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May 31, 2019
Jianxin Zhang
Chief Executive Officer
China Liberal Education Holdings Limited
Huateng Century Park Headquarters
Building A, Level 2
Beijing, PRC
Re: China Liberal Education Holdings Limited
Draft Registration Statement on Form F-1
Submitted May 6, 2019
CIK No. 0001775085
Dear Mr. Zhang:
We have reviewed your draft registration statement 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 this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Draft Registration Statement on Form F-1
Prospectus Summary, page 1
1. Revise to highlight that your Sino-foreign Jointly Managed Academic
Programs constitute
your core business and that the vast majority of your revenues from that
line of business
derives from your two major partners, FMP and Minjiang University. Also
describe in
plain English the nature of your Technological Consulting Services for
Smart Campus
Solutions business.
Jianxin Zhang
FirstName LastNameJianxin Zhang
China Liberal Education Holdings Limited
Comapany NameChina Liberal Education Holdings Limited
May 31, 2019
May 31, 2019 Page 2
Page 2
FirstName LastName
Our History and Corporate Structure, page 2
2. Revise the chart showing your corporate structure to reflect the
anticipated post-offering
ownership structure of the Company, including the respective ownership
percentages of
the controlling entities and the minority shareholders.
Risk Factors
Risks Related to Our Business, page 8
3. We note your disclosure on page 41 discussing the Ministry of
Education's termination of
certain Sino-foreign cooperative education programs. Revise to
specifically discuss the
risks associated with any further action by the Ministry of Education.
Highlight that such
action has recently negatively impacted your student enrollment.
Risks Related to Our Corporate Structure, page 21
4. We note that upon completion of this offering, the beneficial owners
will hold a sufficient
percentage of outstanding shares such that they will have the power to
act as a group in
approving any action requiring a shareholder vote. Provide risk factor
disclosure
highlighting this significant influence and disclose that the
beneficial owners may have
interests that differ from other shareholders. Disclose that as such,
the Company could be
prevented from entering into transactions that could be beneficial to
the Company and
minority shareholders.
PRC regulation of loans to and direct investment in PRC entities by offshore
holding companies
and governmental control of currency..., page 24
5. You disclose a series of regulatory restrictions and limitations with
respect to
providing funding to your PRC subsidiary through loans or capital
contributions. For
example, we note your disclosure that your PRC subsidiary may not
procure loans which
exceed the difference between its total investment amount and
registered capital. Given
these various regulatory restrictions, quantify here and where
applicable in the
prospectus the extent to which you may make loans to your PRC
subsidiaries based upon
the applicable PRC restrictions.
Use of Proceeds, page 33
6. In light of the statutory limits and required regulatory approvals
with respect to your
ability to make loans and capital contributions to your PRC
subsidiary, please quantify
the amount of loans or capital contributions you anticipate being able
to make to your
PRC subsidiary following this offering. Discuss any specific
regulatory approvals you
expect to seek and/or receive in connection with allocating the net
proceeds of this
offering.
Jianxin Zhang
FirstName LastNameJianxin Zhang
China Liberal Education Holdings Limited
Comapany NameChina Liberal Education Holdings Limited
May 31, 2019
May 31, 2019 Page 3
Page 3
FirstName LastName
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Key Factors that Affect Our Results of Operations, page 38
7. Please tell us whether management uses any key performance indicators,
including non-
financial performance indicators to manage the business. In this
respect, we note your
reliance on growing the number of students enrolled in your programs.
To the extent
management uses key performance indicators that would be material to
investors, please
include these disclosures in the prospectus.
Results of Operations, page 40
8. We note that you have ceased or will cease to provide services in
connection with two of
your existing Sino-foreign Jointly Managed Academic Programs due to
student difficulties adapting to certain standards of an English
teaching environment. You
disclose elsewhere that you assessed that these two programs were not
profitable. With a
view toward providing investors with a material understanding of how
you assess the
financial performance and viability of your programs and offerings,
please describe in
greater detail the factors, financial or otherwise, that led to your
decision to discontinue
these programs.
Regulations, page 81
9. Revise this section to state specifically how the regulations
discussed apply to the
Company, and the extent to which you are in compliance with each
regulation. For
example, please discuss with more specificity the impact that the
newly adopted (March
2019) Foreign Investment Law is likely to have on the Company and its
operations.
Likewise, please discuss with greater specificity the likely impact to
the Company of The
Law for Promoting Private Education and The Implementation Rules for
the Law for
Promoting Private Education.
Provisions on Foreign Investment, page 83
10. We note your disclosure indicating that education consulting services
is an industry for
which foreign investment is permitted, as it does not appear on the
Negative List. Discuss
whether any of your four planned business lines might fall within or
be interpreted as
falling within an industry category that is on the Negative List. Any
related risks should
also be discussed elsewhere in your registration statement.
Financial Statements, page F-1
11. Please provide condensed financial statements of the registrant,
pursuant to 5-04 of
Regulation S-X, or advise us. The financial statements should provide
the information
required by 12-04 of Regulation S-X.
Jianxin Zhang
FirstName LastNameJianxin Zhang
China Liberal Education Holdings Limited
Comapany NameChina Liberal Education Holdings Limited
May 31, 2019
May 31, 2019 Page 4
Page 4
FirstName LastName
Note 2 - Summary of Significant Accounting Policies
General, page F-8
12. We note significant revenue recognized for smart campus technological
consulting
services. Please disclose your accounting policy for software
development, if material.
Revenue Recognition, page F-11
13. We note that student tuition and fees are first collected by Chinese
host
universities/colleges from enrolled students at the beginning of each
academic school
year, and then remitted to the Company. Please disclose any material
rights the host
universities have to withhold or retain tuition and fees collected
initially from the
students. Disclose your rights and obligations should the host
university not be satisfied
with your services. Please also disclose any general refund policies,
if material.
Note 12 - Shareholders' Equity, page F-22
14. We note your disclosure regarding the statutory reserve and the first
Risk Factor on page
24. Please expand your disclosure to fully comply with 4-08(e)(3) of
Regulation S-X with
respect to your PRC based subsidiaries.
General
15. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communication.
16. We note references to third-party market data within your prospectus,
including, for
example, references to a Frost & Sullivan report at page 55 and
elsewhere. Please provide
us with copies of any materials that support third-party statements,
clearly cross-
referencing a statement with the underlying factual support.
You may contact Charles Eastman, Staff Accountant, at (202) 551-3794 or
Robert S.
Littlepage, at (202) 551-3361 if you have questions regarding comments on the
financial
statements and related matters. Please contact Joshua Shainess,
Attorney-Adviser, at (202) 551-
7951 or Celeste M. Murphy, Legal Branch Chief, at (202) 551-3257 with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of
Telecommunications