, page 7
6. Revise your risk factors to acknowledge that if the PRC government
determines that the
contractual arrangements constituting part of the VIE structure do not
comply with PRC
Han Gengchen
FirstName LastNameHan
Origin Agritech Limited Gengchen
Comapany
August 19, NameOrigin
2022 Agritech Limited
August
Page 3 19, 2022 Page 3
FirstName LastName
regulations, or if these regulations change or are interpreted
differently in the future,
your securities may decline in value or become worthless if the
determinations, changes,
or interpretations result in your inability to assert contractual
control over the assets of
your PRC subsidiaries or the VIEs that conduct all or substantially
all of your operations.
7. Given the Chinese government s significant oversight and discretion
over the conduct of
your business, please revise to highlight separately the risk that the
Chinese government
may intervene or influence your operations at any time, which could
result in a material
change in your operations and/or the value of your securities. Also,
given recent
statements by the Chinese government indicating an intent to exert
more oversight and
control over offerings that are conducted overseas and/or foreign
investment in China-
based issuers, acknowledge the risk that any such action 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.
Item 5. Operating and Financial Review and Prospects
Results of Operations - Revenues , page 47
8. We reference your response to comment 2. You indicate that the decline
in revenue in
fiscal year 2021 was mainly due to significant scrap sales in fiscal
year 2020. However,
we note from page 47 that the scrap sales increased for fiscal year
2021. In addition,
revenue from hybrid corn seed decreased significantly in fiscal 2021
compared to fiscal
2020. Please revise to clarify the reason for the significant decline
in revenues in fiscal
2021. Please also revise to explain the reason for the significant
decline in revenues in
fiscal 2020 compared to fiscal 2019.
General and Administrative , page 48
9. We note your response to comment 1. Fiscal year 2021 general and
administrative
expenses were approximately RMB15.2 million higher than the prior
year, most of which
appears to relate to the increase in the bad debt provision. Please
clarify the reason for the
significant increase in the bad debt provision during the year. In
addition, clarify the
impairments recorded in fiscal 2021 and the reason for the
impairments. We note from
page F-7 that most of the impairment appears to relate to property and
equipment.
However, your discussion on page 48 indicates that the impairment is
for land use right
and intangible assets related to Xinjiang Origin. In addition,
quantify and discuss each of
the reasons for the significant increase in general and administrative
expenses in fiscal
2020 compared to 2019.
You may contact Christie Wong at 202-551-3684 or Brian Cascio at
202-551-3676 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Tyler Howes at 202-551-3370 or Celeste Murphy at 202-551-3257 with any
other
questions.
Han Gengchen
Origin Agritech Limited
August 19, 2022
Page 4
FirstName LastNameHan Gengchen Sincerely,
Comapany NameOrigin Agritech Limited
Division of Corporation Finance
August 19, 2022 Page 4 Office of Life Sciences
FirstName LastName