QUDIAN INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017
(Amounts in Renminbi (RMB) and US dollar (US$), except for number of shares and per share data)
20. Convertible Preferred Shares - continued
Initial Measurement and Subsequent Accounting for Preferred Shares - continued
the issuance date in the Companys case. When a beneficial conversion feature exists as of the commitment date, its intrinsic value is bifurcated from the carrying value of the convertible
preferred shares as a contribution to additional paid-in capital. On the commitment date, the most favorable conversion price used to measure the beneficial conversion feature of the Preferred Shares was higher than the fair value per ordinary share
and therefore no bifurcation of beneficial conversion feature was recognized. The Company determined the fair value of ordinary shares with the assistance of an independent third party valuation firm.
The Company has elected to recognize the changes in redemption value immediately as they occur and adjust the carrying amount of the Preferred Shares to equal
the redemption value at each reporting period. The changes in redemption value including cumulative dividends shall be recorded as a reduction of income available to ordinary shareholders in accordance with ASC 480-10-S99 3A.
The Company concluded that there is no accretion to be recognized because the carrying amount of the Preferred Shares is greater than the redemption value.
Therefore, no adjustment will be made to the initial carrying amount of the Preferred Shares until the redemption amount exceeds the carrying amount of the Preferred Shares.
21. Treasury shares
On November 11, 2017, the Board
of Directors of the Company authorized a share repurchase program (Share Repurchase Program), pursuant to which the Company was authorized to repurchase its own issued and outstanding American depositary shares (ADSs) up to
an aggregate value of US$100 million from the open market, in negotiated transactions off the market, or through other legally permissible means in accordance with applicable securities laws from time to time.
On November 25, 2017, the Board of Directors of the Company authorized an amendment to the Share Repurchase Program by increasing the maximum amount from
US$100 million to US$300 million.
As of December 31, 2017, the Company had repurchased under the Share Repurchase Program an aggregate of
4,537,115 ADSs, representing 4,537,115 Class A ordinary shares, at an average price of $14.00 per ADS, for US$63,658,143 (RMB 421,164,802). These shares were recorded at their purchase cost on the consolidated balance sheets and have not been
canceled as of December 31, 2017.
22. Ordinary shares
On December 9, 2016, the Companys shareholders approved an Amended and Restated Memorandum and Articles of Associations, pursuant to which
577,539,514 shares were authorized as ordinary shares, and 222,460,486 shares were authorized and
re-designated
into convertible preferred shares with a nominal or par value of US$0.0001 each share. As of
December 31, 2016, there were 79,305,191 shares legally outstanding as of December 31, 2016.
On April 28, 2017, the Companys
shareholders and the Board of Directors resolved that the Company accepted from Qufenqi Holding Limited the surrender of 15,814,019 of the said issued ordinary shares (the Surrendered Shares) at no consideration and all the Surrendered
Shares was canceled.
F-61