{"url_path":"/sec/fedu/10-k/2026/item-4","section_key":"item-4","section_title":"Item 4 INFORMATION ON THE COMPANY","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-06-17","source_url":"https://www.sec.gov/Archives/edgar/data/1709819/0001193125-26-273350-index.html","accession_number":"0001193125-26-273350","cik":"0001709819","ticker":"FEDU","issuer_name":"Four Seasons Education (Cayman) Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1709819/0001193125-26-273350-index.html","primary_entity_key":"0001709819","primary_entity_name":"Four Seasons Education (Cayman) Inc."},"word_count":24412,"has_tables":true,"body_markdown":"ITEM 4. INFORMATION ON THE COMPANY\n\nA. History and Development of the Company\n\nWe began our operations in March 2007, when our Chairman, Mr. Peiqing Tian, founded Shanghai Four Seasons Education Investment Management Co., Ltd. in Shanghai. In 2010, we established our first learning center providing after-school math education services to elementary school students. With the growth of our business and in order to facilitate international capital investment in our company, we incorporated Four Seasons Education (Cayman) Inc., or Four Seasons Education Cayman, to become our offshore holding company under the laws of the Cayman Islands in June 2014. Further, in June 2014, Four Seasons Education Cayman established a wholly-owned subsidiary in Hong Kong, namely Four Seasons Education (Hong Kong) Limited, or Four Seasons Education HK. Shanghai Fuxi Information Technology Service Co., Ltd., or Shanghai Fuxi, was then incorporated in December 2014 as a wholly-owned subsidiary of Four Seasons Education HK.\n\nIn November 8, 2017, we completed an initial public offering and listed our ADSs on the New York Stock Exchange under the symbol “FEDU”. On June 21, 2022, we effected a change in the ratio of our ADSs to common shares from two ADSs representing one ordinary share to one ADS representing ten ordinary shares.\n\nB. Business Overview\n\nWe provide a wide variety of learning and tourism services in China.\n\nWe started our business initially focusing on math education for elementary school students in Shanghai, from where we actively seeking to expand during the past years.\n\nWe always keep a keen prospective for the evolving and developing industry. In addition to the course offerings that target improving learners and customers’ academic performance, we also began to expand our offerings by introducing study camp and learning trip. This expansion aligns with our broader vision of integrating education with travel, leveraging the increasing demand for immersive and interactive learning experiences. In compliance with regulatory policies promulgated in 2021, we ceased offering the K-9 Academic AST Services in mainland China at the end of the same year. We have since realigned our business focus towards enrichment learning services, tourism services, as well as learning technology and content solutions to capture evolving customer needs. We are hosting a series of study camps, learning trips and interest-oriented classes, and have continued to integrate technology with learning, promote industry innovation, and lead industry development from our inception.\n\nOur revenue was RMB254.4 million (US$37.1 million) in the 2026 fiscal year, compared with RMB251.1 million in the 2025 fiscal year, and RMB125.4 million in the 2024 fiscal year. In the 2026 fiscal year, we recorded a net income of RMB29.1 million (US$4.2 million), compared with the net loss of RMB0.6 million in the 2025 fiscal year and net income of RMB2.8 million in the 2024 fiscal year. Our adjusted net income, which excludes share-based compensation expenses, unrealized holding gain in investments, and impairment loss on long-lived assets (net of tax effect), was RMB28.3 million (US$4.1 million) in the 2026 fiscal year, compared with adjusted net income of RMB2.4 million in the 2025 fiscal year and adjusted net income of RMB5.7 million in the 2024 fiscal year. For a detailed description of adjusted net income (loss), please see “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Non-GAAP Measures.”\n\nOur Offerings\n\nWe are committed to maximizing a learner’s potential by providing access to an engaging learning experience empowered by our technology and content capabilities. We have crafted a wide variety of both learning and tourism products and services to address learners and customers’ evolving needs in well-rounded development.\n\nWe are currently offering, and evaluating, a broad range of learning programs that are aligned with our mission, core competencies, and learner demand. Our offerings are divided into learning services, tourism services and learning technology and content solutions.\n\n \n\n70\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nLearning services\n\nHistorically, we offered K-9 Academic AST Services in mainland China, which was ceased at the end of 2021 in compliance with regulatory policies promulgated in 2021.\n\nSpurred by the strong market demand, we built on our experience on learning services. Equipped with robust content development capabilities, in recent years we offer a broad range of expertly designed enrichment learning programs, including science and creativity, humanities and aesthetics, and coding and programming. We have designed and implemented such enrichment learning programs by levels and tailored them to learners of different ages and varying interests.\n\nAs we continue to expand our enrichment learning program offerings, we remain committed to providing our learners with a holistic educational experience that goes beyond the confines of traditional academic subjects. By nurturing their diverse interests and capabilities, we aim to empower them to become well-rounded, adaptable, and intellectually curious individuals, poised to thrive in an ever-evolving global landscape.\n\nTourism Services\n\nOur tourism services encompass two key components: trip-related services and study camp operations. These programs are designed to address the diverse needs of learners and customers, while contributing to their well-rounded development. By leveraging our technological and content capabilities, we are committed to delivering an engaging and enriching experience that maximizes the potential of every individual we serve.\n\nTrip-Related Services\n\nAt the foundation of our business, we provide comprehensive travel agency services to meet the diverse needs of our customers. Our experienced team handles all aspects of trip planning and logistics, including flight and train ticket bookings, visa processing, hotel reservations, and ground transportation arrangements. Whether catering to individual travelers or large tour groups, we deliver seamless end-to-end travel management to ensure a hassle-free experience for our clients.\n\nIn addition to our core travel agency offerings, we have developed an extensive portfolio of specialized travel packages designed to cater to the unique interests and requirements of various customer segments. For instance, we offer educational travel programs for youth that incorporate pre-set curriculum themes and personal development activities. These specialized \"study tour\" packages provide enriching experiences that combine hands-on learning with cultural immersion. Recognizing the growing demand for travel offerings catered to seniors, we have also curated a range of specialized travel products targeting the mature demographic. These include wellness-focused itineraries emphasizing relaxation, healthy lifestyle activities, and cultural exploration. By partnering with seasoned travel guides and local experts, we are able to craft itineraries that deliver memorable experiences while addressing the specific needs of our senior customers, such as accessibility, safety, and comfort.\n\nThrough this comprehensive suite of trip-related services, we are able to cater to the evolving needs of our diverse customer base, delivering enriching travel experiences that create lasting memories. We remain committed to innovation and continuous improvement in order to solidify our position as a trusted partner for all travel-related requirements.\n\nStudy camp operations and constructions\n\nIn alignment with the National Science Quality Action Outline of the Plan (2021-2035) issued by the State Council, we have strategically integrated information technology and hands-on learning experiences into our suite of educational offerings. Collaborating with leading cultural institutions, historic sites, and prestigious universities, we have developed immersive study camp programs that holistically cultivate our participants' academic and personal capabilities.\n\n \n\n71\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nOur study camp operations and constructions have experienced steady progress, both in terms of facility enhancements and geographic expansion. Our new study camp site in Jiangxi province has officially opened in 2025. By leveraging cutting-edge technologies and forging strategic collaborations, we aim to elevate this camp as a pioneering model for immersive, technology-enabled learning.\n\nLearning Technology and Content Solutions\n\nWe have continued to invest in learning technology and content solutions empowering other industry players including educational institutions, in particular primary and middle schools. Driven by real-world needs and pain points faced by these schools, we have created, developed and launched a broad array of learning technology and content solutions customized for various close-loop learning scenarios encompassing teaching, learning and content development.\n\nNumerous well-known K-12 schools and institutions have invited us to deliver our proprietary courses to their students since our inception. Typically, our courses are delivered by our own teachers at these schools through after-school math clubs or interest groups. We charge each school a lump sum cooperation fee and service fees calculated based on fixed hourly rates. We have found our courses incorporating hands-on learning to be the most popular, including Sudoku, Bridge, and Mathematics Magic House module, which consists of math stories and games, and our logic thinking module.\n\nOur Learning and Travel Experiences\n\nWe have established a dynamic process for curating and updating our learning and travel experience offerings to meet the evolving needs of our customers. Our content and experience design is an iterative process, drawing insights from the diverse backgrounds and expertise of our team as well as the feedback and changing preferences of our participants. Leveraging our deep understanding of modern learners, we craft programs that cultivate intellectual curiosity, practical skills, and personal growth. The overwhelmingly positive response from our customers underscores the effectiveness of this holistic approach.\n\nWe also continuously refine and enhance our offerings based on participant feedback and our analysis of engagement metrics. This agile content development and update process allows us to rapidly respond to market trends and deliver exceptional value to our customers.\n\nWhile we develop a significant portion of our programs in-house, we also collaborate with renowned experts, cultural institutions, and tourism partners to co-create unique experiences that expand the breadth and depth of our portfolio. We are committed to further diversifying and enriching our learning and travel experiences to deliver even more impactful and memorable journeys for our participants.\n\nOur Faculty\n\nWe believe that our faculty is critical to maintaining the quality of our services and promoting our brand and reputation. Our total number of teachers is 95 as of February 28, 2026. As of February 28, 2026, approximately 91% of our teachers had bachelor’s degrees and above.\n\nWe strive to give our faculty a supportive working environment, providing our faculty members with abundant opportunities for career development and advancement. We offer competitive salary and benefit packages, and make great efforts to build a congenial academic and workplace culture among our faculty. We do not encourage or require our teachers to recruit learners or promote our learning contents on their own, which allows them to focus on teaching and knowing the demand of our learners. We encourage our faculty to learn at the same time that they are teaching, try out innovative teaching methods and hone their own skills. We believe that our culture promotes self-improvement and a sense of satisfaction from teaching.\n\n \n\n72\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nOur faculty recruitment process is highly selective. We require our candidates to pass a series of exams, interviews, mock lectures and training programs before they can become our trainee teachers and start their probation period. During the recruitment process, we mainly focus on candidates’ academic background, communication skills and classroom demeanor. We generally recruit our teachers through on-campus recruitment of university graduates and from time to time through referrals or online channels. We encourage teachers to put their own spin on their classes to keep learners engaged. Therefore, we also target our faculty recruiting toward candidates with energetic and positive personalities who can connect with and motivate our learners.\n\nAll of our teachers are required to attend our on-the-job training programs to ensure their familiarity with our latest learning content and our software and facilities. We design and implement in-house training programs for our teachers, which consist of courses on specific subjects and teaching techniques. Each teacher participates in an orientation training session when first joining us, as well as training programs in each subsequent year. In addition, we continuously monitor our teachers’ mastery of their subject matter, teaching skills, and communication abilities. We have implemented a multi-tiered and competitive compensation system for our faculty members, and through a stringent internal review process, our faculty members can be promoted to higher tiers based on a comprehensive evaluation of their teaching effectiveness and their delivery of teaching services, including their patience in answering learner questions and proactiveness in following up on learners’ needs.\n\nCompetition\n\nThe learning solution and enrichment activity market in China is rapidly evolving, highly fragmented and competitive. We face competition in each type of products and services we offer and each geographic market in which we operate. We mainly face competition from other existing major players in the learning solution and enrichment activity market who also provide learning services, as well as learning technology solutions and learning content products. Additionally, China’s travel industry is highly competitive. We compete primarily with other travel agencies, including domestic and foreign consolidators of hotel accommodation and airline tickets as well as traditional travel agencies. As China’s travel market continues to evolve, we may be faced with increased competition from new domestic travel agencies, including the ones operated by other major internet companies, or international players that seek to expand into China. We may also face increasing competition from hotels and airlines as they increase their direct selling efforts or engage in alliances with other travel service providers, as well as content platforms and social networks entering into the travel industry.\n\nThere may be new entrants emerging, in each of our business lines, and these market players compete to attract, engage and retain learners and customers. We believe the principal competitive factors in our business include the following:\n\n•\nreputation and brand;\n\n•\nlearning-centric technology and content capabilities;\n\n•\noverall learner and customer experience;\n\n•\ntype and quality of products and services offered;\n\n•\nability to effectively tailor service and product offerings to specific needs of learners; and\n\n•\nability to attract, train and retain high quality faculty members.\n\nWe believe that we compete favorably with our competitors on the basis of the above factors. However, some of our competitors may have greater access to financing and other resources, and a longer operating history than us. See “Item 3. Key Information — D. Risk Factors — Risks Related to Our Business — We face significant competition, and if we fail to compete effectively, we may lose our market share and our profitability may be adversely affected.”\n\n \n\n73\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nData Privacy and Security\n\nWe are committed to protecting data privacy and security. We have internal rules and policies on data collection, processing and usage, as well as protocols, systems and technologies in place to ensure the confidentiality and integrity of our data. We are subject to PRC laws and regulations governing the collection, storing, sharing, using, processing, disclosure and protection of personal information and other data and the relevant risks and uncertainties. See “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Our business is subject to various evolving PRC laws and regulations regarding data privacy and cybersecurity. Failure of cybersecurity and data privacy concerns could subject us to penalties, damage our reputation and brand, and harm our business and results of operations.”\n\nIntellectual Property\n\nOur business relies substantially on the creation, use and protection of our proprietary learning content materials. We have copyrights for our original content materials, including practice books, course videos and study software programs. Other forms of intellectual property include our trademarks, domain names and patents. As of February 28, 2026, we had 20 registered trademarks, 21 copyrights (including 9 works copyrights and 12 software copyrights), 13 registered patents. In addition, as of February 28, 2026, we have registered 31 domain names, including sijiedu.com.\n\nWe believe the protection of our trademarks, copyrights, domain names, trade names, trade secrets and other proprietary rights is critical to our business, and we protect our intellectual property rights by relying on local laws and contractual restrictions. More specifically, we rely on a combination of trademark, fair trade practice, copyright and trade secret protection laws in the PRC as well as confidentiality procedures and contractual provisions to protect our intellectual property and our trademarks. We enter into confidentiality agreements with our employees, and have confidentiality arrangements with our business partners. We also actively engage in monitoring and enforcement activities with respect to infringing uses of our intellectual property by third parties.\n\nWhile we actively take steps to protect our proprietary rights, these steps may not be adequate to prevent the infringement or misappropriation of the intellectual property created by or licensed to us. Also, we cannot be certain that the course materials that we license, and our redesign of these materials, do not or will not infringe on the valid patents, copyrights or other intellectual property rights held by third parties. We may be subject to legal proceedings and claims from time to time relating to the intellectual property of others, as discussed in “Item 3. Key Information — D. Risk Factors — Risks Related to Our Business — We may encounter disputes from time to time relating to our use of intellectual property of third parties.”\n\nInsurance\n\nWe maintain various insurance policies to safeguard against risks and unexpected events. We maintain insurance to cover our liability should any injuries occur at our schools or at travel agency. We maintain medical insurance for our employees and management, maintain public liability insurance which covers property damage and casualty damage in accidents, and we also maintain travel agent liability insurance which covers personal or property damages to our tourists during the conduct of the tourism business activities held by our travel agencies. We do not have property, business interruption, general third-party liability, product liability or key-man insurance. See “Item 3. Key Information — D. Risk Factors — Risks Related to Our Business — We have limited insurance coverage with respect to our business and operations.” We consider our insurance coverage to be in line with that of other learning service providers of similar size in the PRC.