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Sunlands Technology Group

Sunlands Technology GroupSTG決算レポート

NYSE

STG Partners, LLC (STG) is an American private equity firm and based in Menlo Park, California. Its predecessor, Symphony Technology Group ("Symphony") was founded in 2002 by Romesh Wadhwani, William Chisholm, and Bryan Taylor. In 2017, Symphony was reorganized as STG Partners. As of March 2025, STG Partners managed approximately $12 billion in 19 pooled investment vehicle for its clients. The firm itself has less than one billion dollars in assets.

What changed in Sunlands Technology Group's 20-F — 2022 vs 2023

Top changes in Sunlands Technology Group's 2023 20-F

562 paragraphs added · 576 removed · 490 edited across 4 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

261 edited+39 added−55 removed599 unchanged
The VIEs are owned by certain nominee shareholders, not us. Most of the nominee shareholders of the VIEs are also beneficial owners of our company. Investors in our ADSs are purchasing equity securities of a Cayman Islands holding company rather than equity securities issued by our subsidiaries and the VIEs.
The VIEs are owned by certain nominee shareholders, not us. Most of the nominee shareholders of the VIEs are also beneficial owners of our company. Investors in the ADSs are purchasing equity securities of a Cayman Islands holding company rather than equity securities issued by our subsidiaries and the VIEs.
Our ADSs may decline in value or become worthless if we are unable to effectively enforce our contractual control rights over the assets and operations of the VIEs that conduct a significant portion of the Group’s business in China. See “Item 3. Key Information—3.D. Risk Factors—Risks Related to Our Corporate Structure” for detailed discussion.
The ADSs may decline in value or become worthless if we are unable to effectively enforce our contractual control rights over the assets and operations of the VIEs that conduct a significant portion of the Group’s business in China. See “Item 3. Key Information—3.D. Risk Factors—Risks Related to Our Corporate Structure” for detailed discussion.
Risk Factors—Risks Related to the Group’s Business—The Group faces regulatory risks and uncertainties with respect to the licensing requirement for the online transmission of internet audio-visual programs,” “Item 3. Key Information—3.D.
Key Information—3.D. Risk Factors—Risks Related to the Group’s Business—The Group faces regulatory risks and uncertainties with respect to the licensing requirement for the online transmission of internet audio-visual programs,” “Item 3. Key Information—3.D.
If the foreign exchange control system prevents the Group from obtaining sufficient foreign currencies to satisfy the Group’s foreign currency demands, the Group may not be able to pay dividends in foreign currencies to our offshore intermediary holding companies or ultimate parent company, and therefore, our shareholders or investors in our ADSs.
If the foreign exchange control system prevents the Group from obtaining sufficient foreign currencies to satisfy the Group’s foreign currency demands, the Group may not be able to pay dividends in foreign currencies to our offshore intermediary holding companies or ultimate parent company, and therefore, our shareholders or investors in the ADSs.
These factors include, among other things, (i) reduced interest in the degrees, diplomas, certifications, professions, skills or interests for which our course offerings are designed; (ii) negative publicity or perceptions regarding us, or online education services in general; (iii) the emergence of alternative course delivery models; (iv) the inability of students to pay the tuition; (v) increasing market competition, particularly price reductions by competitors that the Group is unable or unwilling to match; and (vi) adverse changes in relevant government policies or general economic conditions.
These factors include, among other things, (i) reduced interest in the interests, certifications, professions, skills, degrees or diplomas for which our course offerings are designed; (ii) negative publicity or perceptions regarding us, or online education services in general; (iii) the emergence of alternative course delivery models; (iv) the inability of students to pay the tuition; (v) increasing market competition, particularly price reductions by competitors that the Group is unable or unwilling to match; and (vi) adverse changes in relevant government policies or general economic conditions.
The Group has been and may continue to be involved in legal and other disputes in the ordinary course of business operations. For example, we and certain of our directors and officers have been named as defendants in a class action lawsuit. For details, see “Item 8. Financial Information—A.
The Group has been and may continue to be involved in legal and other disputes in the ordinary course of business operations. For example, we and certain of our directors and officers have been named as defendants in a class action lawsuit. For details, see “Item 8. Financial Information—8.A.
On 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, effective on March 31, 2023.
On 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, effective on March 31, 2023.
If the Group fails to complete the filing with the CSRC in a timely manner or at all, for any future offerings, listing or any other capital raising activities, which are subject to the filings under the Overseas Listing Trial Measures, due to the Group’s contractual arrangements, our ability to raise or utilize funds could be materially and adversely affected, and we may even need to unwind the Group’s contractual arrangements or restructure our business operations to rectify the failure to complete the filings.
If the Group fails to complete the filing with the CSRC in a timely manner or at all, for any future offerings, listing or any other capital raising activities, which are subject to the filings under the Overseas Listing Trial Measures, due to the Group’s contractual arrangements, our ability to raise or utilize funds could be materially and adversely affected, and we may even need to unwind the Group’s contractual arrangements or restructure the Group’s business operations to rectify the failure to complete the filings.
Any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless.
Any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless.
The enforcement of laws and rules and regulations in China may change quickly with little advance notice, which could result in a material adverse change in the Group’s operations and the value of our ADSs.” Any such action, once taken by the PRC government, could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or in extreme cases, become worthless.
The enforcement of laws and rules and regulations in China may change quickly with little advance notice, which could result in a material adverse change in the Group’s operations and the value of the ADSs.” Any such action, once taken by the PRC government, could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or in extreme cases, become worthless.
There is no certainty that we will be able to list our ADSs on a non-U.S. exchange or that a market for our shares will develop outside of the U.S. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.
There is no certainty that we will be able to list the ADSs on a non-U.S. exchange or that a market for our shares will develop outside of the U.S. The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.
In addition to market and industry factors, the price and trading volume for the ADSs may be highly volatile for factors specific to our own operations, including the following: • variations in our revenues, earnings and cash flows; • announcements of new investments, acquisitions, strategic partnerships or joint ventures by the Group or our competitors; • announcements of new offerings, solutions and expansions by the Group or our competitors; • changes in financial estimates by securities analysts; • detrimental adverse publicity about the Group, the Group’s services or the Group’s industry; • announcements of new regulations, rules or policies relevant for our business; 50 • additions or departures of key personnel; • release of lockup or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; • potential litigation or regulatory investigations; • allegations of a lack of effective internal control over financial reporting resulting in financial; inadequate corporate governance policies, or allegations of fraud, among other things, involving China-based issuers; and • any of these factors may result in large and sudden changes in the volume and price at which the ADSs will trade.
In addition to market and industry factors, the price and trading volume for the ADSs may be highly volatile for factors specific to our own operations, including the following: • variations in our revenues, earnings and cash flows; • announcements of new investments, acquisitions, strategic partnerships or joint ventures by the Group or our competitors; • announcements of new offerings, solutions and expansions by the Group or our competitors; • changes in financial estimates by securities analysts; • detrimental adverse publicity about the Group, the Group’s services or the Group’s industry; • announcements of new regulations, rules or policies relevant for the Group’s business; • additions or departures of key personnel; • release of lockup or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; • potential litigation or regulatory investigations; • allegations of a lack of effective internal control over financial reporting resulting in financial; inadequate corporate governance policies, or allegations of fraud, among other things, involving China-based issuers; and • any of these factors may result in large and sudden changes in the volume and price at which the ADSs will trade.
Risk Factors—Risks Related to Doing Business in China—The approval, filing or other requirements of the China Securities Regulatory Commission or other PRC government authorities may be required under PRC law in connection with our issuance of securities overseas, and if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing or other requirements.” Transfer of Funds and Other Assets Under relevant PRC laws and regulations, we are permitted to remit funds to the VIEs through loans rather than capital contributions.
