China Online Education Group Provides Update on New Regulations

Rhea-AI Summary

On July 24, 2021, China's state media announced new regulations aiming to reduce the burden of homework and after-school tutoring for students. These new policies require online tutoring institutions to be registered as non-profits, ban foreign teachers from providing services, prohibit foreign ownership in these institutions, and impose restrictions on operational hours and funding. China Online Education Group (COE) acknowledges these regulations and anticipates a material adverse impact on its operations and future prospects due to compliance requirements.

Positive

• None.

Negative

• Anticipated material adverse impact on operations and prospects due to new regulations.
• Online tutoring institutions must register as non-profits, affecting revenue models.
• Ban on foreign teachers could limit the talent pool and service offerings.
• Prohibition of foreign ownership may lead to restructuring or loss of business.
• Restrictions on raising capital for academic tutoring services could hinder growth.

BEIJING, July 26, 2021 /PRNewswire/ -- China Online Education Group ("51Talk," or the "Company") (NYSE: COE), a leading online education platform in China with core expertise in English education, announced that, on July 24, 2021, China's official state media, including Xinhua News Agency and China Central Television, announced the Opinions on Further Alleviating the Burden of Homework and After-School Tutoring for Students in Compulsory Education (the "Opinion"), issued by the General Office of the CPC Central Committee and the General Office of the State Council. The Opinion contains high-level policy directives about requirements and restrictions related to online and offline after-school tutoring services, including, among others, (i) institutions providing after-school tutoring services on academic subjects in China's compulsory education system, or Academic AST Institutions, need to be registered as non-profit; (ii) changing the current registration-based regime for operating online Academic AST Institutions to a government approval-based regime, (iii) banning foreign teachers located overseas from providing tutoring services in China, (iv) foreign ownership in Academic AST Institutions is prohibited, including through contractual arrangements, and companies with existing foreign ownership need to rectify the situation; (v) listed companies are prohibited from raising capital to invest in businesses that teach academic subjects in compulsory education; (vi) Academic AST Institutions are prohibited from providing tutoring services on academic subjects in compulsory education during public holidays, weekends and school breaks; and (vii) Academic AST Institutions must follow the fee standards to be established by relevant authorities.

The Company will continue to comply with all applicable rules and regulations in providing educational services, including those rules and regulations to be adopted following the policy directives of the Opinion. The Company is carefully considering the provisions of the Opinion and assessing their implications for the Company's business. The Company expects the Opinion, related rules and regulations, and the compliance measures to be taken by the Company will have a material adverse impact on its results of operations and prospect. The Company will proactively seek guidance from and cooperate with government authorities in connection with its efforts to comply with the Opinion and any related rules and regulations.   

Safe Harbor Statement

This press release contains statements that may constitute "forward-looking" statements which are made pursuant to the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "aims," "future," "intends," "plans," "believes," "estimates," "likely to," and similar statements. 51Talk may also make written or oral forward-looking statements in its periodic reports to the Securities and Exchange Commission ("SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about 51Talk's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. Further information regarding these and other risks is included in 51Talk's filings with the SEC. All information provided in this press release is as of the date of this press release, and 51Talk does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

About China Online Education Group

China Online Education Group (NYSE: COE) is a leading online education platform in China, with core expertise in English education. The Company's mission is to make quality education accessible and affordable. The Company's online and mobile education platforms enable students across China to take live interactive English lessons with overseas foreign teachers, on demand. The Company connects its students with a large pool of highly qualified foreign teachers that it assembled using a shared economy approach, and employs student and teacher feedback and data analytics to deliver a personalized learning experience to its students.

For investor and media inquiries, please contact:

China Online Education Group
Investor Relations
+86 (10) 8342-6262
ir@51talk.com  

The Piacente Group, Inc.
Brandi Piacente
+86 (10) 5730-6200
+1-212-481-2050
51talk@tpg-ir.com     

View original content:https://www.prnewswire.com/news-releases/china-online-education-group-provides-update-on-new-regulations-301340828.html

SOURCE China Online Education Group

FAQ

What are the new regulations affecting China Online Education Group (COE)?

The new regulations require online tutoring institutions to register as non-profits, ban foreign teachers, prohibit foreign ownership, and impose other restrictions on operational hours.

How will the new regulations impact COE's business operations?

COE expects the new regulations to have a material adverse impact on its results of operations and future prospects.

When were the new education regulations announced in China?

The new regulations were announced on July 24, 2021.

Is China Online Education Group (COE) compliant with the new regulations?

Yes, COE has stated it will comply with all applicable rules and regulations, including the new directives.

What restrictions do the new policies impose on after-school tutoring services?

The policies include a ban on providing academic tutoring during public holidays, weekends, and school breaks, and impose fee standards to be set by authorities.