\n\nRegulation\n\nThis section sets forth a summary of the most significant laws, rules and regulations that affect our business activities in China and our shareholders’ rights to receive dividends and other distributions from us.\n\n \n\n74\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nRegulations Relating to Foreign Investment in Education\n\nForeign Investment Law\n\nOn March 15, 2019, the National People’s Congress reviewed the submitted draft and approved the Foreign Investment Law, which came into effect on January 1, 2020. The Foreign Investment Law replaces the three laws on foreign investment (the Wholly Foreign-owned Enterprise Law, the Cooperative Joint Venture Law of the PRC and the Equity Joint Venture Law of the PRC) and the Foreign Investment Law provides a five-year transition period for the existing foreign invested enterprises, or the FIEs, to adjust their business structures.\n\nOn December 26, 2019, the State Council issued the Implementation Rules of the Foreign Investment Law, which came into effect on January 1, 2020, to clarify and elaborate relevant provisions of the Foreign Investment Law. The Foreign Investment Law and its implementation regulations emphasize the principle of applying “national treatment” to foreign investors. Industries that are not listed in the negative list issued by, amended or released upon approval by the State Council from time to time are permitted areas for foreign investments, and are generally open to foreign investment unless specifically restricted by other PRC regulations.\n\nSpecial Administrative Measures (Negative List) for Foreign Investment Access\n\nThe current effective negative list is the Special Administrative Measures (Negative List) for Foreign Investment Access, or the 2024 Negative List, which became effective on November 1, 2024. Pursuant to the 2024 Negative List, operation of training institution is outside the scope of the 2024 Negative List, which indicates that this is open to foreign investment, while a preschool, a regular senior secondary school, or a higher education institution shall only be operated by Chinese-foreign contractual joint ventures, under the control of the Chinese party (the principal or the chief executive shall be a Chinese citizen, and the council, board of directors, or joint management committee shall consist of members from the Chinese party accounting for no less than one half of the total number of members).\n\nRegulation on Sino-foreign Cooperation in Operating Schools and its Implementing Rules\n\nSino-foreign cooperation in operating schools in China is governed by the Regulation on Sino-foreign Cooperative Education (2019 Revision) promulgated by the State Council and the Implementing Rules for Sino-foreign Cooperative Education (2004) issued by the Ministry of Education. These rules encourage substantive cooperation between PRC educational organizations and foreign educational organizations with the relevant qualifications and experience in providing high quality education to jointly operate various types of schools in China. Any Sino-foreign cooperative school and cooperation education program shall be approved by the relevant PRC authorities and obtain a permit for Sino-foreign cooperation in operating schools.\n\nAdditionally, the Implementation Opinions of the Ministry of Education on Encouraging and Guiding the Entry of Private Capital in the Education Sector and Promoting the Healthy Development of Private Education (2012) encourage private investment and foreign investment in the education sector. According to these opinions, the proportion of foreign investment in a Sino-foreign cooperative education institution shall be less than 50%.\n\nRegulations Relating to Private Education\n\nPrivate Education Law and Its Implementation Rules\n\nThe Law for Promoting Private Education (2018 Revision), or the PRC Private Education Law, promulgated by the SCNPC on December 28, 2002 and last amended on December 29, 2018 and the Implementation Rules for the Private Education Law (2021) which was newly revised on April 7, 2021 and became effective on September 1, 2021, provide rules for social organizations or individuals to establish schools or other educational organizations using non-government funds in China. Such schools or educational organizations so established using non-government funds are referred to as “private schools.”\n\n \n\n75\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nAccording to the Private Education Law, establishment of private schools for academic education, pre-school education, self-taught examination support and other cultural education are subject to approval by the authorities in charge of education at or above the county level, while establishment of private schools for vocational qualification training and vocational skill training are subject to approval by the authorities in charge of labor and social welfare at or above the county level. A duly approved private school will be granted a private school operating permit and shall be registered with the Ministry of Civil Affairs or its local counterparts as a private non-enterprise institution.\n\nThe Decision of the SCNPC on Amending the Private Education Law was promulgated on November 7, 2016 and became effective on September 1, 2017. Under the amendment, the term “reasonable return” is no longer used and a new classification system for private schools is established based on whether they are established and operated for profit-making purposes. Sponsors of private schools may choose to establish non-profit or for-profit private schools at their own discretion. Nonetheless, school sponsors are not allowed to establish for-profit private schools that are engaged in compulsory education. In other words, the schools engaged in compulsory education should be non-profit schools after this amendment comes into force. We currently intend to register all of our schools as for-profit schools when allowed. However, most local authorities may delay accepting or approving applications of for-profit schools before the local implementing regulations are promulgated.\n\nImplementing Measures for the Supervision and Administration of For-profit Private Schools\n\nAccording to the Implementing Measures for the Supervision and Administration of For-profit Private Schools jointly promulgated by the Ministry of Education, the Ministry of Human Resources and Social Security, and the State Administration for Industry and Commerce on December 30, 2016, social organizations or individuals are permitted to run for-profit private colleges and universities and other higher education institutions, high schools and kindergartens, but are prohibited from running for-profit private schools implementing compulsory education. No definite effective date has been set for these measures.\n\nAccording to these implementing measures, a social organization or individual running a for-profit private school shall have the financial strength appropriate to the level, type and scale of the school, and their net assets or monetary funds shall be sufficient for the costs of the school construction and development. Furthermore, the social organization running the for-profit private school shall be a legal person who is in good credit standing, and shall not be in the list of enterprises operating abnormally or the list of enterprises with serious breaches of law and discredited enterprises. Individuals running for-profit private schools shall be PRC citizens who reside in China, be in good credit standing without any criminal record and enjoy political rights and complete civil capacity.\n\nRegulations on After-school Tutoring Institutions and Online Training\n\nOn July 12, 2019, the Ministry of Education, together with other five PRC authorities, jointly promulgated the Implementation Opinions on the Regulation of Extracurricular Online Training, which reinstates the filing requirement of extracurricular online training institutions and provides that the education authorities at provincial level should review the application documents submitted by extracurricular online training institutions, approve the filing applications submitted by qualified training institutions, and disclose qualified training institutions to the public. The filing information include ICP filings, approvals and licenses, personal information protection system, network security protection measures, introduction of courses, education plans, basic information of teachers, teacher qualification certificates, etc. In case of any change of the filing information, the extracurricular online training institution shall make filing for such updated information.\n\n \n\n76\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nIn order to continuously regulate after-school tutoring, and effectively alleviate the burden of excessive homework and the burden of after-school tutoring on students in compulsory education, on July 24, 2021, the General Office of the CPC Central Committee and the General Office of the State Council issued the Double Alleviating Opinions, which among other things requires that: (i) no new approvals shall be granted to Academic AST Institutions, including online Academic AST Institutions; (ii) all existing Academic AST Institutions, including online Academic AST Institutions are required to convert themselves into non-profit institutions; (iii) an approval mechanism will be adopted to replace the filing mechanism applicable to online Academic AST Institutions, and all existing online Academic AST Institutions are subject to examination before being granted with private school operating permits. On August 24, 2021, the General Office of the MCA issued the Notice on Further Strengthening the Registration Management of After-School Tutoring Institutions, which reiterates that existing online Academic AST Institutions are required to convert themselves into non-profit institutions under the Double Alleviating Opinions. On September 10, 2021, the General Office of MOE, together with other five governmental authorities promulgated the Notice on the Conversion of Filing Mechanism to Approval Mechanism regarding Existing Online Academic AST Institutions, which reiterates the requirements to adopt approval mechanism with regard to the existing online Academic AST Institutions previously filed with competent authorities under the Double Alleviating Opinions and further requires that the online AST Institution shall: (i) establish physical offices and tutoring premise within the location where it is registered; (ii) own or lease performance-reliable server within mainland China; (iii) be in compliance with Cyber Security Law and Data Security Law and adopt grade three or higher cyber security protection standard. Moreover, the service provider of education app shall establish data protection mechanism with regard to collection, storage, transmission, and use of personal information and education apps operated by online Academic AST Institutions which store personal information of more than one million people shall pass the impact assessment, certification, or compliance audit on personal information protection.\n\nOn November 30, 2022, the MOE and relevant authorities published Opinions on Regulation of Non-Academic After-School Tutoring for Primary and Secondary School Students, which provide that, among others, (i) local governments shall identify corresponding competent authorities for different tutoring categories and set forth basic standards; (ii) non-academic tutoring institutions shall comply with requirements relating to premise, facilities, fire safety, environment protection and food safety; (iii) practitioners shall have corresponding capability or certificates for different tutoring categories, and tutoring institutions shall not solicit or recruit primary and secondary school teachers; (iv) non-academic online tutoring institutions shall obtain certificates issued by provincial government authorities; (v) class times shall not conflict with the teaching time of the local primary and secondary schools, and offline after-school trainings shall end no later than 8:30 p.m. and online live trainings shall end no later than 9:00 p.m.; (vi) tuition fees collected by a tutoring institution shall not be collected in a lump sum for more than 60 course sessions, or for a course length of more than three months, or for more than 5,000 RMB, and tutoring institutions shall open a special bank account for the tuition fees and file the account information and other required information with government authorities. In addition, any violation under such opinions of a non-academic AST institutions shall be rectified accordingly by the end of June 2023.\n\nOn March 14, 2023, the MOE jointly with other four authorities issued the Administrative Measures for the Financial Management of After School Tutoring Institutions, which apply to the financial management activities of AST institutions that operate after-school tutoring for pre-school children between the ages of 3 and 6, primary and secondary school students. These measures stipulate that, among others, (i) tutoring pre-paid fees (including collected in cash) shall be deposited into such institution’s special accounts and shall be separated from its own funds. Tutoring fees shall not be collected in such institution’s other accounts or any third party’s accounts; (ii) AST institutions shall not accept any tutoring fees paid by means of tutoring loans; (iii) AST institutions shall use the contract template jointly stipulated by General Office of the MOE and the SAMR for the after-school tutoring service, and clearly specify the tutoring fees, refund arrangement and dispute resolutions; AST institutions shall offer refunds for any remaining classes in a course to students who withdraw from the course in a timely manner.\n\n \n\n77\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nOn August 23, 2023, the MOE issued Interim Measures for Administrative Penalties on After-school Tutoring, which became effective on October 15, 2023. These interim measures set out the general requirements for administrative penalties for illegal after-school tutoring operated by any natural person, legal person or other organization that is offered to preschool children over 3 years of age, and primary and secondary school students. In particular, these interim measures provide that the following circumstances shall constitute illegal off campus tutoring, and relevant natural person, legal person or other organization conducting such illegal off-campus tutoring may be subject to various administrative penalties, such as orders to rectify or cease tutoring activities, returning fees charged, revocation of operation approval, warning, criticism and fines: (i) any natural person, legal person or other organization carries out after-school tutoring without the requisite permit and meets certain conditions, including having a specific tutoring facility for offline tutoring activities or a specific website or application for online tutoring activities, two or more tutoring personnel and corresponding organizational structure and division of work; (ii) any natural person, legal person or other organization carries out certain after-school academic tutoring activities in a disguised form without meeting the conditions as prescribed above but also without the requisite permit; (iii) any AST institutions carries out after-school tutoring beyond the scope of its private school operating permit; (iv) any after-school tutoring institution carries out after-school tutoring in violation of applicable laws and regulations; (v) any AST institutions has the problem of disorganized management; and (vi) any AST institutions organizes or participates in the organization of social competitions without approval for preschool children over 3 years of age, and primary and secondary school students.\n\nOn February 8, 2024, the MOE issued the Administrative Regulations on After-school Tutoring (Draft for Comments), which provide that, among other things, (i) AST institutions shall be administered by the classification of academic subjects and non-academic subjects; all AST institutions shall obtain corresponding after-school tutoring operating permit and possess legal personalities while the academic AST institutions for students in compulsory education shall complete registration as non-profit legal person; (ii) the permit to operate after-school tutoring shall be granted by the education administration authorities at or above the county level; online after-school tutoring institutions shall be subject to review and approval by provincial education administration authorities; for the permit to operate after-school tutoring, prior to the application is made to education administration authorities, the institution is required to obtain approval from corresponding competent authorities depending on the tutoring categories; where multiple competent authorities are involved, the application shall be submitted respectively; and (iii) the income of AST institutions collected from financing and tutoring fees shall be mainly used for engaging in educational services, improving training conditions and guaranteeing the welfare of employees. However, unlike the Double Alleviating Burden Opinion and certain previous regulations implementing the Double Alleviating Burden Opinion, these draft administrative regulations no longer emphasize administration and supervision over academic AST institutions for students on grade ten to twelve shall be implemented by reference to the applicable provisions of the Alleviating Burden Opinion. As of the date of this annual report, these draft administrative regulations were released for public comment only, and their respective provisions and anticipated adoption or effective date may be subject to change.\n\nRegulations on Value-Added Telecommunications Services\n\nLicenses for Value-added Telecommunications Services\n\nThe PRC Telecommunications Regulations or the Telecommunications Regulations, promulgated by the State Council on September 25, 2000 and further amended with immediate effect on February 6, 2016, provide the regulatory framework for telecommunications services in the PRC. The Telecommunications Regulations classify telecommunications services into basic telecommunications services and value-added telecommunications services. Providers of value-added telecommunications services are required to obtain licenses for value-added telecommunications services. According to the Catalog of Telecommunications Services attached to the Telecommunications Regulations promulgated and most recently amended by the MIIT (formerly known as the Ministry of Information Industry of the PRC), on June 6, 2019, information services and the online data processing and transaction processing services provided via public communication network or the internet are value-added telecommunications services.\n\n \n\n78\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nIn addition, as a subcategory of the value-added telecommunications services, internet information services are also regulated by the Administrative Measures on Internet Information Services, or the Internet Measures, which was promulgated by the State Council on September 25, 2000 and most recently amended on December 6, 2024. Internet information services are defined as “services that provide information to online users through internet”. The Internet Measures classify internet information services into non-commercial internet information services and commercial internet information services. Commercial internet information service providers shall obtain a license for value-added telecommunications services with a scope covering internet information service from MIIT or its local counterparts, while non-commercial ones shall file with such authorities.\n\nThe Administrative Measures for Telecommunications Businesses Operating Licensing, promulgated by the MIIT on March 1, 2009, most recently amended on July 3, 2017 and came into effect on September 1, 2017, set forth more specific provisions regarding the types of licenses required to operate value-added telecommunications services, the qualifications and procedures for obtaining such licenses and the administration and supervision of such licenses. Under these measures, a commercial operator of value-added telecommunications services must first obtain a license from the MIIT or its provincial counterpart, otherwise such operator may subject to penalties including corrective orders, warnings, fines and confiscation of illegal gains. In case of serious violations, the operator’s websites may be ordered to be shutdown.