Risk Factors—Risks Related to Doing Business in China—The approval, filing or other requirements of the China Securities Regulatory Commission or other PRC government authorities may be required under PRC law in connection with our issuance of securities overseas, and if required, we cannot predict whether or for how long the Group will be able to obtain such approval or complete such filing or other requirements.” Transfer of Funds and Other Assets Under relevant PRC laws and regulations, we are permitted to remit funds to the VIEs through loans rather than capital contributions.
Moreover, claims or allegations that the Group has failed to adequately protect users’ data, or otherwise violated applicable privacy, cybersecurity, data security and personal information protection laws, regulations, policies, contractual provisions, industry 30 standards, or other requirements, may result in damage to the Group’s reputation and a loss of confidence in the Group by users or partners, potentially causing the Group to lose users, business partners and revenues, which could have a material adverse effect on the Group’s business, financial condition and results of operations.
Moreover, claims or allegations that the Group has failed to adequately protect users’ data, or otherwise violated applicable privacy, cybersecurity, data security and personal information protection laws, regulations, policies, contractual provisions, industry standards, or other requirements, may result in damage to the Group’s reputation and a loss of confidence in the Group by users or partners, potentially causing the Group to lose users, business partners and revenues, which could have a material adverse effect on the Group’s business, financial condition and results of operations.
For example, the Self-taught Higher Education Examination, or the STE, a state-administered exam in China for learners pursuing associate diplomas or bachelor’s degrees, was postponed by the Ministry of Education of the PRC in April 2022 and October 2022 in some cities as a result of the recurrence of the COVID-19 pandemic, resulting in postponement in enrollments for the Group’s STE courses, which have historically represented a significant portion of the Group’s net revenues, gross billings and new student enrollments of the Group’s online course offerings.
For example, the Self-taught Higher Education Examination, or the STE, a state-administered exam in China for learners pursuing associate diplomas or bachelor’s degrees, was postponed by the Ministry of Education of the PRC in April 2022 and October 2022 in some cities as a result of the recurrence of the COVID-19 pandemic, resulting in postponement in enrollments for the Group’s 37 STE courses, which have historically represented a significant portion of the Group’s net revenues, gross billings and new student enrollments of the Group’s online course offerings.
Risk Factors—Risks Related to the Group’s Business—the Group is subject to a variety of laws and other obligations regarding data protection, and any failure to comply with applicable laws and obligations could have a material adverse effect on the Group’s business, financial condition and results of operations”, Sunlands Technology Group, our subsidiaries and the VIEs are not covered by permission requirements from the CAC (i) to conduct a security offering or maintain our listing status on the NYSE, or (ii) to conduct business operations, on the following grounds: (i) our PRC legal counsel has consulted the competent government authorities which acknowledged that, under the currently effective PRC laws and regulations, a company that has been listed on a foreign stock exchange before the promulgation of the Revised Cybersecurity Review Measures is not required to go through a cybersecurity review by the CAC to conduct a securities offering or to maintain its listing status on the foreign stock exchange on which its securities have been listed; (ii) as of the date of this annual report, none of Sunlands Technology Group, our subsidiaries and the VIEs has been identified by any PRC governmental authority as a “critical information infrastructure operator” that will be subject to the CAC’s cybersecurity review requirements.
Risk Factors—Risks Related to the Group’s Business—The Group is subject to a variety of laws and other obligations regarding data protection, and any failure to comply with applicable laws and obligations could have a material adverse effect on the Group’s business, financial condition and results of operations,” Sunlands Technology Group, our subsidiaries and the VIEs are not covered by permission requirements from the CAC (i) to conduct a security offering or maintain our listing status on the NYSE, or (ii) to conduct business operations, on the following grounds: (i) our PRC legal counsel has consulted the competent government authorities which acknowledged that, under the currently effective PRC laws and regulations, a company that has been listed on a foreign stock exchange before the promulgation of the Revised Cybersecurity Review Measures is not required to go through a cybersecurity review by the CAC to conduct a securities offering or to maintain its listing status on the foreign stock exchange on which its securities have been listed; (ii) as of the date of this annual report, none of Sunlands Technology Group, our subsidiaries and the VIEs has been identified by any PRC governmental authority as a “critical information infrastructure operator” that will be subject to the CAC’s cybersecurity review requirements.
If we proceed with any of such offering or maintain the listing status of our ADSs without obtaining the CSRC’s approval to the extent it is required, or if the Group is unable to comply with any new approval or filing requirements which might be adopted for offerings that we have completed prior to the effective date of the Overseas Listing Trial Measures, the Group may face regulatory actions or other sanctions from the CSRC or other PRC regulatory agencies.
If we proceed with any of such offering or maintain the listing status of the ADSs without obtaining the CSRC’s approval to the extent it is required, or if the Group is unable to comply with any new approval or filing requirements which might be adopted for offerings that we have completed prior to the effective date of the Overseas Listing Trial Measures, the Group may face regulatory actions or other sanctions from the CSRC or other PRC regulatory agencies.
Fraud or other misconducts by students, employees or third parties may also involve engaging in unauthorized misrepresentation to the Group’s potential students and misappropriating third-party intellectual property and other propitiatory rights during marketing activities, misusing sensitive personal information of students, and engaging in bribery or other unlawful payments, any of which could result in customer complaints, regulatory and legal liabilities, as well as serious harm to the Group’s brand and reputation.
Fraud or other misconducts by students, employees or third parties may also involve engaging in unauthorized misrepresentation to the Group’s potential students and misappropriating third-party intellectual property and other propitiatory rights during marketing activities, misusing sensitive personal information 33 of students, and engaging in bribery or other unlawful payments, any of which could result in customer complaints, regulatory and legal liabilities, as well as serious harm to the Group’s brand and reputation.
Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of these subsidiaries in the PRC, including Hong Kong, to make payments to us could have a material and adverse effect on our ability to conduct business.” For the purpose of illustration, the below table reflects the hypothetical taxes that might be required to be paid within China, assuming that: (i) we have taxable earnings, and (ii) we determine to pay a dividend in the future: Taxation Scenario (1) Statutory Tax and Standard Rates Hypothetical pre-tax earnings (2) 100 % Tax on earnings at statutory rate of 25% (3) (25 )% Net earnings available for distribution 75 % Withholding tax at standard rate of 10% (4) (7.5 )% Net distribution to Parent/Shareholders 67.5 % Notes: (1) The tax calculation has been simplified for the purpose of this example.
Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of these subsidiaries in the PRC, including Hong Kong, to make payments to us could have a material and adverse effect on our ability to conduct the Group’s business.” For the purpose of illustration, the below table reflects the hypothetical taxes that might be required to be paid within China, assuming that: (i) we have taxable earnings, and (ii) we determine to pay a dividend in the future: 11 Taxation Scenario (1) Statutory Tax and Standard Rates Hypothetical pre-tax earnings (2) 100 % Tax on earnings at statutory rate of 25% (3) (25 )% Net earnings available for distribution 75 % Withholding tax at standard rate of 10% (4) (7.5 )% Net distribution to Parent/Shareholders 67.5 % Notes: (1) The tax calculation has been simplified for the purpose of this example.
The Group could face material and adverse tax consequences if the PRC tax authorities determine that the VIE contractual 39 arrangements were not entered into on an arm’s-length basis in such a way as to result in an impermissible reduction in taxes under applicable PRC laws, rules and regulations, and adjust the income of the VIEs in the form of a transfer pricing adjustment.
The Group could face material and adverse tax consequences if the PRC tax authorities determine that the VIE contractual arrangements were not entered into on an arm’s-length basis in such a way as to result in an impermissible reduction in taxes under applicable PRC laws, rules and regulations, and adjust the income of the VIEs in the form of a transfer pricing adjustment.
If the Group cannot renew such agreements upon their expirations or terminations on commercially reasonable terms, or at all, or if the live streaming 26 service providers become unwilling or unable to provide the Group with live streaming services at any time for any reasons, the Group’s ability to deliver live streaming online courses will be severely impacted, and the students’ learning experience and the Group’s reputation will be harmed.
