On 15th November 2018, the CPC Central Committee and the State Council of the PRC issued Several Opinions of the CPC Central Committee and the State Council on Deepening Reform and Regulating the Development of Pre-school Education (the “Opinions”), dated 7th November 2018. The Opinions sets out several prohibitions on the investment of private kindergartens and requirements for regulating the same. The following are some highlighted information which needs to be considered by potential investors.
- A private kindergarten shall use the fees gained mainly for caring of and educating children, improving conditions of the kindergarten and ensuring the remuneration of its teachers and employees.
- Capital from any individual or institution of the society is not allowed to control any kindergarten which is operated by state-owned assets or group-owned assets or non-profit based through mergers and acquisitions (M&A), entrusted operations, franchise, VIE structure, agreements control, etc. Those kindergartens which have violated laws or regulations, will be subject to Government’s actions from related bodies of Department of Education together with other Departments concerned.
- The profit based kindergartens, which participate in M&A or franchise, shall report their agreements with the interest-related enterprises to the Department of Education at county level or above for record and publish the same to the public.
- Private kindergartens are subject to restrictions on listing and M&A activities.
See more details of the Opinions: http://www.xinhuanet.com/politics/2018-11/15/c_1123720031.htm/