Sina 10-K 2007
Documents found in this filing:
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Amendment No. 3)
Commission File Number 000-30698
(Exact Name of Registrant as specified in its charter)
Room 1802, United Plaza
1468 Nan Jing Road West
Shanghai 200040, China
(86-21) 6289 5678
(Address, including zip code, and telephone number, including area code, of Registrants principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Ordinary Share, $0.133 par value
Ordinary Share Purchase Rights
Securities registered pursuant to Section 12(g) of the Act:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. þ Yes or No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. o Yes or No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.
þ Large accelerated filer o Accelerated filer o Non-accelerated filer
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o or No þ
The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $902,285,443.72 as of June 30, 2006, based upon the closing sale price for our ordinary shares as quoted by the NASDAQ Global Select Market reported for such date. Ordinary shares held by each officer and director and by each person known to the registrant (based on information provided by such persons and/or the most recent Schedule 13Ds or 13Gs as filed by such persons) to beneficially own 5% or more of the outstanding ordinary shares have been excluded because such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.
As of April 20, 2007, there were 54,668,454 shares of the registrants ordinary shares outstanding, $0.133 par value.
This Amendment No. 3 to the registrants annual report on Form 10-K for the fiscal year ended December 31, 2006 is being filed in order to: (i) amend and restate Part III. Item 13. Certain Relationships and Related Transactions to:
and (ii) amend and restate Part IV. Item 15. Exhibits and Financial Statement Schedules to:
Except for the matters described above, this amendment does not modify or update disclosure in, or exhibits to, (i) the Original Form 10-K, (ii) Amendment No. 1 to the registrants annual report on Form 10-K for the fiscal year ended December 31, 2006 filed on April 30, 2007 (Amendment No. 1) or (iii) Amendment No. 2 to the registrants annual report on Form 10-K for the fiscal year ended December 31, 2006 filed on May 11, 2007 (Amendment No. 2). Furthermore, this amendment does not change any previously reported financial results, nor does it reflect events occurring after the date of the Original Form 10-K, Amendment No. 1 or Amendment No. 2, as applicable. Any information not affected by this amendment is unchanged and reflects the disclosures made at the time the Original Form 10-K, Amendment No. 1 and Amendment No. 2 were filed, as applicable.
As used in this Amendment No. 3 to annual report on Form 10-K, unless the context otherwise requires, the following terms shall have the meanings set forth below:
Item 13. Certain Relationships and Related Transactions
Except for those employment and compensation arrangements between the Company and its directors and executive officers as described in Item 11 under Compensation of Executive Officers, Director Compensation, Employment Agreements, and Change of Control Agreements above, since the beginning of the fiscal year 2006, there has not been, nor is there currently proposed, any transaction or series of similar transactions to which we were or are a party in which the amount involved exceeds or exceeded $120,000 and in which any director, executive officer or beneficial holder of more than 5% of any class of our voting securities or such persons immediate family members had or will have a direct or indirect material interest other than as described below and elsewhere in Part III hereof. It is our policy that future transactions between us and any of our directors, executive officers or related parties will be subject to the review and approval of our Audit Committee or other committee comprised of independent, disinterested directors.
In April 2007, SINA.com Technology (China) Co. Ltd., one of our subsidiaries, entered into an agreement with BroadVision Inc. (BroadVision). Mr. Pehong Chen, a director of SINA, is the controlling stockholder of BroadVision and is currently serving as its Chairman, CEO and President. As of March 23, 2007, Mr. Chen beneficially owned approximately 39% of common stock of BroadVision. Under the agreement, BroadVision will provide customization and hosting service for our HR information management system in China. We will pay BroadVision a total of RMB1,000,000 in 2007, including RMB500,000 for system implementation service and another RMB500,000 for the software subscription, and starting from 2008, a yearly subscription fee of RMB500,000 for the software subscription and system upgrade, feature enhance and technical support. Under the agreement, we have an option to buy out the software license from BroadVision on a non-exclusive basis by paying a lump-sum amount (RMB2,000,000, RMB1,500,000 or RMB1,000,000 for buy-out in 2008, 2009 or 2010 or later, respectively) plus a 22% of the buy-out amount for maintenance services.
Our Code of Ethics states that a conflict of interest may exist whenever a relationship of an employee, officer or director, or one of their family members, is inconsistent with the Companys best interests or could cause a conflict with job responsibilities. Under our Code of Ethics, if our employees, officers and directors have any question regarding whether a conflict of interest exists, they are required to consult with their immediate supervisor or the Compliance Officer of the Company. If they become aware of a conflict or potential conflict, they are required to bring it to the attention of their immediate supervisor or the Compliance Officer.