If the Group cannot renew such agreements upon their expirations or terminations on commercially reasonable terms, or at all, or if the live streaming service providers become unwilling or unable to provide the Group with live streaming services at any time for any reasons, the Group’s ability to deliver live streaming online courses will be severely impacted, and the students’ learning experience and the Group’s reputation will be harmed.
Furthermore, if future laws, administrative regulations or provisions prescribed by the State Council mandate further actions to be taken by companies with respect to existing contractual arrangements, such as unwinding the Group’s existing contractual arrangements and/or disposal of the Group’s related business operations, the Group may face substantial uncertainties as to whether the Group can complete such actions in a timely manner, or at all.
Furthermore, if future laws, administrative regulations or provisions prescribed by the State Council mandate further actions to be taken by companies with respect to existing contractual arrangements, such as unwinding the Group’s existing contractual arrangements and/or disposal of the Group’s related business operations, the Group may face uncertainties as to whether the Group can complete such actions in a timely manner, or at all.
Any such circumstance may subject the Group to fines and other regulatory, civil or criminal liabilities, and the Group may be ordered by the competent government authorities to suspend relevant operations, which will materially and adversely affect the Group’s business operation. For risks relating to licenses and approvals required for business operations in China, see “Item 3. Key Information—3.D.
Any such circumstance may subject the 8 Group to fines and other regulatory, civil or criminal liabilities, and the Group may be ordered by the competent government authorities to suspend relevant operations, which will materially and adversely affect the Group’s business operation. For risks relating to licenses and approvals required for business operations in China, see “Item 3. Key Information—3.D.
See “—Risks Related to the ADSs—Our triple-class share structure with different voting rights will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.” As a result, Mr. Peng Ou, Mr.
See “—Risks Related to the ADSs—Our triple-class share structure with different voting rights will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares 40 and ADSs may view as beneficial.” As a result, Mr. Peng Ou, Mr.
The Final Amendments include requirements to disclose information, including the auditor name and location, the percentage of shares of the issuer owned by governmental entities, whether governmental entities in the applicable foreign jurisdiction with respect to the auditor has a controlling financial interest with respect to the issuer, the name of each official of the Chinese Communist Party who is a member of the board of the issuer, and whether the articles of incorporation of the issuer contains any charter of the Chinese Communist Party.
The Final Amendments include requirements to disclose information, including the auditor name and location, the percentage of shares of the issuer owned by governmental entities, whether governmental entities in the 48 applicable foreign jurisdiction with respect to the auditor has a controlling financial interest with respect to the issuer, the name of each official of the Chinese Communist Party who is a member of the board of the issuer, and whether the articles of incorporation of the issuer contains any charter of the Chinese Communist Party.
As a result, the contractual arrangements may be less effective than direct ownership, and we could face heightened challenges, risks and costs in enforcing these contractual arrangements due to legal uncertainties and jurisdictional limits, because there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations, and rules relating to the legality and enforceability of these contractual arrangements.
As a result, the contractual arrangements may be less effective than direct ownership, and we could face heightened challenges, risks and costs in enforcing these contractual arrangements due to legal uncertainties and jurisdictional limits, because there are uncertainties regarding the interpretation and application of current and future PRC laws, regulations, and rules relating to the legality and enforceability of these contractual arrangements.
For details, please see page 43. • We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of these subsidiaries in the PRC, including Hong Kong, to make payments to us could have a material and adverse effect on our ability to conduct business.
For details, please see page 43. • We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of these subsidiaries in the PRC, including Hong Kong, to make payments to us could have a material and adverse effect on our ability to conduct the Group’s business.
Business Overview—Regulations—Regulation Relating to Private Education—The Law for Promoting Private Education and its Implementing Rules.” As of the date of this annual report, the Group has not received any notice of warning or been subject to any penalties or disciplinary action from government authorities due to the lack of a private school operating permit for online education services.
Business Overview—Regulation—Regulation Relating to Private Education—The Law for Promoting Private Education and its Implementing Rules.” As of the date of this annual report, the Group has not received any notice of warning or been subject to any penalties or disciplinary action from government authorities due to the lack of a private school operating permit for online education services.
While we would strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed against the relevant short seller by principles of freedom of speech, applicable state law or issues of commercial confidentiality. Such a situation could be costly and time-consuming, and could distract our management from growing our business.
While we would strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed against the relevant short seller by principles of freedom of speech, applicable state law or issues of commercial confidentiality. Such a situation could be costly and time-consuming, and could distract our management from growing the Group’s business.
As a result of this triple-class share structure and the concentration of ownership, Mr. Peng Ou, Mr. Tongbo Liu and certain of our senior management and employees will have significant influence over our business, including decisions regarding mergers, consolidations, liquidations and the sale of all or substantially all of our assets, election of directors and other significant corporate actions.
As a result of this triple-class share structure and the concentration of ownership, Mr. Peng Ou, Mr. Tongbo Liu and certain of our senior management and employees will have significant influence over the Group’s business, including decisions regarding mergers, consolidations, liquidations and the sale of all or substantially all of our assets, election of directors and other significant corporate actions.
Risks Related to Doing Business in China • The approval, filing or other requirements of the China Securities Regulatory Commission or other PRC government authorities may be required under PRC law in connection with our issuance of securities overseas, and if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing or other requirements.
Risks Related to Doing Business in China The approval, filing or other requirements of the China Securities Regulatory Commission or other PRC government authorities may be required under PRC law in connection with our issuance of securities overseas, and if required, we cannot predict whether or for how long the Group will be able to obtain such approval or complete such filing or other requirements.
Any uninsured business disruptions may result in the Group’s incurring substantial costs and the diversion of resources, which could have an adverse effect on the Group’s results of operations and financial condition. The Group faces risks related to natural disasters, extreme weather conditions, health epidemics and other 36 catastrophic incidents, which could significantly disrupt the Group’s operations.
Any uninsured business disruptions may result in the Group’s incurring substantial costs and the diversion of resources, which could have an adverse effect on the Group’s results of operations and financial condition. The Group faces risks related to natural disasters, extreme weather conditions, health epidemics and other catastrophic incidents, which could significantly disrupt the Group’s operations.
We are a Cayman Islands company and our wholly-owned PRC subsidiaries are currently considered foreign-invested enterprise. Accordingly, our PRC subsidiaries are not eligible to provide value-added telecommunication services in China. To ensure strict compliance with the PRC laws and regulations, such business activities were conducted through the VIEs and their respective subsidiaries.
We are a Cayman Islands exempted company and our wholly-owned PRC subsidiaries are currently considered foreign-invested enterprise. Accordingly, our PRC subsidiaries are not eligible to provide value-added telecommunication services in China. To ensure strict compliance with the PRC laws and regulations, such business activities were conducted through the VIEs and their respective subsidiaries.
Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the SAT’s general position on how the “de facto management body” text should be applied in determining the tax resident status of all offshore enterprises.
Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC 46 individuals or foreigners, the criteria set forth in the circular may reflect the SAT’s general position on how the “de facto management body” text should be applied in determining the tax resident status of all offshore enterprises.
On March 15, 2019, the National People’s Congress promulgated the Foreign Investment Law, which came into effect on January 1, 2020 and replaced the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations.
On March 15, 2019, the National People’s Congress promulgated the Foreign Investment Law, which came into effect on January 1, 2020 and replaced the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly 47 Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations.
If we were a PFIC for any taxable year during which a U.S. investor holds ADSs or ordinary shares, certain adverse U.S. federal income tax consequences could apply to such U.S. investor. See “Item 10. Additional Information—10.E. Taxation—Material U.S. Federal Income Tax Considerations—Passive Foreign Investment Company Rules.”
