Business Overview
the event of any breach or default under the loan • the contractual arrangements between our major
agreement or other structure contracts, if applicable. wholly-owned entities, our major variable interest
These equity pledge agreements remain in force until entities and the variable interest entity equity
the later of (i) the full performance of the contractual holders governed by PRC laws are valid, binding
arrangements by the relevant parties, and (ii) the full and enforceable in accordance with their terms
repayment of the loans made to the relevant variable and applicable PRC laws, rules, and regulations
interest entity equity holders. The parties to the equity currently in effect, and will not violate any
pledge agreement for each of our major variable applicable PRC law, regulation, or rule currently
interest entities are the relevant variable interest entity in effect.
equity holders, the relevant variable interest entity and
its corresponding wholly-owned entity. However, we have been further advised by our
PRC legal counsel, Fangda Partners, that there are
Contracts that Enable Us to Receive substantial uncertainties regarding the interpretation
and application of current and future PRC laws, rules
Substantially All of the Economic Benefits and regulations. Accordingly, the possibility that the
from the Variable Interest Entities PRC regulatory authorities and PRC courts may in the
future take a view that is contrary to the opinion of our
Exclusive Services Agreements PRC legal counsel cannot be ruled out. We have been
Following the VIE Structure Enhancement, each further advised by our PRC legal counsel that if the PRC
relevant variable interest entity has entered into government finds that the agreements that establish
an exclusive service agreement with the respective the structure for operating our Internet-based business
wholly-owned entity, pursuant to which our relevant do not comply with PRC government restrictions on
wholly-owned entity provides exclusive services to foreign investment in the aforesaid business we
the variable interest entity. In exchange, the variable engage in, we could be subject to severe penalties
interest entity pays a service fee to our wholly-owned including being prohibited from continuing operations.
entity, the amount of which shall be determined, to the See “Risk Factors – Risks Related to Our Corporate
extent permitted by applicable PRC laws as proposed Structure.”
by our wholly-owned entity, resulting in a transfer of
substantially all of the profits from the variable interest
entity to our wholly-owned entity.
Property, Plant and
The exclusive call option agreements described above Equipment
also entitle our wholly-owned entity to all profits, As of March 31, 2021, we occupied facilities around
distributions or dividends (after deduction of relevant the world with an aggregate gross floor area of
tax expenses) to be received by the variable interest office buildings, logistics warehouses, retail space,
entity equity holder, and the following amounts, to the data centers and other facilities owned by us totaling
extent in excess of the original registered capital that approximately 15.1 million square meters, reflecting
they contributed to the variable interest entity (after the continuous expansion of our business through
deduction of relevant tax expenses) to be received by organic growth and acquisitions and consolidation of
each variable interest entity equity holder: (i) proceeds new businesses, including the consolidation of Sun
from the transfer of its equity interests in the variable Art in fiscal year 2021. We maintain offices in many
interest entity, (ii) proceeds received in connection with countries and regions, including mainland China,
a capital decrease in the variable interest entity, and (iii) Hong Kong S.A.R., Singapore and the United States.
distributions or liquidation residuals from the disposal In addition, we maintain data centers in a number of
of its equity interests in the variable interest entity upon countries including China, Indonesia, Malaysia, India,
termination or liquidation. Australia, Singapore, Dubai, Germany, the UK, Japan,
In the opinion of Fangda Partners, our PRC legal and the U.S.
counsel:
• the ownership structures of our major
wholly-owned entities and our major variable
interest entities in China do not and will not
violate any applicable PRC law, regulation, or rule
currently in effect; and
Fiscal Year 2021 Annual Report 93