\n\nRestrictions on Foreign Investment in Value-added Telecommunications Services\n\nPursuant to the 2024 Negative List and the Administrative Regulations on Foreign-Invested Telecommunications Enterprises, which were promulgated by the State Council on December 11, 2001 and latest amended on March 29, 2022, the ultimate percentage of capital contribution by foreign investor(s) in a foreign-invested enterprise conducting value-added telecommunications services (except for e-commerce, domestic multi-party communications, storage-forwarding and call centers) shall not exceed 50%. Before the latest amendment to the Administrative Regulations on Foreign-Invested Telecommunications Enterprises, such administrative regulations provide that the primary foreign investor should have a good track record and operational experience in conducting value-added telecommunication services. However, pursuant to the latest amendment, the criterion of “having good track record and operational experience in value-added telecommunications businesses” has been removed\n\nPursuant to the Ministry of Information Industry Circular on Strengthening the Administration of Foreign Investment in and Operation of Value-added Telecommunications Services, issued by the MII) on July 13, 2006, domestic value-added telecommunications enterprises were prohibited to rent, transfer or sell licenses for value-added telecommunications services to foreign investors in any form, or provide any resources, premises, facilities or other assistance in any form to foreign investors for their illegal operation of any value-added telecommunications business in the PRC.\n\nPursuant to the Notice on the Pilot Program for Expanding the Opening up of Value-added Telecommunications Services promulgated by the MIIT On April 8, 2024, the restrictions on the shareholding percentage of foreign investors are abolished for engaging in one type of the information services, namely the information publishing platforms and delivery services (except internet news and information, online publishing, online audiovisual and internet cultural operations) in several pilot zones.\n\n \n\n79\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nRegulations Relating to Online Transmission of Audio-Visual Programs\n\nThe Measures for the Administration of Publication of Audio-Visual Programs through Internet or Other Information Network, or the Audio-Visual Measures, promulgated by the State Administration of Press, Publication, Radio, Film and Television, or the SAPPRFT (currently known as the State Administration of Radio and Television), on July 6, 2004 and came into effect on October 11, 2004, apply to the activities relating to the opening, broadcasting, integration, transmission or download of audio-visual programs using internet or other information network. Under the Audio-Visual Measures, to engage in the business of transmitting audio-visual programs, a license issued by the SAPPRFT is required, and “audio-visual programs (including audio-visual products of films and televisions)” is defined under the Audio-Visual Measures as the audio-visual programs consisting of movable pictures or sounds that can be listened to continuously, which are shot and recorded using video cameras, vidicons, recorders and other audiovisual equipment for producing programs. FIES are not allowed to carry out such business.\n\nOn April 13, 2005, the State Council promulgated the Certain Decisions on the Entry of the Non-state-owned Capital into the Cultural Industry. On July 6, 2005, five PRC governmental authorities, including the SAPPRFT, jointly adopted the Several Opinions on Canvassing Foreign Investment into the Cultural Sector. According to these regulations, non-state-owned capital and foreign investors are not allowed to engage in the business of transmitting audio-visual programs through information networks. However, the Audio-Visual Measures was repealed according to the Administrative Provisions on Audio-Visual Program Service through Special Network and Directed Transmission that was promulgated by the SAPPRFT on April 25, 2016, effective on June 1, 2016, which was further amended on March 23, 2021.\n\nTo further regulate the provision of audio-visual program services to the public via the internet, including through mobile networks, within the territory of China, the SAPPRFT and the MIIT jointly promulgated the Administrative Provisions on Internet Audio-Visual Program Service, or the Audio-Visual Program Provisions, on December 20, 2007, which came into effect on January 31, 2008 and was last amended on August 28, 2015. Under the Audio-Visual Program Provisions, “internet audio-visual program services” is defined as activities of producing, redacting and integrating audio-visual programs, providing them to the general public via internet, and providing service for other people to upload and transmit audio-visual programs, and providers of internet audio-visual program services are required to obtain a License for Online Transmission of Audio-Visual Programs issued by the SAPPRFT, or complete certain registration procedures with the SAPPRFT. In general, providers of internet audio-visual program services must be either state-owned or state-controlled entities, and the business to be carried out by such providers must satisfy the overall planning and guidance catalog for internet audio-visual program service determined by the SAPPRFT.\n\nOn April 8, 2008, SAPPRFT issued a Notice on Relevant Issues Concerning Application and Approval of License for the Online Transmission of Audio-Visual Programs, as amended on August 28, 2015, which sets out detailed provisions concerning the application and approval process regarding the License for Online Transmission of Audio-Visual Programs. According to the above regulations, providers of internet audio-visual program services that engaged in such services prior to the promulgation of the Audio-Visual Program Provisions are eligible to apply for the license so long as those providers did not violate the relevant laws and regulations in the past or their violation of the laws and regulations is minor in scope and can be rectified in a timely manner and they have no records of violation during the last three months prior to the promulgation of the Audio-Visual Program Provisions. Further, on March 31, 2009, SAPPRFT promulgated the Notice on Strengthening the Administration of the Content of Internet Audio-Visual Programs, which reiterates the pre-approval requirements for the audio-visual programs transmitted via the internet, including through mobile networks, where applicable, and prohibits certain types of internet audio-visual programs containing violence, pornography, gambling, terrorism, superstition or other similarly prohibited elements.\n\nOn March 17, 2010, the SAPPRFT promulgated Tentative Categories of Internet Audio-Visual Program Services, or the Categories, which clarified the scope of internet audio-visual programs services, which was amended on March 10, 2017. According to the Categories, there are four categories of internet audio-visual program services which are further divided into seventeen sub-categories. The third sub-category to the second category covers the making and editing of certain specialized audio-visual programs concerning, among other things, educational content, and broadcasting such content to the general public online. However, there are still significant uncertainties relating to the interpretation and implementation of the Audio-Visual Program Provisions, in particular, the scope of “internet audio-visual programs.”\n\n \n\n80\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nOn March 16, 2018, the SAPPRFT promulgated the Notice on Further Regulating the Transmission Order of Internet Audio-Visual Program Services, providing that the classic literary works, radio, film and television programs, internet original audio-visual programs shall not be re-edited, re-dubbed, re-subtitled or partly captured and consolidated as a new program without authorizations and providers of internet audio-visual program services shall strictly manage and supervise such re-edited programs uploaded by the internet users and shall not provide any transmission channel for those internet audio-visual programs which have political orientation issues, copyright issues or content issues.\n\nRegulations on Production and Operation of Radio and Television Programs\n\nOn 19 July 2004, the SAPPRFT promulgated the Administrative Measures on the Production and Operation of Radio and Television Programs, which were last amended on December 1, 2020. These Measures are applicable for establishing institutions that produce and operate radio and television programs or for the production of radio and television programs like programs with a special topic, column programs, variety shows, animated cartoons, radio plays and television dramas and for activities like transactions and agency transactions of program copyrights. Pursuant to these Measures, any entity that intends to produce or operate radio or television programs must first obtain the Permit for Production and Operation of Radio and TV Programs from the SAPPRFT or its local branches.\n\nRegulations Relating to Internet Culture Activities\n\nOn February 17, 2011, the Ministry of Culture, or MOC (currently known as the Ministry of Culture and Tourism), promulgated the Interim Administrative Provisions on Internet Culture, or the Internet Culture Provisions, which became effective on April 1, 2011 and was amended on December 15, 2017. The Internet Culture Provisions require ICP services providers engaging in commercial “internet culture activities” to obtain an Internet Culture Business Operating License from the MOC. “Internet cultural activity” is defined in the Internet Culture Provisions as an act of provision of internet cultural products and related services, which includes (i) the production, duplication, importation, and broadcasting of the internet cultural products; (ii) the online dissemination whereby cultural products are posted on the internet or transmitted via the internet to end-users, such as computers, fixed-line telephones, mobile phones, television sets and games machines, for online users’ browsing, use or downloading; and (iii) the exhibition and comparison of the internet cultural products. In addition, “internet cultural products” is defined in the Internet Culture Provisions as cultural products produced, broadcast and disseminated via the internet, which mainly include internet cultural products specially produced for the internet, such as online music entertainment, online games, online shows and plays (programs), online performances, online works of art and online cartoons, and internet cultural products produced from cultural products such as music entertainment, games, shows and plays (programs), performances, works of art, and cartoons through certain techniques and duplicating those to internet for dissemination.\n\nThe Internet Culture Provisions further classifies internet cultural activities into commercial internet cultural activities and non-commercial internet cultural activities. Entities engaging in commercial internet cultural activities must apply to the relevant authorities for a Network Cultural Business Permit, while non-commercial cultural entities are only required to report to related culture administration authorities within 60 days of the establishment of such entity. If any entity engages in commercial internet culture activities without approval, the cultural administration authorities or other relevant government may order such entity to cease to operate internet culture activities as well as levying penalties including administrative warning, fines up to RMB30,000 and listing such entity on the cultural market blacklist to impose credit penalty in case of continued non-compliance. In addition, FIEs are not allowed to engage in the above-mentioned services except online music.\n\nIn accordance with the Administrative Measures for Content Self-Review by Network Culture Business Entities, issued by MOC on August 12, 2013 and became effective on December 1, 2013, the entities that engage in the internet cultural business shall review the content of products and services to be provided before providing such content and services to the public. These entities shall establish content management system, set up departments for content management and employ proper personnel to ensure the legality of content. The content management system of an internet cultural business entity is required to specify the responsibilities, standards and processes for content review as well as accountability measures, and is required to be filed with the provincial level counterpart of the MCT.\n\n \n\n81\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nRegulations on Travel Agency\n\nOn April 25, 2013, the SCNPC promulgated the Tourism Law of the PRC, which was last amended on October 26, 2018 and came into effect on the same day. This Law aims to protect tourists’ and tour operators’ legal rights, regulate travel market, protect and make a reasonable use of travel resources, and promote the development of travel industry, and sets forth specific requirements for the operation of travel agencies. According to the Tourism Law of the PRC, a travel agency established to attract, organize, and receive tourists, and provide tourism services for them shall meet certain conditions, obtain the permit from the administrative department of tourism and make industrial and commercial registration in accordance with law. Besides, Travel agencies are prohibited from (i) leasing, lending, or illegally transferring travel agency operation licenses, (ii) disseminating untrue or inaccurate information when soliciting customers and organizing tours or conducting any false publicity to mislead customers, (iii) arranging visits to or participation in any project or activity in violation of PRC laws and regulations or social morality, (iv) organizing tours at unreasonably low prices to induce or cheat tourists, or obtaining unlawful profits such as kickbacks, and (v) changing or ceasing scheduled itineraries without reasons and forcing the tourists to participate in other activities against the will of the tourists. In addition, travel agencies must enter into contracts with customers for travel services; and before a tour starts, a customer may assign his personal rights and obligations in a tourism contract to any third person, whom the travel agency cannot refuse without cause, as long as any fee increase will be borne by the customer and the relevant third person. Accordingly, travel agencies may be subject to civil liabilities for failing to fulfill the obligations discussed above, which include rectification, confiscation of any illegal income, imposition of a fine, an order to cease business operation, or revocation of its travel agency permit.\n\nAccording to the Travel Agency Regulations, promulgated by the State Council in February 2009 and most recently amended on November 29, 2020, and the Implementing Rules of Travel Agency Regulations, promulgated by the National Tourism Administration (currently known as the Ministry of Culture and Tourism) in April 2009 and most recently amended on December 12, 2016, a travel agency must obtain a license for outbound travel agency business from the National Tourism Administration or its authorized provincial-level tourism administration, and a license for domestic and inbound travel agency business from the provincial-level tourism administration or its authorized municipal tourism administration.\n\nIn addition, the Travel Agency Regulations permit foreign investors to establish foreign-invested travel agencies, while foreign-owned travel agencies are restricted from engaging in Chinese mainland residents' traveling to other countries and to Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan region for mainland China residents, unless otherwise determined by the State Council, or provided under a free trade agreement between the country and China, or any closer economic partnership arrangements between mainland China, Hong Kong, and Macao.\n\nOn August 20, 2020, the Ministry of Culture and Tourism promulgated Interim Provisions on Online Tourism Business Services, which intends to standardize the online travel operation business. The online travel operation services mean provision of travel services to the travelers via the information network such as internet and such services include package tour, transportation, accommodation, dining, sightseeing, entertainment, and so on. According to these Provisions, the online tourism operators that provide online tourism business services shall abide by the requirements of socialist core values, adhere to the bottom lines of personal and property safety, information content security, and cybersecurity, among others, conduct business operations in good faith, compete fairly, assume responsibility for product and service quality, and be subject to the supervision by the government and the public.\n\n \n\n82\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nRegulations on Research and Academic Study Travel\n\nOn August 4, 2015, the General Office of the State Council promulgated the Opinions on Further Promotion of Tourism Investment and Consumption, which became effective on the same date. According to the Opinions, research and academic study travel shall be included into the category of comprehensive competence-oriented education of students. Construction of a number of bases for research and academic study travel shall be supported, and all regions shall be supported in launching activities of research and academic study travel on the basis of natural and cultural heritage resources, tourist scenic spots and scenic regions associated with the Chinese Communist revolution, large-sized public utilities, famous universities and schools, scientific and technological research institutions, industrial or mining enterprises and large-sized farms. Research and academic study travel safety protection mechanisms shall be established and perfected. Travel agencies and places for research and academic study travel shall, in accordance with the characteristics of young students, combine education with tourism in terms of content designing, furnishing of tourist guides, safety facilities and protection.\n\nOn December 19, 2016, the National Tourism Administration issued the Standards of Research and Academic Study Travel. According to the standards, the undertaker of the research and academic study travel should be a qualified travel agency. The organizers, undertakers and suppliers of the research and academic study travel shall follow the principle of safety first and carry out safety prevention and control work throughout to ensure activities are carried out safely, focusing on the development of students' comprehensive quality capabilities.\n\nOn November 27, 2019, the Standing Committee of Jiangxi Provincial People's Congress promulgated Regulations on the Protection of the Tourists’ Rights and Interests of Jiangxi Province. According to these regulations, organizers, contractors and suppliers of research and academic study travels should formulate a safety management system in accordance with the relevant provisions of the State, take effective safety measures, be equipped with necessary safety personnel, and carry out safety educational work and work of risk prevention and control alongside the tours. Travel agencies to host research and academic study travels should be registered in accordance with the law for the travel agency, and have operated with no major quality complaints, poor integrity records, economic disputes or major safety accidents for three consecutive years. In addition, organizers research and academic study travels are not allowed to arrange high-risk tourism activities such as high-altitude activities, high-speed activities, activities on water, diving and expeditions.