If we were a PFIC for any taxable year during which a U.S. investor holds ADSs or ordinary shares, certain adverse U.S. federal income tax consequences could apply to such U.S. investor. See “Item 10. Additional Information—10.E. Taxation—Material U.S. Federal Income Tax Considerations—Passive Foreign Investment Company Rules.” 54
While the Group endeavors to ensure that the overseas institutions with whom the Group partners are qualified, we cannot assure you that the Group’s partnering institutions will timely renew their necessary licenses or qualifications when they become due or that the Group will be able to identify any unqualified institutions accurately in a timely manner or at all.
While the Group endeavors to ensure that the overseas institutions with whom the Group partners are qualified, we cannot assure you that the Group’s partnering institutions will timely 21 renew their necessary licenses or qualifications when they become due or that the Group will be able to identify any unqualified institutions accurately in a timely manner or at all.
If the Group is unsuccessful in pursuing course and educational content development and upgrading opportunities due to the financial constraints, failure to attract qualified faculty, or other factors, the Group’s ability to attract and retain students could be impaired and the Group’s financial results could suffer. The Group faces risks associated with the online live streaming course delivery model.
If the Group is unsuccessful in pursuing course and educational content development and upgrading 26 opportunities due to the financial constraints, failure to attract qualified faculty, or other factors, the Group’s ability to attract and retain students could be impaired and the Group’s financial results could suffer. The Group faces risks associated with the online live streaming course delivery model.
It may be difficult for our shareholders to effect service of process upon the Group or those persons inside China, including Hong Kong. In addition, neither China nor Hong Kong has treaties providing for the reciprocal recognition and enforcement of judgments of courts 42 with the Cayman Islands and many other countries and regions.
It may be difficult for our shareholders to effect service of process upon the Group or those persons inside China, including Hong Kong. In addition, neither China nor Hong Kong has treaties providing for the reciprocal recognition and enforcement of judgments of courts with the Cayman Islands and many other countries and regions.
The depositary may refuse to deliver, transfer or register transfers of the ADSs generally when our share register or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.
The depositary may refuse to deliver, transfer or register 53 transfers of the ADSs generally when our share register or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.
Contractual Arrangements and Corporate Structure We are a Cayman Islands company and currently conduct substantially all business operations in the PRC through our subsidiaries incorporated in the PRC and the contractual arrangements among our PRC subsidiaries and the VIEs. It is the VIEs that hold key operating licenses, provide services to customers, and enter into contracts with suppliers.
Contractual Arrangements and Corporate Structure We are a Cayman Islands exempted company and currently conduct substantially all business operations in the PRC through our subsidiaries incorporated in the PRC and the contractual arrangements among our PRC subsidiaries and the VIEs. It is the VIEs that hold key operating licenses, provide services to customers, and enter into contracts with suppliers.
For the purpose of this hypothetical example, this table has been prepared based on a taxation scenario under which the full withholding tax would 11 be applied. In addition, this table has been prepared under the assumption that all profits of the VIEs will be distributed as fees to our PRC subsidiaries under tax neutral contractual arrangements.
For the purpose of this hypothetical example, this table has been prepared based on a taxation scenario under which the full withholding tax would be applied. In addition, this table has been prepared under the assumption that all profits of the VIEs will be distributed as fees to our PRC subsidiaries under tax neutral contractual arrangements.
On May 26, 2022, we were conclusively identified by the SEC under the HFCAA as having filed audit reports issued by a registered public accounting firm that cannot be inspected or 16 investigated completely by the PCAOB in connection with the filing of our 2021 Form 20-F.
On May 26, 2022, we were conclusively identified by the SEC under the HFCAA as having filed audit reports issued by a registered public accounting firm that cannot be inspected or investigated completely by the PCAOB in connection with the filing of our 2021 Form 20-F.
If the Group is unable to manage these risks, the Group could become subject to penalties, fines, suspension of business and revocation of required licenses, and the Group’s reputation and results of operations could be materially and adversely affected. Tuition refunds or potential refund disputes may negatively affect the Group’s cash flow, financial condition, and reputation.
If the Group is unable to manage 31 these risks, the Group could become subject to penalties, fines, suspension of business and revocation of required licenses, and the Group’s reputation and results of operations could be materially and adversely affected. Tuition refunds or potential refund disputes may negatively affect the Group’s cash flow, financial condition, and reputation.
Under Cayman Islands law, a Cayman Islands company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business.
Under Cayman Islands law, a Cayman Islands exempted company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business.
Pursuant to the Amended Implementing Rules and the Implementation Rules, the teachers employed by a for-profit private school shall obtain the teaching licenses or relevant professional skill qualifications required by PRC laws and 23 regulations, although the definition or the scope of the “relevant professional skill qualifications” is not explicitly stated in the Implementation Rules.
Pursuant to the Amended Implementing Rules and the Implementation Rules, the teachers employed by a for-profit private school shall obtain the teaching licenses or relevant professional skill qualifications required by PRC laws and regulations, although the definition or the scope of the “relevant professional skill qualifications” is not explicitly stated in the Implementation Rules.
For example, there have been no clarifications from the relevant authorities as to the standards for determining whether an activity is one that “affects or may affect national security”, thus uncertainties remain as to whether the Groups’ data processing activities shall be subject to a cybersecurity review.
For example, there have been no clarifications from the relevant authorities as to the detailed standards for determining whether an activity is one that “affects or may affect national security”, thus uncertainties remain as to whether the Groups’ data processing activities shall be subject to a cybersecurity review.
The Group’s students, employees and third-party vendors may engage in intentional or negligent misconduct or other 32 improper activities or misuse the Group’s platform, which could harm the Group’s brand and reputation. The Group is exposed to the risk of fraud or other misconducts committed by students, employees and vendors, including certain third-party sales and marketing agencies.
The Group’s students, employees and third-party vendors may engage in intentional or negligent misconduct or other improper activities or misuse the Group’s platform, which could harm the Group’s brand and reputation. The Group is exposed to the risk of fraud or other misconducts committed by students, employees and vendors, including certain third-party sales and marketing agencies.
However, the amount of the Group’s estimates may be inaccurate, in which case the Group’s financial condition and cash flow may be adversely affected if the Group were to pay late fees or fines in relation to the underpaid employee benefits. Increases in labor costs in the PRC may adversely affect the Group’s business and results of operations.
However, the amount of the Group’s estimates may be inaccurate, in which case 35 the Group’s financial condition and cash flow may be adversely affected if the Group were to pay late fees or fines in relation to the underpaid employee benefits. Increases in labor costs in the PRC may adversely affect the Group’s business and results of operations.
We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of these subsidiaries in the PRC, including Hong Kong, to make payments to us could have a material and adverse effect on our ability to conduct our business.
We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of these subsidiaries in the PRC, including Hong Kong, to make payments to us could have a material and adverse effect on our ability to conduct the Group’s business.
This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects. Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or the Group to fines and other legal or administrative sanctions.
This may restrict our ability to implement our acquisition strategy and could adversely affect the Group’s business and prospects. Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or the Group to fines and other legal or administrative sanctions.
Business Overview—Regulations—Regulations Relating to Online Publishing.” As of the date of this annual report, the Group has not received any notice of warning or been subject to any penalties or disciplinary action from government authorities due to the lack of an Internet Publishing License for online education services.
Business Overview—Regulation—Regulations Relating to Online Publishing.” As of the date of this annual report, the Group has not received any notice of warning or been subject to any penalties or disciplinary action from government authorities due to the lack of an Internet Publishing License for online education services.
As a result, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. Meanwhile, there are very few precedents and little formal guidance as to how contractual arrangements in the context of a VIE should be interpreted or enforced under PRC laws.
As a result, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. Meanwhile, there are very few precedents and little formal guidance as to how contractual arrangements in the context of a VIE should be 39 interpreted or enforced under PRC laws.
