The New Education Rule in China coming into force this September has introduced significant limitations on investment structures, governance and curricula affecting private schools operating in China.

The Regulation has limited the scope of acceptable investment structures in private schools providing compulsory education, which may discourage foreign investors. Changes have been made to the mandatory investment structures, which now have to come mostly from PRC sources and be governed by Chinese board members. While franchising is not affected, the VIE structures became outlawed, for instance.

Further limitations have been put on the naming convention for private schools providing compulsory education, alongside significant restrictions on the mandatory curriculum. While additional learning materials and alternative, international programs may still be taught at certain schools, they are subject to restrictions.

Dentons has produced a summary of changes brought about by the New Rule, signaling to current and future investors, points worth considering while investing in private education in China.

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