\n\nOn November 19, 2024, the Ministry of Culture and Tourism promulgated the Notice on Promoting the Academic Study Travel Services by Travel Agencies, which became effective on the same date. The notice requires (i) emphasizing positive guidance for academic study travel; (ii) enriching the supply of academic study travel resources; (iii) leveraging the guiding role of academic study travel standards; (iv) developing and promoting model academic study travel contract templates; (v) strengthening safety management of academic study travel; (vi) prevent risks in outbound academic study travels; (vii) enhancing market supervision of academic study travel services; (viii) cultivating specialized talent for academic study travels; and (ix) implementing the principal responsibility of travel agencies.\n\n \n\n83\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nRegulations on Hotel Operation\n\nThe Ministry of Public Security issued the Measures for the Control of Security in the Hospitality Industry in November 1987, which were amended in January 2011, November 2020 and March 2022, and the State Council promulgated the Decision of the State Council on Establishing Administrative License for Necessarily Retained Items Requiring Administrative Examination and Approval in June 2004 and amended it in January 2009 and August 2016, respectively. Under these two regulations, anyone who applies to operate a hotel is subject to examination and approval by the local public security authority and must obtain a special industry license. The Measures for the Control of Security in the Hospitality Industry impose certain security control obligations on the operators. For example, the hotel must examine the identification card of any guest to whom accommodation is provided and make an accurate registration. The hotel must also report to the local public security authority if it discovers anyone violating the law or behaving suspiciously or an offender wanted by the public security authority. Pursuant to the Measures for the Control of Security in the Hospitality Industry, hotels failing to obtain the special industry license may be subject to warnings or fines of up to RMB200. In addition, pursuant to the Law of the PRC on Penalties for the Violation of Public Security Administration promulgated in August, 2005 and amended in October 2012, and various local regulations, hotels failing to obtain the special industry license may be subject to warnings, orders to suspend or cease continuing business operations, confiscations of illegal gains or fines. Operators of hotel businesses who have obtained the special industry license but violate applicable administrative regulations may also be subject to revocation of such licenses in serious circumstances.\n\nThe State Council promulgated the Administrative Regulations on Sanitation of Public Places in April 1987 and last amended it in December 2024, according to which, a hotel must obtain a public area hygiene license before opening for business. Pursuant to this regulation, hotels failing to obtain a public area hygiene license may be subject to the following administrative penalties depending on the seriousness of their respective activities: (i) warnings; (ii) fines; or (iii) orders to suspend or cease continuing business operations. In March 1991, the Ministry of Health promulgated the Implementation Rules of the Administrative Regulations on Sanitation of Public Places, which was most recently amended in December 2017, according to which, hotel operators shall establish sanitation management system and keep records of sanitation management.\n\nThe SCNPC enacted the Food Safety Law of the PRC in February 2009, which was most recently amended in April 2021, according to which any hotel that provides food must obtain a license. Furthermore, China Food and Drug Administration enacted the Measures for the Administration of Food Trade Licensing and Recordation in June 2023, according to which whoever plans to engage in food sales and provide catering services within the territory of the People's Republic of China shall obtain a food business license in accordance with the law, while those sell prepackaged food only shall report to the local market regulatory department of the county or equivalent where it is located for recordation. Pursuant to the abovementioned Law and Measures, hotels failing to obtain the food business license (or formerly the food service license) may be subject to: (i) confiscation of illegal gains, food illegally produced for sale, and tools, facilities and raw materials used for illegal production; or (ii) fines between RMB50,000 and RMB100,000 if the value of food illegally produced is less than RMB10,000, or fines equal to 10 to 20 times of the value of food if such value is equal to or more than RMB10,000.\n\nThe Fire Prevention Law of the PRC, promulgated in April 1998 and amended in October 2008, April 2019 and April 2021, respectively, by the SCNPC, and the Provisions on Supervision and Inspection on Fire Prevention and Control, promulgated on April 30, 2009 and effective as of May 1, 2009 and amended on November 1, 2012 by the Ministry of Public Security, and the Interim Provisions on Administration of Review and Examination of Fire Prevention Design of Construction Projects promulgated in April 1, 2020 and amended on August 21, 2023 by the Ministry of Housing and Urban-rural Construction require that (i) the fire prevention design documents of special construction projects, such as hotels with overall floor area of more than 10,000 square meters, shall be reviewed and inspected by local housing and urban-rural development authorities before construction; (ii) the construction of specific construction projects, such as hotels with overall floor area of more than 10,000 square meters be inspected and accepted by local housing and urban-rural development authorities from a fire prevention perspective before completion; and (iii) the public gathering places, such as hotels, shall complete fire prevention safety inspection with the local fire and rescue department, which is a prerequisite for business opening. Pursuant to these regulations, related hotels failing to obtain approval of fire prevention inspection and acceptance or failing fire prevention safety inspections (including acceptance check and safety check on fire prevention) may be subject to: (i) orders to suspend the construction of projects, use or operation of business; and (ii) fines between RMB30,000 and RMB300,000.\n\n \n\n84\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nOn November 27, 2023, the SAMR and the Standardization Administration of the People's Republic of China issued Classification and Accreditation for Star-rated Tourist Hotels (GB/T 14308-2023), which became effective on March 1, 2024 and replaced GB/T 14308-2010. According to this Standard, all hotels with operations of over one year are eligible to apply for a star rating assessment. There are five ratings from one star to five stars for tourist hotels, assessed based on the rating of the essential items stated in the Appendix A to this Standard, facilities and other items and the quality of the management of the hotel. A star rating, once granted, is valid for five years.\n\nRegulations on Labor Dispatch Business\n\nPursuant to the Labor Contract Law of PRC promulgated by the SCNPC on June 29, 2007 and last amended on December 28, 2012 and the Regulations on the Implementation of Labor Contract Law of PRC promulgated by the State Council on September 18, 2008, to engage in the labor dispatch business, an entity shall apply to the labor administrative department for administrative licensing in accordance with law; and after obtaining licensing, shall undergo corresponding company registration formalities in accordance with law. No entity or individual may engage in the labor dispatch business without licensing. No entities or individuals are allowed to carry on a labor dispatch business without license. Any entity, in violation of the provisions of this Law, engaging in the labor dispatch business without licensing shall be subject to orders for corrections of its violations, confiscation of its illegal income, and fines of one up to five times the amount of illegal income; or if such entity has no illegal income, it may be subject to fines of not more than RMB50,000. Labor dispatch service providers are employers under the Labor Contract Law of PRC and shall perform the employers’ obligations for its employees. Labor dispatch service providers shall not employ part-time to-be-dispatched employees.\n\nPursuant to the Measures for the Implementation of Administrative License for Labor Dispatch promulgated by the Ministry of Human Resources and Social Security, or the MOHRSS, on June 20, 2013, where a labor dispatch service provider establishes a subsidiary to engage in the labor dispatch business, the subsidiary shall apply for an license to the local licensing authority; and where a labor dispatch service provider establishes a branch company to engage in the labor dispatch business, it shall report to the licensing authority in writing and complete filings with the local administrative department of human resources and social security. Labor dispatch service providers are required to submit reports to the licensing authorities before March 31 on their previous year’s operation of the labor dispatching business.\n\nRegulations on Land or Property Use\n\nIn June 1986, the SCNPC promulgated the Land Administration Law of the PRC, which was last amended on August 26, 2019 and became effective on January 1, 2020. In January 1991, the State Council published Rules for Implementation of the Land Administration Law of the PRC which was last amended on July 2, 2021 and came into effect on September 1, 2021. According to the regulations, enterprises and individuals shall use land strictly in accordance with the purpose stipulated in the land use master plan. Changes to the purpose of the use of land in accordance with laws must be supported by approval documents, and an application for the change of registration must be submitted to the land administration department of the people’s government above county level in which the land is situated. The change registration shall be carried out by the original land registration administrative authority in accordance with law. If the enterprises or individuals do not use state-owned land in accordance with the approved land use purpose, the natural resources administrative department of the people’s government at county level and above shall order the party concerned to hand over the land.\n\nRegulations on Environmental Protection\n\nIn February 2012, the SCNPC issued the newly amended Law of the PRC on Promoting Clean Production, which regulates service enterprises such as restaurants, entertainment establishments and hotels and requires them to use technologies and equipment that conserve energy and water, serve other environmental protection purposes, and reduce or stop the use of consumer goods that waste resources or pollute the environment.\n\n \n\n85\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nAccording to the Environmental Protection Law of the PRC promulgated by the SCNPC on December 26, 1989 and last amended on April 24, 2014, the Environmental Impact Assessment Law of the PRC promulgated by the SCNPC on October 28, 2002 and last amended on December 29, 2018, and the Administrative Regulations on Environmental Protection for Construction Projects promulgated by the State Council on November 29, 1998 and amended on July 16, 2017 and came into effect on October 1, 2017, hotels located in environmental sensitive areas shall submit a Report Form on Environmental Impact Assessment to competent environmental protection authorities for approvals before commencing the construction. Pursuant to the Environmental Impact Assessment Law of the PRC, any hotel failing to obtain the approval of the Report/Form of Environmental Impact Assessment may be ordered to cease construction and restore the property to its original state, and according to the violation activities committed and the harmful consequences thereof, be subject to fines of no less than 1% but no more than 5% of the total investment amount for the construction project of such hotel. The person directly responsible for the project may be subject to certain administrative penalties.\n\nRegulations on Publishing and Distribution of Publications\n\nThe Administrative Regulations on Publication, promulgated by the State Council in December 2001 and most recently amended on December 6, 2024, apply to publication activities, i.e., the publishing, printing, copying, importation or distribution of publications, including books, newspapers, periodicals, audio and video products and electronic publications, each of which requires approval from the relevant publication administrative authorities. According to the Administrative Regulations on Publication, any entity engaging in the activities of publishing, printing, copying, importation or distribution of publications, shall obtain relevant permits of publishing, printing, copying, importation or distribution of publications.\n\nThe Provisions on the Administration of the Publication Market, jointly promulgated by the SAPPRFT and SAMR in May 2016, further stipulates that entities or individuals obtained the publication business permit that conducts publication distribution through the Internet or any other information network within the approved business scope shall undergo recordation formalities at the publication administrative department that granted approval within 15 days after conducting network distribution.\n\nThe Regulations on the Administration of Online Publishing Services, jointly promulgated by the SAPPRFT and the MIIT on February 4, 2016, requires that any internet publishing services provider shall obtain an online publishing service license to engage in online publishing services. Under these Regulations, “online publications” was defined as digital works that are edited, produced, or processed to be published and provided to the public through the internet, including (i) original digital works, such as knowledgeable and thoughtful texts, pictures, maps, games, animation, audio and video readings in literature, art, science and other fields; (ii) digital works with content that is consistent with the type of content that, prior to being released online, typically was published in offline media such as books, newspapers, periodicals, audio-visual products and electronic publications; (iii) digital works in the form of online databases compiled by selecting, arranging and compiling other types of digital works; and (iv) other types of digital works identified by the SAPPRFT.\n\nIn addition, according to the effective Negative List, foreign investors are prohibited from engaging in the publishing business.\n\nRegulations on Anti-Monopoly and Unfair Competition\n\nThe Anti-unfair Competition Law of the PRC promulgated by the SCNPC on September 2, 1993, which was last amended on June 27, 2025 and became effective on October 15, 2025, stipulates that unfair competition refers to that the operator disrupts the market competition order and damages the legitimate rights and interests of other operators or consumers in violation of the provisions set forth therein in its production and operating activities. Operators shall abide by the principle of voluntariness, equality, impartiality, integrity, as well as laws and business ethics during production and operating activities.\n\n \n\n86\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nThe Anti-Monopoly Law of PRC promulgated by the SCNPC on August 30, 2007, which was last amended on June 24, 2022 and became effective on August 1, 2022, stipulates that the monopolistic practices include any monopoly agreement reached by any operators, abuse of market-dominating position by any operators and any concentration of operators which has eliminated or limited or may eliminate or limit the market competition. Specifically, competing business operators may not enter into monopoly agreements that eliminate or restrict competition, such as by boycotting transactions, fixing or changing the price of commodities, limiting the output of commodities, dividing the sales markets or the raw material supply markets, unless the agreement will satisfy the exemptions under this Law, such as improving technologies, increasing the efficiency and competitiveness of small and medium-sized enterprises, or safeguarding legitimate interests in cross-border trade and economic cooperation with foreign counterparts among others, business operators should not exclude or limit competition by abusing data, algorithms, technology, capital advantages and platform rules, and that relevant government authorities shall strengthen the examination of concentration of undertakings in areas such as national economy and people's livelihood.\n\nOn February 7, 2021, the Anti-Monopoly Guidelines for Platform Economy was promulgated by the Antimonopoly Commission of the PRC State Council which specifies certain activities of internet platforms should be identified as monopolistic and concentrations of undertakings involving contractual control structure are subject to anti-monopoly scrutiny as well.\n\nOn May 6, 2024, the Interim Provisions on Anti-Unfair Competition on the Internet promulgated by the SAMR, which came into effect on September 1, 2024, stipulates that business operators shall not conduct acts of unfair competition on the Internet, disrupt the order of market competition, affect fair market transactions, or harm the legitimate rights and interests of other business operators or consumers.\n\nRegulations on Fire Safety\n\nAccording to the Fire Prevention Law, before a public gathering place is put into use or opens for business, the owner or using entity shall apply for fire safety inspection, give an undertaking that the said place complies with fire protection technical standards and management provisions, submit the required materials, and be responsible for its undertaking and the veracity of materials. The fire and rescue department shall examine the materials submitted by the applicant, and if the application materials are complete and of the statutory form, it shall grant a permit.\n\nOn June 4, 2021, Shanghai Fire and Rescue Headquarters issued the Notice on the Implementation of the Informed Commitment Regime for Public Gathering Places Before Put into Use or Open for Operation, which stipulates that following places shall apply for fire inspection before put into use or open for operation: (1) dance and entertainment screening amusement venues, (2) hotels, restaurants, shopping malls, marketplaces, theaters, auditoriums, halls, playgrounds, business fitness, leisure venues, passenger station waiting rooms, passenger terminal waiting rooms, civilian airport terminals, stadiums, which floor area is over 300 meters. As well as other relevant detailed fire prevention regulations, require that schools must pass a fire safety control assessment or complete a fire safety filing.\n\nPursuant to the aforementioned law and notice, failure to pass the required fire control assessment shall be subject to: (i) orders to suspend the construction of projects, use of such projects or operation of relevant business; and (ii) a fine between RMB30,000 and RMB300,000. Failure to complete a fire safety filing shall be subject to: (i) orders to make rectifications within a specified time limit; and (ii) a fine of not more than RMB5,000. See “Item 3. Key Information — D. Risk Factors — Risks Related to Our Business — We are required to obtain various operating licenses and permits and to make registrations and filings for our business operations in China; failure to comply with these requirements may materially adversely affect our business and results of operations.” for further details on the compliance of Regulations on Fire Safety.\n\n \n\n87\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nOn May 17, 2022, MOE and the General Office of the Ministry of Emergency Management promulgated the Notice of the Nine Provisions on Fire Safety Management of After-School Training Institutions which became effective on the same date. According to the Notice, (i) after school training institutions should be registered in accordance with the law and set up in a fixed place that meets the safety conditions, and after-school training institutions for children should be set up in places that meet current national standards, (ii) training places within the same training period per student training room floor space of not less than 3 square meters to ensure that not crowded, easy to evacuate.