We received a letter from the NYSE dated July 23, 2021 notifying us that the stock prices of our ADSs are below compliance standards due to the fact that the average closing price of our ADSs was less than $1.00 for a consecutive 30 trading-day period.
We received a letter from the NYSE dated July 23, 2021 notifying us that the stock prices of the ADSs are below compliance standards due to the fact that the average closing price of the ADSs was less than $1.00 for a consecutive 30 trading-day period.
The Group’s failure to fully comply with these existing and future laws and regulations may materially and adversely affect the Group’s business, financial condition and results of operations. Significant uncertainties exist in relation to the interpretation and implementation of, or proposed changes to, the PRC laws, regulations and policies regarding the education industry.
The Group’s failure to fully comply with these existing and future laws and regulations may materially and adversely affect the Group’s business, financial condition and results of operations. 23 Significant uncertainties exist in relation to the interpretation and implementation of, or proposed changes to, the PRC laws, regulations and policies regarding the education industry.
Business Overview—Regulations—Regulations Relating to Internet Live Streaming Services.” As of the date of this annual report, the Group has not been subject to any fines or other form of regulatory or administrative penalties or sanctions due to the lack of any aforementioned approvals, licenses or, permits or filings.
Business Overview—Regulation—Regulations Relating to Internet Live Streaming Services.” As of the date of this annual report, the Group has not been subject to any fines or other form of regulatory or administrative penalties or sanctions due to the lack of any aforementioned approvals, licenses or, permits or filings.
Business 29 Overview—Regulation—Regulations Relating to Internet Information Security and Privacy Protection.” Regulatory requirements regarding the protection of data are constantly evolving and can be subject to differing interpretations or significant change, making the extent of the Group’s responsibilities in that regard uncertain.
Business Overview—Regulation—Regulations Relating to Internet Information Security and Privacy Protection.” Regulatory requirements regarding the protection of data are constantly evolving and can be subject to differing interpretations or significant change, making the extent of the Group’s responsibilities in that regard uncertain.
Furthermore, on July 7, 2022, the CAC promulgated the Security Assessment Measures for Outbound Data Transfer, effective from September 1, 2022, to regulate outbound data transfer activities, protect the rights and interests of personal information, safeguard national security and social public interests, and promote the cross-border security and free flow of data.
Furthermore, on July 7, 2022, the CAC promulgated the Security Assessment Measures for Outbound Data Transfer, effective from September 1, 2022, to regulate outbound data transfer activities, protect the rights and interests of personal 30 information, safeguard national security and social public interests, and promote the cross-border security and free flow of data.
If the Group’s website is found to be in violation of any such requirements, the Group may be penalized by relevant authorities, and the Group’s operations or reputation could be adversely affected. 49 It may be difficult for overseas regulators to conduct investigation or collect evidence within China.
If the Group’s website is found to be in violation of any such requirements, the Group may be penalized by relevant authorities, and the Group’s operations or reputation could be adversely affected. It may be difficult for overseas regulators to conduct investigation or collect evidence within China.
In addition, 53 several shareholder advisory firms have announced their opposition to the use of multiple class structure and our triple-class structure may cause shareholder advisory firms to publish negative commentary about our corporate governance, in which case the market price and liquidity of the ADSs could be adversely affected.
In addition, several shareholder advisory firms have announced their opposition to the use of multiple class structure and our triple-class structure may cause shareholder advisory firms to publish negative commentary about our corporate governance, in which case the market price and liquidity of the ADSs could be adversely affected.
Risk Factors—Risks Related to the Group’s Business—The Group is subject to a variety of laws and other obligations regarding data protection, and any failure to comply with applicable laws and obligations could have a material adverse effect on the Group’s business, financial condition and results of operations”, Sunlands Technology Group, our subsidiaries and the VIEs are not subject to the permission requirements from the CAC with respect to business operations, based on the fact that, as of the date of this annual report, none of Sunlands Technology Group, our subsidiaries and the VIEs has been identified by any PRC governmental authority as an “critical information infrastructure operator” that will be subject to the CAC’s cybersecurity review requirements.
Risk Factors—Risks Related to the Group’s Business—The Group is subject to a variety of laws and other obligations regarding data protection, and any failure to comply with applicable laws and obligations could have a material adverse effect on the Group’s business, financial condition and results of operations,” Sunlands Technology Group, our subsidiaries and the VIEs are not subject to the permission requirements from the CAC with respect to business operations, based on the fact that, as of the date of this annual report, none of Sunlands Technology Group, our subsidiaries and the VIEs has been identified by any PRC governmental authority as an “critical information infrastructure operator” that will be subject to the CAC’s cybersecurity review requirements.
In addition, any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. The PRC government’s significant oversight over the Group’s business operation in China could result in a material adverse change in the Group’s operations in China and the value of our ADSs.
In addition, any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. The PRC government’s significant oversight over the Group’s business operation in China could result in a material adverse change in the Group’s operations in China and the value of the ADSs.
For example, the Group may be subject to a more stringent review and approval process with respect to our foreign exchange activities, 45 such as remittance of dividends and foreign-currency-denominated borrowings, which may adversely affect the Group’s financial condition and results of operations.
For example, the Group may be subject to a more stringent review and approval process with respect to our foreign exchange activities, such as remittance of dividends and foreign-currency-denominated borrowings, which may adversely affect the Group’s financial condition and results of operations.
On December 29, 2022, the Accelerating Holding Foreign Companies Accountable Act became the law, which reduced the time period before our ADSs could be delisted from the exchange and prohibited from over-the-counter trading in the U.S. from three consecutive years to two consecutive years.
On December 29, 2022, the Accelerating Holding Foreign Companies Accountable Act became the law, which reduced the time period before the ADSs could be delisted from the exchange and prohibited from over-the-counter trading in the U.S. from three consecutive years to two consecutive years.
In addition, if the government authorities deem printing and providing physical education materials to users as “publication distribution” under Administrative Provisions on the Publications Market, we, the VIEs or their operating subsidiaries may be required to obtain the Publication License.
In addition, if the government 25 authorities deem printing and providing physical education materials to users as “publication distribution” under Administrative Provisions on the Publications Market, we, the VIEs or their operating subsidiaries may be required to obtain the Publication License.
The enforcement of laws and rules and regulations in China may change quickly with little advance notice, which could result in a material adverse change in the Group’s operations and the value of our ADSs. The PRC legal system is a civil law system based on written statutes.
The enforcement of laws and rules and regulations in China may change quickly with little advance notice, which could result in a material adverse change in the Group’s operations and the value of the ADSs. The PRC legal system is a civil law system based on written statutes.
However, New York Stock Exchange rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the New York Stock Exchange corporate 54 governance listing standards.
However, New York Stock Exchange rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the New York Stock Exchange corporate governance listing standards.
Regulation and censorship of information disseminated over the internet in China may adversely affect our business and reputation and subject the Group to liability for information displayed on our website. The PRC government has adopted regulations governing internet access and the distribution of news and other information over the internet.
Regulation and censorship of information disseminated over the internet in China may adversely affect the Group’s business and reputation and subject the Group to liability for information displayed on our website. The PRC government has adopted regulations governing internet access and the distribution of news and other information over the internet.
More specifically, investors in the ADSs or our 4 ordinary shares would not be holding any ownership interest, directly or indirectly, in the VIEs under current PRC laws and regulations as investors would only have the contractual relationship with the operating entities in the PRC.
More specifically, investors in the ADSs or our ordinary shares would not be holding any ownership interest, directly or indirectly, in the VIEs under current PRC laws and regulations as investors would only have the contractual relationship with the operating entities in the PRC.
The VIEs funded their operations primarily using cash generated from operating and financing activities. In addition, we and the VIEs may, from time to time, lend cash to each other to settle the payment obligations on each other’s behalf to provide temporary working capital support.
