Authorities put tighter regulations in place for tutoring firms

China has set up a detailed financial management plan for tutoring institutions to prevent risks and safeguard the rights of students, parents and employees.

The plan, issued by the Ministry of Education and four other departments, asks tutoring institutions to establish an internal finance management system, raise capital based on the law, effectively manage assets and control costs.

The plan bans listed companies from establishing or participating in academic tutoring for primary or secondary school students. Foreign capital is also not allowed to control or have shares in tutoring companies.

Primary and secondary schools are banned from setting up tutoring institutions.

For non-profit tutoring institutions, their founders, persons in charge, and actual controllers are not allowed to withdraw capital, while founders of for-profit tutoring institutions are not allowed to withdraw capital.

All pre-paid service fees should be managed through a special account and be kept separate from the institutions' money.

If the institutions are closed, they should return the tuition fees to students and pay the salaries and other fees to its employees.

Han Fei, vice-professor of the Beijing National Accounting Institute, said that in recent years some tutoring companies have expanded blindly and spent a lot of money on marketing and advertising. Due to poor management, their capital ran out and they went bankrupt, while the owners disappeared with the tuition fees.

With the double reduction policy introduced in 2021 to reduce students' homework and academic tutoring burden, the regulation of tutoring institutions has been tightened, but some institutions still have not taken necessary measures to fend off risks, she said.

The plan standardizes the financial management of tutoring institutions, improves their management, prevents financial risks and promotes healthy development, she added.