December 18, 2019
Daniel Yong Zhang
Chief Executive Officer
Alibaba Group Holding Ltd
26/F Tower One, Times Square
1 Matheson Street, Causeway Bay
Hong Kong
Re: Alibaba Group Holding Ltd
Form 20-F for the Fiscal Year Ended March 31, 2019
Form 6-K filed November 13, 2009
Response Dated December 4, 2019
File No. 001-36614
Dear Mr. Yong Zhang:
We have reviewed your December 4, 2019 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
November 5, 2019 letter.
Form 20-F for the Fiscal Year Ended March 31, 2019
Item 18. Financial Statements
Notes to Consolidated Financial Statements
4. Significant restructuring transaction, mergers and acquisitions and
investments
(b) Acquisition of Alibaba Pictures Group Limited ("Alibaba Pictures"), page
F-41
1. We note your response to comment 1 and have the following comments:
With reference to ASC 810-10-25, please tell us more about the
significant financial
and operating decisions of Alibaba Pictures that you identified as
being made in the
ordinary course of business. Tell us which of these decisions are
made by Alibaba
Daniel Yong Zhang
FirstName LastNameDaniel Yong Zhang
Alibaba Group Holding Ltd
Comapany18, 2019
December NameAlibaba Group Holding Ltd
December 18, 2019 Page 2
Page 2
FirstName LastName
Pictures' board of directors and which of these decisions can be
put to a shareholder
vote to assist us in better understanding your analysis of
consolidation and
deconsolidation related to Alibaba Pictures.
Based on your response and the publicly available annual reports
of Alibaba Pictures,
it appears that directors who are "related" to you did not
represent a majority of
Alibaba Pictures' board of directors or nomination committee in
the years
immediately before or after the June 2015 deconsolidation. It
appears that you did
not control Alibaba Pictures' board of directors until your March
2019 re-
consolidation. With regards to the significant financial and
operating decisions made
by Alibaba Pictures' board of directors that you identify in
response to the bullet point
above, such as selecting, terminating, and setting the
compensation of management,
please provide us with your analysis of whether you controlled
these board decisions
prior to the June 2015 share placement and whether this control
ceased following the
June 2015 share placement. If you believe you controlled these
board decisions prior
to the June 2015 share placement but ceased to control them after
the share
placement, please tell us in reasonable detail if and how there
was a substantive
change to the governance, management, and oversight of Alibaba
Pictures that caused
this change in your conclusion regarding your control of board
decisions.
Alternatively, if you believe you did not control these board
decisions before or after
the June 2015 share placement, tell us in more detail why you
believe it was
appropriate to consolidate Alibaba Pictures prior to June 2015
despite a lack of
control over significant decisions made by the board.
Please clarify for us why you believe directors of Alibaba
Pictures who were
appointed and/or nominated by you during the time you controlled
and consolidated
Alibaba Pictures, as well as your former employees, represent
individuals "not related
to Alibaba Group" during the time you deconsolidated Alibaba
Pictures.
Please also tell us how you considered whether your related party
relationship
with the Chairman of the board or the board member who is also
the CEO should
impact your analysis of your control over the significant
financial and operating
decisions of Alibaba Pictures. Your response appears to indicate
that the Chairman
of the board and the CEO of Alibaba Pictures were individuals
related to you during a
significant portion of the time that you accounted for your
investment in Alibaba
Pictures under the equity method.
(c) Acquisitions and integration of Rajax Holding ("Ele.me") and Koubei Holding
Limited
("Koubei"), page F-43
2. We note your response to comment 2. You indicate that the shareholders
of Ele.me and
Koubei received common and/or preferred shares of the new holding
company
immediately after the integration "based on a formula that applied to
all shareholders."
Daniel Yong Zhang
Alibaba Group Holding Ltd
December 18, 2019
Page 3
Please describe the specific formula used and tell us how the formula
was derived. Please
confirm whether or not the exchange was conducted to ensure each Ele.me
and Koubei
shareholder relinquished and received equity with equivalent fair
values.
Form 6-K filed November 13, 2019
Exhibit 99.2 - Unaudited Condensed Consolidated Financial Statements for the
three months
ended September 30, 2018 and 2019 -- Alibaba Group
Note 4. Significant restructuring transaction, equity transactions, mergers and
acquisitions and
investments
(a) Restructuring of the relationship with Ant Financial and Alipay, page F-17
3. We note that during September 2019 you received a newly-issued 33%
equity interest in
Ant Financial following the satisfaction of the closing conditions of
the SAPA. We have
the following comments:
Your disclosure indicates that you account for this interest in Ant
Financial using the
equity method, you initially recorded this investment at cost, and
you also recorded a
material RMB 69.2 billion gain in interest and investment income
upon completion of
the transaction. Please explain to us the nature of this gain and
cite the authoritative
GAAP guidance that supports your accounting treatment.
We note your statement on page F-18 that you made significant
management
judgments related to the measurement of the 33% equity interest and
the recognition
of the gain; please describe to us these significant management
judgments.
You may contact Andrew Blume, Staff Accountant, at (202) 551-3254 or
Jennifer
Thompson, Accounting Branch Chief, at (202) 551-3737 with any questions.
Sincerely,
FirstName LastNameDaniel Yong Zhang
Division of
Corporation Finance
Comapany NameAlibaba Group Holding Ltd
Office of Trade &
Services
December 18, 2019 Page 3
cc: Daniel Fertig
FirstName LastName