The VIEs funded their operations primarily using cash generated from operating and financing activities. In addition, we and the VIEs may, from time to time, lend cash to each other to settle the payment obligations on each other’s 10 behalf to provide temporary working capital support.
Any or all of these issues could harm the Group’s reputation, adversely affect the Group’s ability to attract and enroll prospective students, cause prospective students not to enroll or stay enrolled, or subject the Group to third-party lawsuits, regulatory fines or other action or liability.
Any or all of these issues could harm the Group’s reputation, adversely affect the Group’s ability to attract and enroll prospective 29 students, cause prospective students not to enroll or stay enrolled, or subject the Group to third-party lawsuits, regulatory fines or other action or liability.
The Group’s success depends on the continuing efforts of the Group’s senior management team and other key 31 employees. The Group depends on the continued contributions of our senior management and other key employees, including, in particular, Mr. Jianhong Yin, also known as Peng Ou, our founder and the chairman of our board of directors, and Mr.
The Group’s success depends on the continuing efforts of the Group’s senior management team and other key employees. The Group depends on the continued contributions of our senior management and other key employees, including, in particular, Mr. Jianhong Yin, also known as Peng Ou, our founder and the chairman of our board of directors, and Mr.
Under the 2017 Plan, the maximum aggregate number of shares which may be issued pursuant to all awards is 829,349 shares. As of the 34 date of this annual report, options to purchase a total of 31,550 ordinary shares were outstanding under the 2017 Plan.
Under the 2017 Plan, the maximum aggregate number of shares which may be issued pursuant to all awards is 829,349 shares. As of the date of this annual report, options to purchase a total of 31,550 ordinary shares were outstanding under the 2017 Plan.
We may lose the ability to use, or otherwise benefit from, the licenses, approvals and assets held by the VIEs, which could severely disrupt our business, render the Group unable to conduct some or all of the business operations and constrain the Group’s growth.
We may lose the ability to use, or otherwise benefit from, the licenses, approvals and assets held by the VIEs, which could severely disrupt the Group’s business, render the Group unable to conduct some or all of the business operations and constrain the Group’s growth.
Any such tax may reduce the returns on your investment in the ADSs or ordinary shares. 46 We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.
Any such tax may reduce the returns on your investment in the ADSs or ordinary shares. We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.
If the Group is 25 unable to obtain or maintain such licenses, permits, approvals or filings in a timely fashion, the Group could be subject to penalties and operational disruption and the Group’s financial condition and results of operations could be adversely affected.
If the Group is unable to obtain or maintain such licenses, permits, approvals or filings in a timely fashion, the Group could be subject to penalties and operational disruption and the Group’s financial condition and results of operations could be adversely affected.
Some of the Group’s current and future competitors may have substantially greater name recognition and financial and other resources than the Group 28 does, which may enable them to compete more effectively for potential students and decrease the Group’s market share.
Some of the Group’s current and future competitors may have substantially greater name recognition and financial and other resources than the Group does, which may enable them to compete more effectively for potential students and decrease the Group’s market share.
This means that you may not be able to exercise your right to direct how the underlying Class A ordinary shares represented by your ADSs are voted and you may have no legal remedy if the underlying Class A ordinary shares represented by your ADSs are not voted as you requested.
This means that you may not be able to exercise your right to direct how the underlying Class A 52 ordinary shares represented by your ADSs are voted and you may have no legal remedy if the underlying Class A ordinary shares represented by your ADSs are not voted as you requested.
Any 9 such circumstance may significantly limit or completely hinder our ability to continue to offer securities to investors, subject the Group to penalties, or cause the Group to alter the Group’s business model or practices and cause the value of such securities to significantly decline or be worthless.
Any such circumstance may significantly limit or completely hinder our ability to continue to offer securities to investors, subject the Group to penalties, or cause the Group to alter the Group’s business model or practices and cause the value of such securities to significantly decline or be worthless.
Moreover, the Group has entered into contracts with various subsidiaries of a limited number of telecommunications service providers at provincial level and rely on them to provide the Group with data communications capacity through local telecommunications lines.
Moreover, the 36 Group has entered into contracts with various subsidiaries of a limited number of telecommunications service providers at provincial level and rely on them to provide the Group with data communications capacity through local telecommunications lines.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Failure to comply with the registration procedures set forth in Circular 37, or making misrepresentation on or failure to disclose controllers of foreign-invested enterprise that is established through round-trip investment, may result in restrictions on the 77 foreign exchange activities of the relevant foreign-invested enterprises, including payment of dividends and other distributions, such as proceeds from any reduction in capital, share transfer or liquidation, to its offshore parent or affiliate, and the capital inflow from the offshore parent, and may also subject relevant PRC residents or entities to penalties under PRC foreign exchange administration regulations.
Failure to comply with the registration procedures set forth in Circular 37, or making misrepresentation on or failure to disclose controllers of foreign-invested enterprise that is established through round-trip investment, may result in restrictions on the foreign exchange activities of the relevant foreign-invested enterprises, including payment of dividends and other 77 distributions, such as proceeds from any reduction in capital, share transfer or liquidation, to its offshore parent or affiliate, and the capital inflow from the offshore parent, and may also subject relevant PRC residents or entities to penalties under PRC foreign exchange administration regulations.
Key Information—Contractual Arrangements with Consolidated VIEs and Their Shareholders” for details of the contractual arrangements with the VIEs. 4.D. Property, Plants and Equipment The Group’s current principal executive offices are located at Building 4-6, Chaolai Science Park, No. 36 Chuangyuan Road, Chaoyang District, Beijing, the People’s Republic of China.
Key Information—Contractual Arrangements with Consolidated VIEs and Their Shareholders” for details of the contractual arrangements with the VIEs. 4.D. Property, Plants and Equipment The Group’s current principal executive offices are located at Building 6, Chaolai Science Park, No. 36 Chuangyuan Road, Chaoyang District, Beijing, the People’s Republic of China.
According to the Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning the Application of Law in Handling Criminal Cases of Infringing Personal Information of Citizens, if a business operator collects personal information of citizens by purchasing, accepting or exchanging, or collects personal information of citizens in the course of performing their duties and providing services in violation of relevant provisions of the State (including Law on the Protection of Consumer Rights and Interests) and meet one of the following standards, such operator shall be considered breaching criminal law and such operator and its responsible personnel shall undertake the criminal liabilities: (i) illegal acquisition, sale or provision of more than 50 pieces of track information, communication content, credit information, property information; (ii) illegal acquisition, sale, or provision of more than 500 pieces of accommodation information, communication records, health, physiological information, trading information, and other personal information may affect the safety of personal and property; (iii) illegal acquisition, sale, or provision of more than 5000 pieces of personal information other than the information mentioned in the preceding (i) and (ii); (iv) the profits generated from using the illegally collected and acquired personal information is more than fifty thousand RMB; and (v) resale of the personal information collected in the course of performing their duties and providing service and the amount of resold personal information reaches 50% of the prescribed standard mentioned in (i) or (ii), as applicable.
According to the Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning the Application of Law in Handling Criminal Cases of Infringing Personal Information of Citizens, if a business operator collects personal information of citizens by purchasing, accepting or exchanging, or collects personal information of citizens in the course of performing their duties and providing services in violation of relevant provisions of the State (including Law on the Protection of Consumer Rights and Interests) and meet one of the following standards, such operator shall be considered breaching criminal law and such operator and its responsible personnel shall undertake the criminal liabilities: (i) illegal acquisition, sale or provision of more than 50 pieces of track information, communication content, credit information, property information; (ii) illegal acquisition, sale, or provision of more than 500 pieces of accommodation information, communication records, health, physiological information, trading information, and other personal information may affect the safety of personal and property; (iii) illegal acquisition, sale, or provision of more than 73 5000 pieces of personal information other than the information mentioned in the preceding (i) and (ii); (iv) the profits generated from using the illegally collected and acquired personal information is more than fifty thousand RMB; and (v) resale of the personal information collected in the course of performing their duties and providing service and the amount of resold personal information reaches 50% of the prescribed standard mentioned in (i) or (ii), as applicable.