\n\nRegulations Relating to Internet Information Security and Privacy Protection\n\nPRC government authorities have enacted laws and regulations with respect to internet information security and protection of personal information from any abuse or unauthorized disclosure. Internet information in China is regulated and restricted from a national security standpoint. The Decisions on Maintaining Internet Security which was enacted by the SCNPC in December 2000 and amended in August 2009, may subject violators to criminal punishment in China for any effort to: (i) gain improper entry into a computer or system of strategic importance; (ii) disseminate politically disruptive information; (iii) leak state secrets; (iv) spread false commercial information; or (v) infringe intellectual property rights. The Ministry of Public Security has promulgated measures that prohibit use of the internet in ways which, among other things, result in a leakage of state secrets or a spread of socially destabilizing content. If an information service provider violates these measures, the Ministry of Public Security and the local security bureaus may revoke its operating license and shut down its websites.\n\nPursuant to the Decision on Strengthening the Protection of Online Information issued by the SCNPC in December 2012, any collection and use of user personal information must be subject to the consent of the user, abide by the principles of legality, rationality and necessity and in accordance with the specified purposes, methods and scopes. Any entity collecting personal information must also keep such information strictly confidential, and is further prohibited from divulging, tampering or destroying any such information, or selling or providing such information to other parties, and is required to take technical and other measures to prevent the collected personal information from any unauthorized disclosure, damage or loss. Any violation of these laws and regulations may subject the entity collecting personal information to warnings, fines, confiscation of illegal gains, revocation of licenses, cancellation of filings, closedown of websites or even criminal liabilities.\n\nPursuant to the Notice of the Supreme People’s Court, the Supreme People’s Procuratorate and the Ministry of Public Security on Legally Punishing Criminal Activities Infringing upon the Personal Information of Citizens, issued in 2013, and the Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues regarding Legal Application in Criminal Cases Infringing upon the Personal Information of Citizens, which was issued on May 8, 2017 and took effect on June 1, 2017, the following activities may constitute the crime of infringing upon a citizen’s personal information: (i) providing a citizen’s personal information to specified persons or releasing a citizen’s personal information online or through other methods in violation of relevant national provisions; (ii) providing legitimately collected information relating to a citizen to others without such citizen’s consent (unless the information is processed, not traceable to a specific person and not recoverable); (iii) collecting a citizen’s personal information in violation of applicable rules and regulations when performing a duty or providing services; or (iv) collecting a citizen’s personal information by purchasing, accepting or exchanging such information in violation of applicable rules and regulations.\n\nPursuant to the Order for the Protection of Telecommunication and Internet User Personal Information issued by the MIIT on July 16, 2013, which became effective from September 1, 2013, any collection and use of user personal information must be subject to the consent of the user, abide by the principles of legality, rationality and necessity and be within the specified purposes, methods and scopes. “Personal information” is defined as information that identifies a citizen, the time or location for his/her use of telecommunication and internet services, or involves privacy of any citizen such as his/her birth date, ID card number, and address. An internet information service provider must also keep information collected strictly confidential, and is further prohibited from divulging, tampering or destroying of any such information, or selling or providing such information to other parties. Any violation of the above decision or order may subject the internet information service provider to warnings, fines, confiscation of illegal gains, revocation of licenses, cancellation of filings, closedown of websites or even criminal liabilities.\n\n \n\n88\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nPursuant to the Ninth Amendment to the Criminal Law issued by the SCNPC in August 2015, which became effective in November 2015, any person or entity that fails to fulfill the obligations related to internet information security administration as required by applicable laws and refuses to rectify upon orders is subject to criminal penalty for the result of (i) any dissemination of illegal information in large scale; (ii) any severe effect due to the leakage of the client’s information; (iii) any serious loss of criminal evidence; or (iv) other severe situation, and any individual or entity that (i) sells or provides personal information to others in a way violating the applicable law, or (ii) steals or illegally obtain any personal information is subject to criminal penalty in severe situation.\n\nPursuant to the PRC Cyber Security Law issued by the SCNPC in November 2016, effective in June 2017 and last amended on October 28, 2025 with effect from January 1, 2026, personal information refers to all kinds of information recorded by electronic or otherwise that can be used to independently identify or be combined with other information to identify natural persons’ personal information including but not limited to: natural persons’ names, dates of birth, ID numbers, biologically identified personal information, addresses and telephone numbers, etc. The Cyber Security Law also provides that: (i) to collect and use personal information, network operators shall follow the principles of legitimacy, rightfulness and necessity, disclose their rules of data collection and use, clearly express the purposes, means and scope of collecting and using the information, and obtain the consent of the persons whose data is gathered; (ii) network operators shall neither gather personal information unrelated to the services they provide, nor gather or use personal information in violation of the provisions of laws and administrative regulations or the scopes of consent given by the persons whose data is gathered; and shall dispose of personal information they have saved in accordance with the provisions of laws and administrative regulations and agreements reached with users; (iii) network operators shall not divulge, tamper with or damage the personal information they have collected, and shall not provide the personal information to others without the consent of the persons whose data is collected. However, if the information has been processed and cannot be recovered and thus it is impossible to match such information with specific persons, such circumstance is an exception. On October 28, 2025, the SCNPC amended the PRC Cyber Security Law, which became effective on January 1, 2026, to significantly enhance the legal liabilities of network operators and critical information infrastructure operators, among other changes.\n\nPursuant to the Provisions on Online Protection of Children’s Personal Information issued by the CAC on August 22, 2019, effective from October 1, 2019, network operators, who collect, store, use, transfer and disclose personal information of children under the age of 14, or the Children, via the internet shall establish special rules and user agreements, designate specific personnel to take charge of the protection of Children’s personal information, inform the Children’s guardians in a noticeable and clear manner, and obtain the consent of the Children’s guardians. When obtaining the consent of the Children’s guardians, network operators shall explicitly inform several matters, including but not limited to the purposes, methods and scope of collection, storage, use, transfer and disclosure of the personal information of Children, and methods for correcting and deleting Children’s personal information. The Provisions on Online Protection of Children’s Personal Information also requires that the network operators shall comply with certain regulatory requirements, including without limitation, that network operators shall collect Children’s personal information that is only related to the services they provide, and shall adopt and strictly implement minimal authorization principal with respect to their staff’s access authority to the Children’s personal information.\n\nIn addition, the Identification Method of Illegal Collection and Use of Personal Information Through Apps jointly promulgated by the Secretary Bureau of the CAC, the General Office of the MIIT, the General Office of the Ministry of Public Security and the General Office of the SAMR in November 2019 provides guidance for the regulatory authorities to identify the illegal collection and use of personal information through mobile apps, and for the app operators to conduct self-examination and self-correction and for other participants to voluntarily monitor compliance.\n\nOn May 28, 2020, the National People’s Congress promulgated the PRC Civil Code, which regulates the legal relationships between private parties. The Civil Code took effect on January 1, 2021. Among other provisions, the Civil Code provides that personal information of individuals is protected under the laws, and the collection, storage, use, processing, transmission, provision and disclosure of personal information shall observe the principles of legitimacy, rightfulness and necessity.\n\n \n\n89\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nOn June 10, 2021, the SCNPC promulgated the PRC Data Security Law, or the Data Security Law, which took effect in September 2021. The Data Security Law imposes data security and privacy obligations on entities and individuals carrying out data activities, including but not limited to the collection, storage, use, processing, transmission, provision, and public disclosure of data. The Data Security Law, among other things, provides for a security review procedure for the data activities that may affect national security and imposes export restrictions on certain data and information. Furthermore, the Data Security Law provides that no entity or individual within the territory of the PRC may provide foreign judicial or law enforcement authorities with the data stored within the territory of the PRC without the approval of the competent PRC authorities.\n\nOn July 12, 2021, the MIIT and two other authorities jointly issued the Provisions on the Administration of Security Vulnerabilities of Network Products, or the Provisions. The Provisions state that, no organization or individual may abuse the security vulnerabilities of network products to engage in activities that endanger network security, or to illegally collect, sell, or publish the information on such security vulnerabilities. Anyone who is aware of the aforesaid offences shall not provide technical support, advertising, payment settlement and other assistance to the relevant offenders. According to the Provisions, network product providers, network operators, and platforms collecting network product security vulnerabilities shall establish and improve channels for receiving network product security vulnerability information and keep such channels available, and retain network product security vulnerability information reception logs for at least six months. The Provisions also ban provision of undisclosed vulnerabilities to overseas organizations or individuals other than to the product providers.\n\nOn July 30, 2021, the State Council promulgated the Provisions on Protection of the Security of Critical Information Infrastructure, which took effect on September 1, 2021. Pursuant to the Provisions on Protection of the Security of Critical Information Infrastructure, critical information infrastructure or the CII shall mean any important network facilities or information systems of the important industry or field such as public communication and information service, energy, communications, water conservation, finance, public services, e-government affairs and national defense science, which may endanger national security, people’s livelihood and public interest in case of damage, function loss or data leakage. In addition, relevant administration departments of each critical industry and sector, which are referred to as the “Protection Departments,” shall be responsible for formulating eligibility criteria and identifying the critical information infrastructure operator, or the CIIO, in the respective industry or sector. The CIIOs shall take the responsibility to protect the CII’s security by performing certain prescribed obligations, including conducting network security test and risk assessment, reporting the assessment results to relevant regulatory authorities.\n\nOn August 20, 2021, the SCPNC adopted the Personal Information Protection Law, which became effective on November 1, 2021. The Personal Information Protection Law reiterates the circumstances under which a personal information processor could process personal information and the requirements for such circumstances. The Personal Information Protection Law clarifies the scope of application, the definition of personal information and sensitive personal information, the legal basis of personal information processing and the basic requirements of notice and consent. According to the Personal Information Protection Law, where personal information is processed based on an individual’s consent, such consent shall be voluntarily and explicitly given by the individual on a fully informed basis, and the individual shall have the right to withdraw his or her consent without affecting the effectiveness of personal information processing activities that have been conducted based on his or her consent before. Furthermore, the Personal Information Protection Law clarifies that personal information of minors under the age of fourteen is sensitive information, and such sensitive information may not be processed unless there are specific purposes and sufficient necessity and strict protection measures are taken.\n\n \n\n90\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nOn July 7, 2022, the CAC issued the Measures for Security Assessment of Cross-border Data Transfer, or the Security Assessment Measures, which came into effect on September 1, 2022. Pursuant to the Security Assessment Measures, a data processor shall apply to competent authorities for security assessment prior to transferring any data abroad if the transfer involves (i) important data; (ii) personal information transferred overseas by a CIIO and a data processor that has processed personal information of more than one million individuals; (iii) personal information transferred overseas by a data processor who has already provided personal information of 100,000 persons or sensitive personal information of 100,000 persons overseas since January 1 of the previous year; or (iv) other circumstances as requested by the CAC. Furthermore, on March 22, 2024, the CAC released the Provisions on Promoting and Standardizing Cross-Border Data Flows, which set forth the circumstances exempted from performing the security assessment or filing procedures for cross-border data transfer and further clarify the thresholds and scenarios for data processors to go through these procedures as stipulated under the Security Assessment Measures. As of the date of this annual report, we do not transfer any users’ personal information or important data outside of China.\n\nOn December 8, 2023, the CAC issued the Administrative Measures for Cybersecurity Incident Reporting (Draft for Comment), or the Draft Measures for Incident Reporting, and attached the Classification Guide for Cybersecurity Incidents, or the Classification Guide, and the Information Report Form for Cybersecurity Incidents for public comments. Pursuant to the Draft Measures for Incident Reporting, network operators who build, operate networks or provide services through networks in the PRC shall report incidents that endanger network security in accordance with the Draft Measures for Incident Reporting. Cybersecurity incidents refer to incidents that cause harm to the network and information systems or data therein and have an adverse impact on society caused by human factors, software or hardware defects or failures, natural disasters, etc. The Draft Measures for Incident Reporting classify cybersecurity incidents into four levels: general, serious, material or extremely material. Cybersecurity incidents of serious level or above must be reported to the regulators using the Information Report Form for Cybersecurity Incidents within one hour. If an operator fails to report a cybersecurity incident according to the Draft Measures for Incident Reporting, the cyberspace administration will impose penalties according to the relevant laws and administrative regulations. If material harmful consequences are caused due to the operator’s delay in reporting, omission, false reporting, or concealment of cybersecurity incidents, the operator and the relevant liable persons will be subject to heavier punishments in accordance with applicable law. As of the date of this annual report, this draft has not been formally adopted. Uncertainties exist with respect to the enactment timetable, final content, interpretation and implementation thereof.\n\nOn February 14, 2025, the CAC promulgated the Measures for the Administration of Personal Information Protection Compliance Audits, or the Personal Information Protection Audits Measures, which became effective on May 1, 2025. The Personal Information Protection Audits Measures require personal information processors that conduct their own compliance audits for personal information protection must ensure that either their internal compliance teams or designated external professional organizations perform periodic audits to assess adherence to applicable laws and administrative regulations governing personal information processing. The regulations provide that a personal information processor processing personal information of over 10 million individuals to conduct a compliance audit for personal information protection at least once every two years. Moreover, the CAC and other relevant authorities responsible for personal information protection may mandate that personal information processors engage external professional organizations to conduct compliance audits of their personal information processing activities: (i)when personal information significant risks are identified in personal information processing activities that could severely impact individual rights or indicate a serious lack of security measures; (ii)when processing activities may infringe upon the rights of numerous individuals; or (iii) in the event of a personal information security incident that results in the leakage, alteration, loss, or destruction of personal information of more than one million individuals, or sensitive personal information of over 100,000 individuals.\n\n \n\n91\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nRegulations Relating to Intellectual Property Rights\n\nCopyrights\n\nThe SCNPC adopted the Copyright Law in 1990 and last amended it on November 11, 2020 and became effective on June 1, 2021. The amended Copyright Law extends copyright protection to Internet activities, products disseminated over the Internet and software products. In addition, there is a voluntary registration system administered by the China Copyright Protection Center. The amended Copyright Law also requires registration of a copyright pledge.