NPC revises law on private schools | Practical Law

NPC revises law on private schools | Practical Law

The NPC Standing Committee has adopted a decision to revise the law governing private schools. The revisions will establish a bifurcated system for regulating non-profit and profit-making private schools.

NPC revises law on private schools

Practical Law UK Legal Update w-004-5524 (Approx. 3 pages)

NPC revises law on private schools

by Practical Law China
Published on 16 Nov 2016China
The NPC Standing Committee has adopted a decision to revise the law governing private schools. The revisions will establish a bifurcated system for regulating non-profit and profit-making private schools.
On 7 November 2016, the Standing Committee of the National People’s Congress adopted the Decision to Revise the "Law of the People's Republic of China on the Promotion of Privately-run Schools" (全国代表大会常务委员会关于修改《中华人民共和国民办教育促进法》的决定), which will take effect 1 September 2017.
The decision includes two essential changes:
  • Dividing private schools into the category of either for-profit or non-profit, and prohibiting for-profit private schools from providing the nine-year compulsory education (Article 2).
    Accordingly, the revised law sets different requirements, preferential land and tax treatments, and government subsidies for each category of private school. For-profit private schools are only permitted to provide education that excludes the compulsory six years of primary school and first three years of high school. The private schools that are currently providing nine-year compulsory education are facing category conversion and strict regulations on tuition fees.
  • Deleting a provision that allows sponsors of private schools to earn a "reasonable profit return" on their investment (Article 10).
    Only sponsors of schools that are registered or re-registered as for-profit private schools can seek a profit return, which also creates conditions for its use of capital.
Other major amendments include:
  • Requiring non-profit private schools to determine tuition fees in accordance with local government regulations (Article 5).
  • Permitting local governments to give favourable financial treatment to non-profit private schools, including:
    • preferential treatment involving land allocation (Article 9);
    • government subsidies, fund incentives and other donor support measures (Article 7); and
    • tax preferences equivalent to those of public schools (Article 8).
  • Increasing the employment protection of the teachers and staff of private schools (Articles 4 and 5).
  • Requiring the Ministry of Education to establish a private schools information disclosure and credit file system (Article 6).
  • Increasing the sanctions for running a private school without government permission (Article 14).
  • Deleting a clause that enabled private training institutions to register with China’s company registrar under separate rules (Article 15).
The decision requires private schools registered before the decision to revise their articles of association, execute financial settlement and assets clearance and re-register as a non-profit or profit-making private school to continue operating schools.
Source: Official website of NPC Standing Committee, Decision to Revise the "Law of the People's Republic of China on the Promotion of Privately-run Schools" (全国代表大会常务委员会关于修改《中华人民共和国民办教育促进法》的决定)