Risk Factors—Risks Related to the Group’s Business—The Group faces risks associated with the lack of a private school operating permit for online education services as well as uncertainties surrounding PRC laws and regulations governing the education industry in general, including the Law for Promoting Private Education and its Implementation Rules.” Regulations on Online and Distance Education The MOE, jointly with certain other PRC government authorities, promulgated the Opinions on Guiding and Regulating the Orderly and Healthy Development of Educational Mobile Apps on August 10, 2019, or the Opinions on Educational Apps, which requires, among others, mobile apps that provide services for school teaching and management, student learning and student life, or home-school interactions, with school faculty, students or parents as the main users, and with education or learning as the main application scenarios, or the Educational Apps, be filed with competent provincial regulatory authorities for education before the end of 2019.
Risk Factors—Risks Related to the Group’s Business—The Group faces risks associated with the lack of a private school operating permit for online education services as well as uncertainties surrounding PRC laws and regulations governing the education industry in general, including the Law for Promoting Private Education and its Implementation Rules.” 70 Regulations on Online and Distance Education The MOE, jointly with certain other PRC government authorities, promulgated the Opinions on Guiding and Regulating the Orderly and Healthy Development of Educational Mobile Apps on August 10, 2019, or the Opinions on Educational Apps, which requires, among others, mobile apps that provide services for school teaching and management, student learning and student life, or home-school interactions, with school faculty, students or parents as the main users, and with education or learning as the main application scenarios, or the Educational Apps, be filed with competent provincial regulatory authorities for education before the end of 2019.
Pursuant to the Online Publishing Provisions, “online publishing services” refer to providing online publications to the public through information networks; and “online publications” refer to digital works with publishing features such as having been edited, produced or processed and are made available to the public through information networks, including: (i) written works, pictures, maps, games, cartoons, audio/video reading materials and other original digital works containing useful knowledge or ideas in the field of literature, art, science or other fields; (ii) digital works of which the content is identical to that of any published book, newspaper, periodical, audio/video product, electronic publication or the like; (iii) network literature databases or other digital works, derived from any of the aforesaid works by selection, arrangement, collection or other means; and (iv) other types of digital works as may be determined by the SAPPRFT.
Pursuant to the Online Publishing Provisions, “online publishing services” refer to providing online publications to the public through information networks; and “online publications” refer to digital works with publishing features such as having been edited, produced or processed and are made available to the public through information networks, including: (i) written works, pictures, maps, games, cartoons, audio/video reading materials and other original digital works containing useful knowledge or ideas in the field of literature, art, science or other fields; (ii) digital works of which the content is identical to that of any published book, newspaper, 71 periodical, audio/video product, electronic publication or the like; (iii) network literature databases or other digital works, derived from any of the aforesaid works by selection, arrangement, collection or other means; and (iv) other types of digital works as may be determined by the SAPPRFT.
Pursuant to the Ninth Amendment to the Criminal Law issued by the Standing Committee of the National People’s Congress in 73 August 2015, which became effective in November 2015, any internet service provider that fails to fulfill the obligations related to internet information security administration as required by applicable laws and refuses to rectify upon orders, shall be 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 obtains any personal information, shall be subject to criminal penalty in severe situation.
Pursuant to the Ninth Amendment to the Criminal Law issued by the Standing Committee of the National People’s Congress in August 2015, which became effective in November 2015, any internet service provider that fails to fulfill the obligations related to internet information security administration as required by applicable laws and refuses to rectify upon orders, shall be 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 obtains any personal information, shall be subject to criminal penalty in severe situation.
According to the Notice on the Reduction or Exemption of Enterprises’ Social 80 Security Contributions in Phases jointly promulgated by the Ministry of Human Resources and Social Security, the Ministry of Finance and the SAT on February 20, 2020, with effect from February 2020, with certain exceptions, based on the epidemic impact and the fund threshold, small, medium and micro enterprises and the enterprises in Hubei may be exempted from contributions to the basic pension insurance, unemployment insurance, and work injury insurance, with the exemption period not exceed five months; and contributions to such three social security contribution items by other social security participating organizations (excluding State agencies and institutions) such as large enterprises may be reduced by 50% by, with the reduction period not exceed three months.
According to the Notice on the Reduction or Exemption of Enterprises’ Social Security Contributions in Phases jointly promulgated by the Ministry of Human Resources and Social Security, the Ministry of Finance and the SAT on February 20, 2020, with effect from February 2020, with certain exceptions, based on the epidemic impact and the fund threshold, small, medium and micro enterprises and the enterprises in Hubei may be exempted from contributions to the basic pension insurance, unemployment insurance, and work injury insurance, with the exemption period not exceed five months; and contributions to such three social security contribution items by other social security participating organizations (excluding State agencies and institutions) such as large enterprises may be reduced by 50% by, with the reduction period not exceed three months.
On 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 (1) domestic companies that have been listed on a foreign stock exchange prior to the effective date of the Overseas Listing Trial Measures are not required to go through the filing procedure immediately but may be required to go through the filing procedure if future fund raising activities are involed; (2) a six-month transition period will be granted to domestic companies which, prior to the effective date of the Overseas Listing Trial Measures, have already obtained the approval from overseas regulatory authorities or stock exchanges (such as the completion of hearing in the market of Hong Kong or the completion of registration in the market of the United States), but have not completed the indirect overseas listing; if domestic companies fail to complete the overseas listing within such six-month transition period, they shall file with the CSRC according to the requirements; and (3) the CSRC will solicit opinions from relevant regulatory authorities and complete the filing of the overseas listing of companies with contractual arrangements which duly meet the compliance requirements, and support the development and growth of these companies by enabling them to utilize two markets and two kinds of resources.
On 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 (1) domestic companies that have been listed on a foreign stock exchange prior to the effective date of the Overseas Listing Trial Measures are not required to go through the filing procedure immediately but may be required to go through the filing procedure if future fund raising activities are involved; (2) a six-month transition period will be granted to domestic companies which, prior to the effective date of the Overseas Listing Trial Measures, have already obtained the approval from overseas regulatory authorities or stock exchanges (such as the completion of hearing in the market of Hong Kong or the completion of registration in the market of the United States), but have not completed the indirect overseas listing; if domestic companies fail to complete the overseas listing within such six-month transition period, they shall file with the CSRC according to the requirements; and (3) the CSRC will solicit opinions from relevant regulatory authorities and complete the filing of the overseas listing of companies with contractual arrangements which duly meet the compliance requirements, and support the development and growth of these companies by enabling them to utilize two markets and two kinds of resources.
The mentors’ roles and responsibilities typically include: • understanding and responding to student inquiries and concerns; • monitoring students’ learning progress as well as their overall academic and personal development; • providing psychological support to help students cope with the challenging aspects of their studies, particularly in a rigorous academic environment; and • encouraging students to share ideas and learning experience and achievements with peers and faculty to foster a sense of community and teamwork spirit.
The mentors’ roles and responsibilities typically include: • understanding and responding to student inquiries and concerns; 61 • monitoring students’ learning progress as well as their overall academic and personal development; • providing psychological support to help students cope with the challenging aspects of their studies, particularly in a rigorous academic environment; and • encouraging students to share ideas and learning experience and achievements with peers and faculty to foster a sense of community and teamwork spirit.
According to the Catalog of Classification of Telecommunication Businesses, or the 2016 MIIT Catalog, which published by MIIT on December 28, 2015 and took effect on March 1, 2016 and were amended on June 6, 2019, internet 68 information services, which include information release and delivery services, information search and query services, information community platform services, information real-times interactive services, and information protection and processing services, are classified as a category of value-added telecommunication services.