\n\nDomain Names\n\nManagement of domain names was prescribed by Measures for the Administration of Internet Domain Names of China which was promulgated by the MIIT in 2002 and amended in 2004. It was superseded by Measures for the Administration of Internet Domain Names published in 2017. Pursuant to the 2017 Measures, the establishment of domain name root servers and domain name root server operation institutions, domain name registration management institutions and domain name registration service institutions within the territory of the PRC shall obtain permission from the MIIT or the communications administration department of the province, autonomous region or municipality directly under the central government. The principle of “first come, first serve” is followed for the domain name registration service. After completing the domain name registration, the registrant becomes the holder of the domain name registered by him/it. See “Item 4. Information on the Company — B. Business Overview — Intellectual Property” for more details on the current situation of our domain names.\n\nTrademark\n\nTrademarks are protected by the PRC Trademark Law which was adopted in 1982 and subsequently amended in 1993, 2001, 2013 and 2019 as well as the Implementation Regulation of the PRC Trademark Law adopted by the State Council in 2002 and amended in 2014. The Trademark Office under the State Administration for Industry and Commerce handles trademark registrations and grants a term of ten years to registered trademarks which may be renewed for consecutive ten-year periods upon request by the trademark owner. Trademark license agreements shall be filed with the Trademark Office for record. The PRC Trademark Law has adopted a “first-to-file” principle with respect to trademark registration. In addition, if a registered trademark is recognized as a well-known trademark, the protection of the proprietary right of the trademark holder may reach beyond the specific sector of the relevant products or services. See “Item 4. Information on the Company — B. Business Overview — Intellectual Property” and “Item 3. Key Information — D. Risk Factors — We may encounter disputes from time to time relating to our use of the intellectual property of third parties or allegations of infringement of the intellectual properties of third parties and we may be unable to be authorized to use third-party copyrighted materials.” for further details on our trademarks.\n\n \n\n92\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nRegulations on Foreign Exchange\n\nRegulations on Loans to and Direct Investment in the PRC Entities by Offshore Holding Companies\n\nAccording to the Interim Provisions on the Management of Foreign Debts, promulgated by SAFE, the National Development and Reform Commission and the Ministry of Finance in 2003 and amended in 2022, and Measures for the Administration of the Registration of Foreign Debts, effective on May 13, 2013, loans by foreign companies to their subsidiaries in China, which are FIEs, are considered foreign debt, and such loans must be registered with the local branches of SAFE. Under the provisions, these FIEs must submit registration applications to the local branches of SAFE within 15 days following execution of foreign loan agreements, and the registration should be completed within 20 business days from the date of receipt of the application. In addition, the total amount of accumulated medium-term and long-term foreign debt and the balance of short-term debt borrowed by a foreign-invested enterprise is limited to the difference between the total investment and the registered capital of the foreign-invested enterprise. Total investment of a foreign-invested enterprise is the total amount of capital that can be used for the operation of the foreign-invested enterprise, as approved by the Ministry of Commerce or its local branch, and may be increased or decreased upon approval by the Ministry of Commerce or its local branch. Registered capital of a foreign-invested enterprise is the total amount of capital contributions to the foreign-invested enterprise by its foreign holding company or owners, as approved by the Ministry of Commerce or its local branch and registered at the SAIC or its local branch.\n\nAccording to applicable PRC regulations on FIEs, including but not limited to the Interim Measures for the Administration of the Establishment and Alteration of Archival Filing of Foreign Funded Enterprises, effective on October 8, 2016 and revised on July 30, 2017 and June 29, 2018, capital contributions from a foreign holding company to its PRC subsidiaries, which are considered FIEs, may only be made when approval or filing by the Ministry of Commerce or its local branch has been obtained. In such approval and filing process of capital contributions, the Ministry of Commerce or its local branch examines the business scope of each foreign invested enterprise under review to ensure it complies with the Foreign Investment Industries Guidance Catalog. See “Item 4. Information on the company — B. Business Overview — Regulations Relating to Foreign Investment in Education — Foreign Investment industries Guidance Catalog (2018 Revision)”. The capital contribution of the FIEs falling in the scope of “restricted foreign investment industries” and “prohibited foreign investment industries” shall obtain approval from the Ministry of Commerce or its local branch, while the capital contribution of FIEs falling outside such scopes may file with the Ministry of Commerce or its local branch. On December 30, 2019, Measures for the Reporting of Foreign Investment Information was promulgated by the Ministry of Commerce and SAIC and replaced the Interim Measures for the Administration of the Establishment and Alteration of Archival Filing of Foreign Funded Enterprises. According to the Measures, foreign investors or foreign-funded enterprises shall report investment information to commerce departments through the enterprise registration system and the National Enterprise Credit Information Publicity System, and SAIC and its local branches shall forward the aforesaid investment information reported by foreign investors or foreign-funded enterprises to commerce departments in a timely manner.\n\nOn January 11, 2017, People’s Bank of China promulgated Notice of the People’s Bank of China on Issues Concerning Macro Prudential Management of Full Scale Cross-border Financing, or PBOC Circular 9. According to PBOC Circular 9, People’s Bank of China establishes a cross-border financing regulation system and the legal entities and financial institutions established in PRC excluding government financing vehicles and real estate enterprise, may carry out cross-border financing of foreign currency in accordance with relevant regulations. PBOC Circular 9 provides that, among other things, the outstanding amount of the foreign currency for the entities in cross-border financing, shall be limited to the upper limit of the risk-weighted balance of such entity.\n\nThe enterprise shall, after signing the cross-border financing contract, but not later than three business days before the withdrawal of the borrowing funds, file with the local branches of SAFE for the cross-border financing through SAFE’s capital project information system. PBOC Circular 9 also provides that during the one-year period starting from January 11, 2017, or the Transitional Period, FIEs may choose one method to carry out cross-border financing in foreign currency either according to PBOC Circular 9 or according to the Interim Provisions on the Management of Foreign Debts. After the end of such one-year period, the method of FIEs to carry out cross-border financing in foreign currency will be determined by People’s Bank of China and SAFE.\n\n \n\n93\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nHowever, although the Transitional Period ended on January 10, 2018, as of the date of this annual report, neither PBOC nor SAFE has issued any new regulations regarding the appropriate means of calculating the maximum amount of foreign debt for FIEs. FIEs have only been subject to the net assets limit in calculating the maximum amount of foreign debt they may hold from the date of promulgation of PBOC Circular 9. Further, the Notice of the State Administration of Foreign Exchange on Further Facilitating Cross-border Trade and Investment, promulgated by SAFE on October 23, 2019, or Circular [2019] 28, effective from January 2020 and last amended on December 4, 2023, establishes a pilot program that a non-financial enterprise in pilot regions may register foreign debts up to two times of its net assets with local branch of SAFE, and it then may borrow several tranches of foreign debts within the registered amount, without registration of each foreign debt. Besides, according to the Notice on Adjustment of Macro-prudent Regulation Parameter of Full-coverage Cross-border Financing promulgated by PBOC and SAFE on March 11, 2020, the macro-prudent regulation parameter is increased from one (1) to one and one-fourth (1.25). On April 10, 2020 the SAFE issued the Notice of the SAFE on Optimizing Foreign Exchange Administration to Support the Development of Foreign-related Business, or the SAFE Circular 8. The SAFE Circular 8 provides that under the condition that the use of the funds is genuine and compliant with current administrative provisions on use of capital relating to capital account, enterprises are allowed to use capital under capital account such as capital funds, foreign debts and overseas listings for domestic payment, without submission to the bank prior to each transaction of materials evidencing the veracity of such payment.\n\nSee “Item 3. Key Information — D. Risk Factors — PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of our initial public offering to make loans or additional capital contributions to our PRC subsidiaries and the VIEs, which could harm our liquidity and our ability to fund and expand our business” for further details.\n\nForeign Currency Exchange\n\nPursuant to the Foreign Exchange Administration Rules, as amended, and various regulations issued by SAFE, and other relevant PRC government authorities, Renminbi is freely convertible to the extent of current account items, such as trade and service-related receipts and payments, interest and dividends. Capital account items, such as direct equity investments, loans and repatriation of investment, unless expressly exempted by laws and regulations, still require prior approval from SAFE or its provincial branch for conversion of Renminbi into a foreign currency, such as U.S. dollars, and remittance of the foreign currency outside of China. Payments for transactions that take place within China shall be made in Renminbi. Foreign currency revenue received by PRC companies may be repatriated into China or retained outside of China in accordance with requirements and terms specified by SAFE.\n\nUnder the Foreign Exchange Administration Rules, FIEs in China may, without the approval of SAFE, make a payment from their foreign exchange accounts at designated foreign exchange banks for paying dividends with certain evidencing documents (such as board resolutions, tax certificates), or for trade and services-related foreign exchange transactions by providing commercial documents evidencing such transactions. They are also allowed to retain foreign currency (subject to a cap approval by SAFE) to satisfy foreign exchange liabilities. In addition, foreign exchange transactions involving overseas direct investment or investment and trading in securities, derivative products abroad are subject to registration with SAFE or its local counterparts and approval form or filling with the relevant PRC government authorities (if necessary).\n\n \n\n94\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nIn November 2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment, as amended on May 4, 2015, which substantially amends and simplifies the current foreign exchange procedure. Pursuant to this circular, the opening of various special purpose foreign exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital accounts and guarantee accounts, the reinvestment of Renminbi proceeds derived by foreign investors in China, and remittance of foreign exchange profits and dividends by a foreign-invested enterprise to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible previously. In addition, SAFE promulgated the Provisions on Foreign Exchange Administration over Direct Investment Made by Foreign Investors in China in May 2013, which specifies that the administration by SAFE or its local branches over direct investment by foreign investors in China must be conducted by way of registration and banks must process foreign exchange business relating to the direct investment in China based on the registration information provided by SAFE and its branches. On February 28, 2015, SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment, or SAFE Notice 13. After SAFE Notice 13 became effective on June 1, 2015, instead of applying for approvals regarding foreign exchange registrations of foreign direct investment and overseas direct investment from SAFE, entities and individuals may apply for such foreign exchange registrations from qualified banks. The qualified banks, under the supervision of SAFE, may directly review the applications and conduct the registration.\n\nOn March 30, 2015, SAFE promulgated the Circular of the SAFE on Reforming the Management Approach regarding the Settlement of Foreign Capital of Foreign-invested Enterprise, or Circular 19, which expands a pilot reform of the administration of the settlement of the foreign exchange capitals of FIEs nationwide. Circular 19 came into force and replaced both the Circular of the State Administration of Foreign Exchange on Issues Relating to the Improvement of Business Operations with Respect to the Administration of Foreign Exchange Capital Payment and Settlement of Foreign-invested Enterprises, or Circular 142 and the Circular of the State Administration of Foreign Exchange on Issues concerning the Pilot Reform of the Administrative Approach Regarding the Settlement of the Foreign Exchange Capitals of Foreign-invested Enterprises in Certain Areas, or Circular 36 on June 1, 2015. Circular 19 allows FIEs established in China whose main business is investment to use their foreign exchange capitals to make equity investment and removes certain other restrictions under Circular 142. However, Circular 19 continues to prohibit FIEs from, among other things, using Renminbi fund converted from its foreign exchange capitals for expenditure beyond its business scope and providing entrusted loans or repaying loans between non-financial enterprises.\n\nSAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or Circular 16, effective in June 2016 and last amended on December 4, 2023, which reiterates some of the rules set forth in Circular 19, but compared to Circular 19, Circular 16 provides that discretionary foreign exchange settlement applies to foreign exchange capital, foreign debt offering proceeds and remitted foreign listing proceeds, and the corresponding Renminbi capital converted from foreign exchange are not restricted from extending loans to related parties or repaying the intercompany loans (including advances by third parties).\n\nIn addition, according to Circular [2019] 28, all FIEs to make domestic equity investments using their foreign exchange capitals or Renminbi fund converted from its foreign exchange capitals with limited preconditions. However, there exist substantial uncertainties with respect to the interpretation and implementation in practice with respect to Circular [2019] 28, Circular 16 and other laws and regulations related to foreign currency exchange. Circular 19, Circular 16, Circular [2019] 28 and other related regulations may delay or limit us from using the proceeds of offshore offerings to make additional capital contributions or loans to our PRC subsidiaries and any violations of these circulars could result in severe monetary or other penalties.\n\n \n\n95\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nRegulations Relating to Foreign Exchange Registration of Overseas Investment by PRC Residents\n\nSAFE Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, issued by SAFE and effective on July 4, 2014, regulates foreign exchange matters in relation to the use of special purpose vehicles, or SPVs, by PRC residents or entities to seek offshore investment and financing and conduct round trip investment in China. Under SAFE Circular 37, an SPV refers to an offshore entity established or controlled, directly or indirectly, by PRC residents or entities for the purpose of seeking offshore financing or making offshore investment, using legitimate domestic or offshore assets or interests, while “round trip investment” refers to the direct investment in China by PRC residents or entities through SPVs, namely, establishing FIEs to obtain the ownership, control rights and management rights. SAFE Circular 37 requires that, before making contribution into an SPV, PRC residents or entities are required to complete foreign exchange registration with SAFE or its local branch. In the event of change of basic information such as the individual shareholder, name, operation term, etc., or if there is a capital increase, decrease, equity transfer or swap, merge, spin-off or other amendment of the material items, the PRC residents or entities shall complete foreign exchange alteration registration formality for offshore investment. The SAFE Circular 37 further provides that option or share-based incentive tool holders of a non-listed SPV can exercise the options or share incentive tools to become a shareholder of such non-listed SPV, subject to registration with SAFE or its local branch. In addition, according to the procedural guidelines as attached to SAFE Circular 37, PRC residents or entities are only required to register the SPV directly established or controlled (first level).\n\nOn February 13, 2015, SAFE further promulgated the Circular on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment, or SAFE Circular 13, which took effect on June 1, 2015 and was partially repealed on December 30, 2019. SAFE Circular 13 has amended SAFE Circular 37 by requiring PRC residents or entities to register with qualified banks rather than SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing.\n\nAs of the date of this annual report, all PRC residents known to us that currently hold direct or indirect interests in our company have completed the necessary registrations with SAFE as required by SAFE Circular 37.\n\nRegulations on Stock Incentive Plans\n\nPursuant to the Notice on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of an Overseas Publicly Listed Company, or SAFE Circular 7, issued by SAFE in February 2012, employees, directors, supervisors and other senior management participating in any stock incentive plan of an overseas publicly listed company who are PRC citizens or who are non-PRC citizens residing in China for a continuous period of not less than one year, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be a PRC subsidiary of such overseas listed company or another qualified institution selected by the PRC subsidiary, and complete certain other procedures. In addition, the domestic qualified agent is required to amend the SAFE registration with respect to the stock incentive plan if there is any material change to the stock incentive plan, the PRC agent or other material changes. The domestic qualified agent must, on behalf of the PRC residents who have the right to exercise the employee share options, apply to SAFE or its local branches for an annual quota for the payment of foreign currencies in connection with the PRC residents’ exercise of the employee share options. The foreign exchange proceeds received by the PRC residents from the sale of shares under the stock incentive plans granted and dividends distributed by the overseas listed companies must be remitted into the bank accounts in China opened by the domestic qualified agents before distribution to such PRC residents. Failure to complete the SAFE registrations may be subject to fines and legal sanctions and may also limit the ability to contribute additional capital into wholly foreign-owned subsidiary in China and limit such subsidiary’s ability to distribute dividends.