Our Insider Trading Policy applicable to all employees, officers and directors and their family members prohibits trading based on material, non-public information regarding the Company or disclosure of such information for trading in the Companys securities. Under our Insider Trading Policy, the Company shall identify the directors and officers who are subject to reporting and liability provisions of Section 16 of the Exchange Act. The Company shall further identify those persons who are likely subject to reporting and liability provisions of Section 16 of the Exchange Act due to their access to insider information during the normal course of their duties and apply pre-clearance procedure to them. Potential criminal and civil liability and disciplinary actions for insider trading are set forth in our Insider Trading Policy. Our Chief Financial Officer serves as the Companys Insider Trading Compliance Officer for the implementation of our Insider Trading Policy. Our Insider Trading Policy is delivered to all new employees and consultants upon the commencement of their relationships with the Company and is circulated to all personnel at least annually.
Our Board of Directors has determined that the following directors, representing a majority of our directors, are independent as defined under Nasdaq Marketplace Rule 4200(a)(15): Yongji Duan, Pehong Chen, Lip-Bu Tan, Ter Fung Tsao, Yichen Zhang, Xiaotao Chen and Song-Yi Zhang. We intend to maintain a majority of directors on the board that are independent.
During 2006, each member of our Compensation Committee, except for Mr. Yan Wang, was independent as defined under Nasdaq Marketplace Rule 4200(a)(15) and each member of our Audit Committee was independent under the standards set forth in Nasdaq Marketplace Rules 4350(d)(2)(A)(i) and (ii). The Board has determined that the appointment of Mr. Yan Wang to the Compensation Committee is in the best interests of the Company and its shareholders because his operational experience at the Company and his familiarity with SINAs industry sector uniquely qualify him to assist the Compensation Committee in helping to set executive compensation that is competitive with that of other companies operating in SINAs markets and that is appropriately designed to increase shareholder value.
Indebtedness of Management
Our subsidiary Beijing SINA Information Technology Co., Ltd. (formerly known as Beijing Stone Rich Sight Information Technology Co., Ltd.) (BSIT), agreed to provide Yan Wang, our former Chief Executive Officer and current Vice Chairman of the Board, an interest-free loan of RMB300,000 for purposes of providing capital to Beijing SINA Internet Information Services Co., Ltd. in 1999. In addition, BSIT has agreed to provide Yan Wang interest free loans of RMB750,000 for purposes of providing capital to Beijing SINA Interactive Advertising Co., Ltd. in 1999, and RMB300,000 for purposes of providing capital to Guangdong SINA Internet Information Service Co., Ltd. in 2001. The entire principal amount of each of these loans is currently outstanding.
BSIT also agreed to provide Tong Chen, our Executive Vice President and Chief Editor, interest-free loans totaling RMB300,000 for purposes of providing capital to Guangdong SINA Internet Information Service Co., Ltd. in 2003. In addition, BSIT has agreed to provide Tong Chen interest-free loans totaling RMB4,500,000 for purposes of providing capital to Beijing SINA Internet Information Service Co., Ltd. in 2003, 2004 and 2007, an interest-free loan of RMB200,000 for purposes of providing capital to Beijing SINA Infinity Advertising Co., Ltd. in 2004, and an interest-free loan of RMB2,000,000 for purposes of providing capital to Beijing SINA Mobile Information Technology Co. Ltd. in 2004. The entire principal amount of each of these loans is currently outstanding.
BSIT agreed to provide Hong Du, our Senior Vice President, Sales and Marketing, interest-free loans totaling RMB5,350,000 for purposes of providing capital to Beijing SINA Internet Information Service Co., Ltd. in 2005 and 2007. The entire principal amount of each of these loans is currently outstanding.
The aforementioned capital investments in SINAs variable interest entities (VIE) are funded by SINA and recorded as interest-free loans to the PRC officers and employees. Such interest-free loans are extended solely for subscription of the shares of the VIE, and the transfer of ownership of the shares in the VIE, as directed by SINA, is the requisite form of repayment of such interest-free loans. These are not personal loans. Under various contractual agreements, employee shareholders of the VIE are required to transfer their ownership in these entities to our subsidiaries in China when permitted by PRC laws and regulations or to our designees at any time. All shareholders of the VIE have waived their right of first refusal on such requested transfer. In addition, our employee shareholders of the VIE have pledged their shares in the VIE (and all rights relating thereto) as collateral for non-payment of (i) the interest-free loans and (ii) fees on technical and other services due to us. Except as set forth above, employee shareholders of the VIE are not otherwise permitted to transfer, pledge or otherwise encumber their ownership of VIE without BSITs written approval. All voting rights with respect to the shares of the VIE are assigned to us. We have the power to appoint all directors and senior management personnel of the VIE. Through our wholly-owned subsidiaries in China, we have also entered into exclusive technical agreements and other service agreements with the VIE, under which these subsidiaries provide technical services and other services to the VIE in exchange for substantially all net income of the VIE.
We have entered into indemnification agreements with our officers and directors containing provisions which may require us, among other things, to indemnify our officers and directors against certain liabilities that may arise by reason of their status or service as officers or directors, other than liabilities arising from willful misconduct of a culpable nature, and to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified.
Registration Rights Agreements
Some of our shareholders are entitled to have their shares registered by us for resale.
Item 15. Exhibits and Financial Statement Schedules
See the Exhibit Index following the signature pages of this report.
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, SINA Corporation has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
Date: June 8, 2007