\n\n \n\n96\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nIn addition, the State Administration of Taxation has issued certain circulars concerning employee share options or restricted shares. Under these circulars, the employees working in the PRC who exercise share options or are granted restricted shares will be subject to PRC individual income tax. The PRC subsidiaries of such overseas listed company have obligations to file documents related to employee share options or restricted shares with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options. If the employees fail to pay or the PRC subsidiaries fail to withhold their income taxes according to relevant laws and regulations, the PRC subsidiaries may face sanctions imposed by the tax authorities or other PRC government authorities.\n\nRegulations on Tax\n\nPRC Enterprise Income Tax Law\n\nThe PRC Enterprise Income Tax Law (2008), as last amended from time to time, applies a uniform 25% enterprise income tax rate to both FIEs and domestic enterprises, except where tax incentives are granted to special industries and projects. Under the PRC Enterprise Income Tax Law and its implementation regulations, dividends generated from the business of a PRC subsidiary and payable to its foreign investor may be subject to a withholding tax rate of 10% if the PRC tax authorities determine that the foreign investor is a non-resident enterprise, unless there is a tax treaty with China that provides for a preferential withholding tax rate.\n\nUnder the PRC Enterprise Income Tax Law, an enterprise established outside China with “de facto management bodies” within China is considered a “resident enterprise” for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. A circular issued by the State Administration of Taxation in April 2009 regarding the standards used to classify certain Chinese-invested enterprises controlled by Chinese enterprises or Chinese enterprise groups and established outside of China as “resident enterprises” clarified that dividends and other income paid by such PRC “resident enterprises” will be considered PRC-source income and subject to PRC withholding tax, currently at a rate of 10%, when paid to non-PRC enterprise shareholders. This circular also subjects such PRC “resident enterprises” to various reporting requirements with the PRC tax authorities. Under the implementation regulations to the PRC Enterprise Income Tax Law, a “de facto management body” is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances and properties of an enterprise. In addition, the tax circular mentioned above specifies that certain PRC-invested overseas enterprises controlled by a Chinese enterprise or a Chinese enterprise group in the PRC will be classified as PRC resident enterprises if the following are located or resided in the PRC: (i) senior management personnel and departments that are responsible for daily production, operation and management; (ii) financial and personnel decision making bodies; (iii) key properties, accounting books, the company seal, and minutes of board meetings and shareholders meetings; and (iv) half or more of the senior management or directors who have the voting rights.\n\nPursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, which became effective on December 8, 2006 and applies to income derived in any year of assessment commencing on or after April 1, 2007 in Hong Kong and in any year commencing on or after January 1, 2007 in China, the withholding tax rate in respect to the payment of dividends by a PRC enterprise to a Hong Kong enterprise may be reduced to 5% from a standard rate of 10% if the Hong Kong enterprise is deemed the beneficial owner of any dividend paid by a PRC subsidiary by PRC tax authorities and holds at least 25% of the equity interests in that particular PRC enterprise at all times within the 12-month period immediately before distribution of the dividends. The SAT issued the Announcement of the State Administration of Taxation on Issues concerning “Beneficial Owners” in Tax Treaties, or SAT Announcement 9, which became effective from April 1 2018, replacing Notice on the Interpretation and Recognition of Beneficial Owners in Tax Treaties, or SAT Notice 601, SAT Announcement 9 stipulates that in determining whether a non-resident enterprise has the status as a beneficial owner, comprehensive analysis shall be conducted based on the factors listed therein and the actual circumstances of the specific case shall be taken into consideration. Specifically, it expressly excludes an agent or a designated payee from being considered as a “beneficial owner.”\n\n \n\n97\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nPursuant to the Notice of the State Administration of Taxation on the Issues concerning the Application of the Dividend Clauses of Tax Agreements, or SAT Circular 81, a Hong Kong resident enterprise shall meet the following conditions, among others, in order to apply the reduced withholding tax rate: (i) it shall be a company; (ii) it shall directly own the required percentage of equity interests and voting rights in the PRC resident enterprise; and (iii) it shall have directly owned such required percentage in the PRC resident enterprise throughout the 12 months prior to receiving the dividends. In August 2015, the State Administration of Taxation promulgated the Administrative Measures for Non-Resident Taxpayers to Enjoy Treatment under Tax Treaties, or SAT Circular 60, which became effective on November 1, 2015. SAT Circular 60 provides that non-resident enterprises are not required to obtain pre-approval from the relevant tax authority in order to enjoy the reduced withholding tax. Instead, non-resident enterprises and their withholding agents may, by self-assessment and on confirmation that the prescribed criteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate, and file necessary forms and supporting documents when performing tax filings, which will be subject to post-tax filing examinations by the relevant tax authorities. The State Administration of Taxation promulgated the Administrative Measures for Non-resident Taxpayers to Enjoy Treatment under Treaties, or SAT Circular 35, which became effective on January 1, 2020 and replaced the Circular 60. SAT Circular 35 reiterates that that non-resident enterprises are not required to obtain pre-approval from the relevant tax authority in order to enjoy the reduced withholding tax and may apply the reduced withholding tax rate upon self-assessment. Compared to the SAT Circular 60, the SAT Circular 35 does not require the non-resident enterprises to file the supporting documents when performing tax filing. Instead, the non-resident enterprises are required to retain the supporting documents for the post-tax filing examinations by the relevant tax authorities.\n\nIn January 2009, the State Administration of Taxation promulgated the Provisional Measures for the Administration of Withholding of Enterprise Income Tax for Non-resident Enterprises, or the Non-resident Enterprises Measures, pursuant to which entities that have direct obligation to make certain payments to a non-resident enterprise shall be the relevant tax withholders for such non-resident enterprise. Further, the Non-resident Enterprises Measures provides that, in case of an equity transfer between two non-resident enterprises which occurs outside the PRC, the non-resident enterprise which receives the equity transfer payment shall, by itself or engage an agent to, file tax declaration with the PRC tax authority located at place of the PRC company whose equity has been transferred, and the PRC company whose equity has been transferred shall assist the tax authorities to collect taxes from the relevant non-resident enterprise. On April 30, 2009, the Ministry of Finance and the State Administration of Taxation jointly issued the Notice on Issues Concerning Process of Enterprise Income Tax in Enterprise Restructuring Business, or SAT Circular 59. On December 10, 2009, the State Administration of Taxation issued the Notice on Strengthening the Administration of the Enterprise Income Tax concerning Proceeds from Equity Transfers by Non-resident Enterprises, or SAT Circular 698. Both SAT Circular 59 and SAT Circular 698 became effective retroactively as of January 1, 2008. By promulgating and implementing these two circulars, the PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of equity interests in a PRC resident enterprise by a non-resident enterprise.\n\nOn February 3, 2015, the State Administration of Taxation issued the Announcement of the State Administration of Taxation on Several Issues Concerning the Enterprise Income Tax on Indirect Property Transfer by Non-Resident Enterprises, or SAT Bulletin 7, to supersede existing provisions in relation to the Indirect Transfer as set forth in SAT Circular 698. SAT Bulletin 7 introduces a new tax regime that is significantly different from that under SAT Circular 698. Public Notice extends its tax jurisdiction to capture not only Indirect Transfer as set forth under SAT Circular 698 but also transactions involving transfer of immovable property in China and assets held under the establishment and place, in the PRC of a foreign company through the offshore transfer of a foreign intermediate holding company. SAT Bulletin 7 also addresses transfer of the equity interest in a foreign intermediate holding company widely. In addition, SAT Bulletin 7 provides clearer criteria than SAT Circular 698 on how to assess reasonable commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings. However, it also brings challenges to both the foreign transferor and transferee of the Indirect Transfer as they have to make self-assessment on whether the transaction should be subject to PRC tax and to file or withhold the PRC tax accordingly.\n\n \n\n98\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nPRC Value-added Tax\n\nIn November 2011, the Ministry of Finance and the State Administration of Taxation promulgated the Pilot Plan for Imposition of Value-Added Tax to Replace Business Tax. On January 1, 2012, the State Council officially launched a pilot VAT, reform program, applicable to businesses in selected industries. Businesses in the VAT reform program would pay VAT instead of business tax. The pilot industries in Shanghai included industries involving the leasing of tangible movable property, transportation services, product development and technical services, information technology services, cultural and creative services, logistics and ancillary services, certification and consulting services. According to official announcements made by competent authorities in Beijing and Guangdong province, Beijing launched the same Pilot Program on September 1, 2012, and Guangdong province launched it on November 1, 2012. On May 24, 2013, the Ministry of Finance and the State Administration of Taxation issued the Circular on Tax Policies in the Nationwide Pilot Collection of Value Added Tax In lieu of Business Tax in the Transportation Industry and Certain Modern Services Industries, or the Pilot Collection Circular. The scope of certain modern services industries under the Pilot Collection Circular extends to the inclusion of radio and television services. On August 1, 2013, the VAT reform program was implemented throughout the PRC. On December 12, 2013, the Ministry of Finance and the State Administration of Taxation issued the Circular on the Inclusion of the Railway Transport Industry and Postal Service Industry in the Pilot Collection of Value-added Tax in Lieu of Business Tax, or the 2013 VAT Circular. Among the other things, the 2013 VAT Circular abolished the Pilot Collection Circular, and refined the policies for the VAT reform program. On April 29, 2014, the Ministry of Finance and the State Administration of Taxation issued the Circular on the Inclusion of Telecommunications Industry in the Pilot Collection of Value-added Tax in Lieu of business tax. On March 23, 2016, the Ministry of Finance and the State Administration of Taxation issued the Circular on Comprehensively Promoting the Pilot Program of the Collection of Value-added Tax in Lieu of Business Tax. Effective from May 1, 2016, the PRC tax authorities collect VAT in lieu of business tax on a trial basis within the territory of the PRC, and in industries such as construction industries, real estate industries, financial industries, and living service industries. Pursuant to Circular on Further Clarifying Policies on Reinsurance, Real Estate Leasing and Non-diploma Education in Comprehensively Promoting the Pilot Collection of Value-added Tax in Lieu of Business Tax which came into effect on May 1, 2016, general taxpayers providing non-diploma education services may opt to adopt the simplified method for calculation of tax payable at a rate of 3%. In addition, pursuant to the Announcement on Policies for Deepening the VAT Reform that was issued on March 20, 2019 and came into effect on April 1, 2019, the deduction rates of 16% and 10% applicable to the taxpayers who have VAT taxable sales activities or imported goods are adjusted to 13% and 9%, respectively. On December 25, 2024, the SCNPC promulgated the Value-Added Tax Law of the PRC, which will become effective on January 1, 2026.\n\nRegulations Relating to Employment, Social Insurance and Housing Fund\n\nPursuant to the PRC Labor Law (2018 Revision) and the PRC Labor Contract Law (2012 Revision), a written labor contract shall be executed by employer and an employee when the employment relationship is established. An employer and an employee may enter into a fixed-term labor contract, an un-fixed term labor contract, or a labor contract that concludes upon the completion of certain work assignments, after reaching agreement upon due negotiations. The employer shall also pay severance to an employee where a labor contract, including a contract with an un-fixed term, is terminated or expires except that the termination is required by the employee or the statutory conditions are fulfilled. All employers shall compensate their employees equal to at least the local minimum wage standards. All employers are required to establish a system for labor safety and sanitation, strictly abide by state rules and standards and provide employees with appropriate workplace safety training. In addition, the government has continued to introduce various new labor-related regulations. Among other things, new annual leave requirements mandate that annual leave ranging from 5 to 15 days is available to nearly all employees and further require that the employer compensate an employee for any annual leave days the employee is unable to take in the amount of three times his daily salary, subject to certain exceptions. Moreover, all PRC enterprises are generally required to implement a standard working time system of eight hours a day and forty hours a week, and if the implementation of such standard working time system is not appropriate due to the nature of the job or the characteristics of business operation, the enterprise may implement a flexible working time system or comprehensive working time system after obtaining approvals from the relevant authorities. In addition, employers in China are obliged to pay contributions to the social insurance plan and the housing fund plan for their employees, and such contribution amount payable shall be calculated based on the employee actual salary in accordance with the relevant regulations.\n\n \n\n99\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nM&A Rules and Overseas Listing\n\nThe M&A Rules, were jointly adopted by six PRC regulatory authorities, including the CSRC, on August 8, 2006 and became effective as of September 8, 2006, and were later amended on June 22, 2009. The M&A Rules require, among other things, offshore SPVs, formed for listing purposes through acquisition of PRC domestic companies and controlled by PRC companies or individuals, to obtain the approval of the CSRC prior to publicly listing their securities on an overseas stock exchange.\n\nOn July 6, 2021, the relevant PRC government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law, or the Opinions on Security Activities, which calls for the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies.\n\nOn September 6, 2024, the NDRC and the Ministry of Commerce, jointly issued the 2024 Negative List, which became effective on November 1, 2024. Pursuant to the 2024 Negative List, if a domestic company engaging in the prohibited business stipulated in the 2024 Negative List seeks an overseas offering and listing, it shall obtain the approval from the competent governmental authorities. Besides, the foreign investors of the company shall not be involved in the company’s operation and management, and their shareholding percentages shall be subject, mutatis mutandis, to the relevant regulations on the domestic securities investments by foreign investors.\n\nOn December 24, 2021, the State Council issued a draft of the Provisions of the State Council on the Administration of Overseas Securities Offering and Listing by Domestic Companies, or the Draft Provisions, and the CSRC issued a draft of Administration Measures for the Filing of Overseas Securities Offering and Listing by Domestic Companies, or the Draft Administration Measures, for public comments. According to the Draft Provisions and the Draft Administration Measures, the overseas offering and listing by a domestic company, whether directly or indirectly, shall be filed with the CSRC. Specifically, the determination of an indirect offering and listing will be conducted on a “substance over form” basis, and an offering and listing shall be considered as an indirect overseas offering and listing by a domestic company if the issuer meets the following conditions: (i) the operating income, gross profit, total assets, or net assets of the domestic enterprise in the most recent fiscal year was more than 50% of the relevant line item in the issuer’s audited consolidated financial statement for that year; and (ii) senior management personnel responsible for business operations and management are mostly PRC citizens or are ordinarily resident in the PRC, and the main place of business is in the PRC or carried out in the PRC. According to the Draft Administration Measures, an overseas offering and listing is prohibited under any of the following circumstances: (i) if the intended securities offering and listing is specifically prohibited by national laws and regulations and relevant provisions; (ii) if the intended securities offering and listing may constitute a threat to or endangers national security as reviewed and determined by competent authorities under the State Council in accordance with law; (iii) if there are material ownership disputes over the equity, major assets, and core technology, etc. of the issuer; (iv) if, in the past three years, the domestic enterprise or its controlling shareholders or actual controllers have committed corruption, bribery, embezzlement, misappropriation of property, or other criminal offenses disruptive to the order of the socialist market economy, or are currently under judicial investigation for suspicion of criminal offenses, or are under investigation for suspicion of major violations; (v) if, in past three years, directors, supervisors, or senior executives have been subject to administrative punishments for severe violations, or are currently under judicial investigation for suspicion of criminal offenses, or are under investigation for suspicion of major violations; (vi) other circumstances as prescribed by the State Council.\n\n \n\n100\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nAccording to the Draft Administration Measures, the issuer or its affiliated domestic company, as the case may be, shall file with the CSRC (i) with respect to its initial public offering and listing within three business days, after its initial filing of the listing application to the regulator in the place of the intended listing, (ii) with respect to its follow-on offering within three business days after completion of the follow-on offering, (iii) with respect to its follow-on offering for purpose of acquiring specific assets, within three business days after the first public announcement of the transaction, and (iv) with respect to listing by means of reverse takeover, share swap, acquisition and similar transactions, within three business days after its initial filing of the listing application or the first public announcement of the transaction, as the case may be. Non-compliance with the Draft Administration Measures or an overseas listing completed in breach of Draft Administration Measures may result in a warning on the relevant domestic companies or a fine of 1-10 million RMB on them. If the circumstances are serious, they may be ordered to suspend their business or suspend their business pending rectification, or their permits or businesses license may be revoked. Furthermore, the controlling shareholder, actual controllers, directors, supervisors, and other legally appointed persons of the domestic enterprises may be warned, or fined between 500,000 - 5 million RMB either individually or collectively.\n\nOn February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Overseas Listing Trial Measures and five supporting guidelines, which came into effect on March 31, 2023. According to the Overseas Listing Trial Measures, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedure and report relevant information to the CSRC; if a domestic company fails to complete the filing procedure or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties, such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines; (2) if the issuer meets both of the following conditions, the overseas offering and listing shall be determined as an indirect overseas offering and listing by a domestic company: (i) any of the total assets, net assets, revenues or profits of the domestic operating entities of the issuer in the most recent accounting year accounts for more than 50% of the corresponding figure in the issuer’s audited consolidated financial statements for the same period; (ii) its major operational activities are carried out in China or its main places of business are located in China, or the senior managers in charge of operation and management of the issuer are mostly Chinese citizens or are domiciled in China; and (3) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and where an issuer makes an application for listing in an overseas market, the issuer shall submit filings with the CSRC within three business days after such application is submitted.\n\nOn the same day, the CSRC also held a press conference for the release of the Overseas Listing Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, clarifies that the domestic companies that have already been listed overseas on or before the effective date of the Overseas Listing Trial Measures (i.e. March 31, 2023) shall be deemed as existing issuers, or the Existing Issuers. Existing Issuers are not required to complete the filling procedures, and they shall be required to file with the CSRC when subsequent matters such as refinancing are involved.\n\nAccording to the Overseas Listing Trial Measures, an overseas listed company shall file with the CSRC within three business days after the completion of its subsequent securities offering on the same market, and an overseas listed company shall file with the CSRC within three business days after its application of its offering and listing on a different market. If an overseas listed company purchase PRC domestic assets through a single or multiple acquisitions, share swaps, shares transfers or other means, and such purchase constitutes direct or indirect listing of PRC domestic assets, a filing with the CSRC is also required. In addition, an overseas listed company is required to report to the CSRC the occurrence of any of the following material events within three business days after the occurrence and announcement thereof: (i) a change of control of the listed company; (ii) the investigation, sanction or other measures undertaken by any foreign securities regulatory agencies or relevant competent authorities in respect of the listed company; (iii) a change of listing status or transfer of listing segment; and (iv) the voluntary or mandatory delisting of the listed company. If there is any material change of the principal business of the listed company after the overseas offering and listing so that the listed company is no longer required to file with the CSRC, it shall file a specific report and a legal opinion issued by a domestic law firm to the CSRC within three business days after the occurrence hereof.\n\n \n\n101\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nOn February 24, 2023, the CSRC and certain other PRC regulatory authorities promulgated the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, or the Confidentiality and Archives Administrative Provisions, which came into effect on March 31, 2023. Pursuant to the Confidentiality and Archives Administrative Provisions, a PRC domestic enterprise that seeks overseas offering and listing, whether directly or indirectly through an overseas listed entity, must strictly abide by applicable PRC laws and regulations, including by enhancing legal awareness in relation to keeping state secrets and strengthening its archives administration, instituting a sound confidentiality and archives administration system, and taking necessary measures to fulfill confidentiality and archives administration obligations. Where a PRC domestic company, either directly or through its overseas listed entity, publicly discloses or provides to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, it must first obtain approval from competent authorities according to law, and make certain filings with the secrecy administrative department at the same level. In the event that such documents and materials, if leaked, would be detrimental to national security or public interest, the PRC domestic company must strictly complete the relevant procedures as stipulated by applicable national regulations. Where a PRC domestic company, after completing the relevant procedures, provides to securities companies, securities service providers or other entities with any documents and materials that contain state secrets or working secrets of government agencies, or any other documents and materials that would be detrimental to national security or public interest if leaked, a non-disclosure agreement must be signed between the provider and receiver of such information according to the relevant PRC laws and regulations, which must specify, among others, the obligations and liabilities on confidentiality held by such securities companies and securities service providers. Specifically, when a PRC domestic company provides accounting archives or copies of accounting archives to any entities including securities companies, securities service providers or overseas regulators and individuals, it must complete the due procedures in compliance with applicable national regulations.\n\nC. Organizational Structure\n\nThe chart below summarizes our corporate structure and identifies our subsidiaries, the VIEs and their shareholders as of May 31, 2026:\n\n \n\n \n\n(1) Mr. Peiqing Tian and Mr. Peihua Tian, hold 99.99% and 0.01% equity interest in Shanghai Luoliang Network Technology Co., Ltd., respectively.\n\n(2) Mr. Peiqing Tian and Ms. Suhua Zhu, hold 70% and 30% equity interests in Shanghai Four Seasons Education Investment Management Co., Ltd., respectively.\n\n \n\n102\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\n(3) Wuyuan Sijijiaozhong Tourism Inv Mgt Co., Ltd., Shanghai Four Seasons Education Investment Management Co., Ltd., and Shanghai Luoliang Network Technology Co., Ltd. hold 45.59%, 36.76% and 17.65% equity interests in Wuyuan Siji Gongda Study Camp Travel Development Co., Ltd., respectively.\n\n(4) 8 companies that operate in the fields including educational tourism and planning, enrichment learning services, faculty training, investment management, and management consulting.\n\n(5) 19 companies that operate in the fields including educational technology, tourism, education-related services, study trip development, culture development, corporate management, and publications.\n\nContractual Arrangements with the VIEs, Their Shareholders and Us\n\nPRC laws and regulations place certain restrictions on direct foreign investment ownership of China-based companies, and also places separate restrictions on foreign investment in the private education businesses. Accordingly, we conduct operations in the PRC principally through contractual arrangements among (i) our WFOE, namely Shanghai Fuxi Information Technology Service Co., Ltd., or Shanghai Fuxi, (ii) the consolidated variable interest entities, or the VIEs, namely Shanghai Luoliang Network Technology Co., Ltd.\nand Shanghai Four Seasons Education Investment Management Co., Ltd., limited liability companies established under PRC law, and their subsidiaries, and (iii) the shareholders of the VIEs, which provides investors with exposure to foreign investment in the Chinese operating companies.\n\nOur reference to control over the VIEs and our position of being the primary beneficiary of the VIEs for the accounting purposes are strictly in the context of the conditions that we met for consolidation of the VIEs under U.S. GAAP. Such conditions include that (i) we have the power to govern the activities which most significantly impact the VIEs’ economic performance, (ii) we are contractually obligated to absorb losses of the VIEs that could potentially be significant to the VIEs, and (iii) we are entitled to receive benefits from the VIEs that could potentially be significant to the VIEs. Only if we meet the aforementioned conditions for consolidation of the VIEs under U.S. GAAP, we will be deemed as the primary beneficiary of the VIEs, and the VIEs will be consolidated in our consolidated financial statements for accounting purposes.\n\nWFOE has entered into the following contractual arrangements with the VIEs and their shareholders, that enable the Company to (i) have power to direct the activities that most significantly affect the performance of the VIEs, and (ii) receive the benefits of the VIEs that could be significant to the VIEs. The Company is fully and exclusively responsible for the management of the VIEs, absorbs all risk of losses of the VIEs, and has the exclusive right to exercise all voting rights of the VIE shareholders. Therefore, the Company, through its WFOE, Shanghai Fuxi, has been determined to be the primary beneficiary of the VIEs and has consolidated the VIEs’ financial results of operations, assets and liabilities and cash flows in the Company’s consolidated financial statements.\n\nIn the opinion of Fangda Partners, our PRC counsel, save for the uncertainties disclosed in this annual report:\n\n•\nthe ownership structure of Shanghai Fuxi and the VIEs does not violate applicable PRC laws and regulations currently in effect; and\n\n•\nthe contractual arrangements between Shanghai Fuxi, the VIEs and their respective shareholders governed by PRC law currently are valid and binding.\n\nHowever, there are substantial uncertainties regarding the interpretation and application of current and future PRC laws and regulations, and there can be no assurance that the PRC government will take a view that is not contrary to or otherwise different from the opinion of our PRC counsel. If the PRC government finds that the agreements that establish the structure for operating our business do not comply with PRC government restrictions on foreign investment in the business we engage in, we could be subject to severe penalties, including being prohibited from continuing operations. See “Item 3. Key Information — D. Risk Factors — Risks Related to Our Corporate Structure — Our business is subject to extensive regulation in the PRC. If the PRC government finds that the contractual arrangement that establishes our corporate structure for operating our business does not comply with applicable PRC laws and regulations, we could be subject to severe penalties.” and “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in the PRC — Uncertainties with respect to the PRC legal system could have a material adverse effect on us.”\n\n \n\n103\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nFurthermore, if the VIEs and their shareholders fail to perform their obligations under the contractual arrangements, we may be limited in our ability to enforce such contractual arrangements that give us effective control. If we are unable to maintain effective control over the VIEs, we would not be able to continue to consolidate their financial results in our consolidated financial statements. In the 2024, 2025 and 2026 fiscal years, substantially all of our revenue was derived from the operations of the VIEs. We rely on dividends and other distributions paid to us by our WFOE, Shanghai Fuxi, which in turn depends on the service fees paid to Shanghai Fuxi by the VIEs. There are significant PRC legal restrictions on the payment of dividends by PRC companies and restrictions on foreign exchange control and foreign investments, all of which may adversely affect our ability to access the revenue of Shanghai Fuxi and the VIEs. In the 2026 fiscal year, Shanghai Fuxi received service fees of RMB9.8 million (US$1.4 million) from the VIEs and did not distribute any dividends. Notwithstanding our business decisions to continue to invest and expand our PRC operations and launching new programs, our WFOE may receive service fees from the VIEs or make distributions to us in the future.\n\nBelow is a summary of the contractual arrangements by and among our WFOE, Shanghai Fuxi, each of the VIEs, and their shareholders.\n\nExclusive Service Agreement\n\nPursuant to the exclusive service agreement, Shanghai Fuxi has the exclusive right to provide or designate any third party to provide technical services and management and consulting services to the VIEs. In exchange, the VIEs pay annual service fees to Shanghai Fuxi in an amount at Shanghai Fuxi’s discretion. Without the prior written consent of Shanghai Fuxi, the VIEs cannot accept services provided by or establishing similar corporation relationship with any third party. Shanghai Fuxi owns the exclusive intellectual property rights created as a result of the performance of this agreement unless otherwise provided by PRC laws or regulations. The agreement will remain effective unless terminated upon the full exercise of call option in accordance with the exclusive call option agreement or unilaterally terminated by Shanghai Fuxi with a notice 30 days in advance. Unless otherwise required by applicable PRC laws, the VIEs do not have any right to terminate the exclusive service agreement.\n\nExclusive Call Option Agreement\n\nPursuant to the call option agreement, the shareholders of the VIEs unconditionally and irrevocably granted Shanghai Fuxi or its designated third party exclusive call options to purchase from the shareholder part or all of its equity interests in the VIEs, as the case may be, at the nominal price or for the minimum amount of consideration permitted by the applicable PRC laws and regulations. Such shareholder will not grant a similar right or transfer any of the equity interests in the VIEs to any party other than Shanghai Fuxi or its designee, nor will it pledge, create or permit any security interest or similar encumbrance to be created on any of the equity interests. Shanghai Fuxi has sole discretion to decide when to exercise the option, and whether to exercise the option in part or in full. The agreement will remain effective unless terminated upon the full exercise of call option or unilaterally terminated by Shanghai Fuxi with a notice 30 days in advance.\n\n \n\n104\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nEquity Pledge Agreement\n\nPursuant to the equity pledge agreement, the shareholders of the VIEs unconditionally and irrevocably pledged all of its equity interests in the VIEs to Shanghai Fuxi, to respectively guarantee the performance of the VIEs of their obligations under the relevant contractual agreements. Should the VIEs or their shareholder breach or default under any of the contractual arrangements, Shanghai Fuxi has the right to require the transfer of the pledged equity interests to itself or its designee, to the extent permitted by PRC law, or require an auction or sale of the pledged equity interests and has priority in any proceeds from the auction or sale of such pledged interests. Moreover, Shanghai Fuxi has the right to collect any and all dividends in respect of the pledged equity interests during the term of the pledge. Without the prior written consent of Shanghai Fuxi, the shareholders of the VIEs shall not transfer or dispose the pledged equity interests or create or allow any encumbrance on the pledged equity interests that would prejudice Shanghai Fuxi’s interest. Unless the VIEs have fully performed all of their obligations in accordance with the contractual agreements, or the pledged equity interests have been fully transferred to Shanghai Fuxi or its respective designee in accordance with the exclusive call option agreement, or unilaterally terminated by Shanghai Fuxi with a 30-day prior notice, the equity interest pledge agreement will continue to remain in effect.\n\nThe shareholders of the VIEs have registered the equity pledge in favor of Shanghai Fuxi with the local counterpart of the State Administration for Industry and Commerce in accordance with PRC laws and regulations.\n\nShareholder Voting Rights Proxy Agreement and Irrevocable Power of Attorney\n\nThe shareholders of the VIEs have each executed a shareholder voting rights proxy agreement appointing Shanghai Fuxi, or any person designated by Shanghai Fuxi, as their proxy to act for all matters pertaining to such shareholding and to exercise all of their rights as shareholders, including but not limited to attending shareholders’ meetings and designating and appointing directors, supervisors, the chief executive officer and other senior management members, and selling, transferring, pledging or disposing the equity interests of the VIEs. Shanghai Fuxi may authorize or assign its rights to any other person or entity at its sole discretion without prior notice to or prior consent from the shareholders of the VIEs. The agreement will remain effective unless Shanghai Fuxi terminates the agreement by written notice or terminated upon the full exercise of call option in accordance with the exclusive call option agreement.\n\nSpousal Consent Letter\n\nPursuant to the spousal consent letter executed by the spouse of the shareholders of our VIEs, each of such spouse unconditionally and irrevocably agreed to the execution of exclusive service agreement, exclusive call option agreement, shareholder voting rights proxy agreement and irrevocable power of attorney and equity pledge agreement described above by the applicable shareholder. They further undertake not to make any assertions in connection with the equity interests of the VIEs held by the applicable shareholder, and confirm that the shareholder can perform the relevant transaction documents described above and further amend or terminate such transaction documents without the authorization or consent from such spouse. The spouse of each applicable shareholder agrees and undertakes that if he/she obtains any equity interests of the VIE held by the applicable shareholder for any reasons, he/she would be bound by the transaction documents described above and the amended and restated exclusive service agreement between Shanghai Fuxi and the VIE. The valid term of spousal consent letter is same as the term of the exclusive call option agreement.\n\nD. Property, Plants and Equipment\n\nOur headquarters are located in Shanghai, China. We lease our headquarters, which occupies approximately 1,083 square meters.\n\n \n\n105\n\n \n\n[Table of Contents](#toc_page)\n\n \n\n \n\nOur education service operations were conducted through a combination of leased and owned properties in China. We lease learning centers with an aggregate of approximately 5,300 square meters throughout China as of the date of this annual report, with most lease terms ranging from one to five years. In addition, we acquired land use right of a parcel for approximately 9,499 square meters, and land use right of a property for approximately 5,655.6 square meters, in Tongling, Anhui on August 1, 2020, as capital contribution of certain shareholders with a consideration of RMB3.2 million and RMB8.5 million, respectively.\n\nOn January 21, 2022 and January 24, 2022, we acquired land use rights of two parcels in Wuyuan, Jiangxi for the construction of study camps, at total cost of approximately RMB15.5 million for approximately 45,535.3 square meters. We entered into a number of agreements, at total cost of approximately RMB135.4 million for the development of the two parcels. The construction of the study camps has been successfully completed and is now fully operational."}