According to the Catalog of Classification of Telecommunication Businesses, or the 2016 MIIT Catalog, which published by MIIT on December 28, 2015 and took effect on March 1, 2016 and were amended on June 6, 2019, internet information services, which include information release and delivery services, information search and query services, information community platform services, information real-times interactive services, and information protection and processing services, are classified as a category of value-added telecommunication services.
After the MOFCOM and NDRC amended the Catalog in March 2015, MIIT also issued the Circular on Removing the Restrictions on Shareholding Ratio Held by Foreign Investors in Online Data Processing and Transaction Processing (Operating E-commerce) Business on June 19, 2015, which amended the relevant provision in FITE Regulations by allowing foreign investors to own more than 50% of the equity interest in an operator of e-commerce business.
After the MOFCOM and NDRC amended the Catalog in March 2015, MIIT also issued the Circular on Removing the Restrictions on Shareholding Ratio Held by Foreign Investors in Online Data Processing and Transaction Processing 68 (Operating E-commerce) Business on June 19, 2015, which amended the relevant provision in FITE Regulations by allowing foreign investors to own more than 50% of the equity interest in an operator of e-commerce business.
The regulations provide that, among others, critical information infrastructure, or the CII, means important network facilities and information systems in important industries such as public communications and information services, energy, transportation, water conservancy, finance, public services, e-government, defense technology industry and others that may seriously harm national security, national economy, people’s livelihood and public interests once damaged, disabled or its data disclosed.
The regulations provide that, among others, critical information infrastructure, or the CII, means important network facilities and information systems in important industries such as public communications and information services, energy, transportation, water conservancy, finance, public services, 74 e-government, defense technology industry and others that may seriously harm national security, national economy, people’s livelihood and public interests once damaged, disabled or its data disclosed.
According to the Guidelines on Security Assessment Report for Outbound Data Transfer promulgated by the CAC, outbound data transfer means (i) a data processor transfers or stores the data collected or generated during its operation within the PRC abroad, (ii) data collected and generated by a data processor 75 is stored within the PRC while offshore institutions or individuals are able to inquire, retrieve, download and obtain such data; and (iii) other outbound data transfer activities prescribed by the CAC.
According to the Guidelines on Security Assessment Report for Outbound Data Transfer promulgated by the CAC, outbound data transfer means (i) a data processor transfers or stores the data collected or generated during its operation within the PRC abroad, (ii) data collected and generated by a data processor is stored within the PRC while offshore institutions or individuals are able to inquire, retrieve, download and obtain such data; and (iii) other outbound data transfer activities prescribed by the CAC.
If such private school chooses to register as a for-profit school, it shall conduct financial liquidation process, have the property rights of 70 its assets such as lands, school buildings and net balance being authenticated by relevant government authorities, pay up relevant taxes, apply for a new private school operating permit, re-register as for-profit school and continue its operation.
If such private school chooses to register as a for-profit school, it shall conduct financial liquidation process, have the property rights of its assets such as lands, school buildings and net balance being authenticated by relevant government authorities, pay up relevant taxes, apply for a new private school operating permit, re-register as for-profit school and continue its operation.
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.
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 80 may implement a flexible working time system or comprehensive working time system after obtaining approvals from the relevant authorities.
Pursuant to the Overseas Listing Archives Rules, domestic companies that seek to offer or list securities overseas directly or indirectly, and securities companies and securities related service providers providing services to such domestic companies shall establish confidentiality and archives administration system, adopt requisite measures to perform the responsibilities of confidentiality and archives administration, and shall not divulge state secrets and state agencies’ work secrets, or harm state and public interests.
Pursuant to the Overseas Listing Archives Rules, domestic companies that seek to offer or list securities overseas directly or indirectly, and securities companies and securities related service providers providing services to such domestic companies shall establish confidentiality and archives administration system, adopt requisite measures to perform the responsibilities of confidentiality and archives administration, and shall not divulge state secrets and state agencies’ work 67 secrets, or harm state and public interests.
In addition, “internet cultural products” is defined in the Internet Culture Provisions as cultural products produced, broadcast and disseminated via the 71 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.
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.
Otherwise, such online transaction operator may be subject to fines and consequences under related laws and regulations, including without limitation suspension of business for rectification and revocation of permits and licenses. 74 On June 10, 2021, the SCNPC promulgated the Data Security Law of the PRC, which came into effect on September 1, 2021.
Otherwise, such online transaction operator may be subject to fines and consequences under related laws and regulations, including without limitation suspension of business for rectification and revocation of permits and licenses. On June 10, 2021, the SCNPC promulgated the Data Security Law of the PRC, which came into effect on September 1, 2021.
The aggregate amount of such cash dividends was approximately US$9.5 million. The Group’s corporate headquarters is located at Building 4-6, Chaolai Science Park, No. 36 Chuangyuan Road, Chaoyang District, Beijing, the People’s Republic of China. The Group’s telephone number at this address is +86-10-52413738.
The aggregate amount of such cash dividends was approximately US$9.5 million. The Group’s corporate headquarters is located at Building 6, Chaolai Science Park, No. 36 Chuangyuan Road, Chaoyang District, Beijing, the People’s Republic of China. The Group’s telephone number at this address is +86-10-52413738.
Course Offerings The Group offers a wide range of online courses addressing various educational needs of adults in China. Currently, the Group’s course offerings mainly cover two main components, namely (i) degree-or diploma-oriented post-secondary courses, and (ii) professional certification preparation, professional skills and interest courses.
Course Offerings 57 The Group offers a wide range of online courses addressing various educational needs of adults in China. Currently, the Group’s course offerings mainly cover two main components, namely (i) interest, professional skills and professional certification preparation courses, and (ii) degree- or diploma-oriented post-secondary courses.
However, we were further advised by our PRC legal counsel that there are substantial uncertainties with respect to the interpretation and application of existing or future PRC laws and regulations and thus there is no assurance that Chinese governmental authorities would take a view consistent with the opinions of our PRC legal counsel.
However, we were further advised by our PRC legal counsel that there are uncertainties with respect to the interpretation and application of existing or future PRC laws and regulations and thus there is no assurance that Chinese governmental authorities would take a view consistent with the opinions of our PRC legal counsel.
Regulations Relating to Online Transmission of Audio-Visual Programs 72 The Measures for the Administration of Publication of Audio-Visual Programs through Internet or Other Information Network, or the Audio-Visual Measures, promulgated by the SAPPRFT, on July 6, 2004 and put 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.
Regulations Relating to Online Transmission of Audio-Visual Programs The Measures for the Administration of Publication of Audio-Visual Programs through Internet or Other Information Network, or the Audio-Visual Measures, promulgated by the SAPPRFT, on July 6, 2004 and put 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.
Students are assigned to different schools and divisions based on the major and number of students enrolled for a given academic period. Students in the same division are further assigned to different “classes” for administrative purposes. Educational Content Development and Offerings Content Development The Group maintains an experienced team of course and educational content development professionals.
Students are assigned to different schools and divisions based on the major and number of students enrolled for a given academic period. Students in the same division are further assigned to different “classes” for administrative purposes. 59 Educational Content Development and Offerings Content Development The Group maintains an experienced team of course and educational content development professionals.
Some of the Group’s present and future competitors may have longer operating histories, larger teams of teaching faculty and supporting staff and greater financial, technical, marketing and other resources. For a discussion of 65 risks relating to competition, see “Item 3. Key Information—3.D.
Some of the Group’s present and future competitors may have longer operating histories, larger teams of teaching faculty and supporting staff and greater financial, technical, marketing and other resources. For a discussion of risks relating to competition, see “Item 3. Key Information—3.D.
If a foreign-invested enterprise investing in the PRC has finished submitting its reports for its establishment, modifications and cancellation and its annual reports, the relevant information will be shared by the competent market regulation department to the competent commercial department, and does not require such foreign-invested enterprise to submit the reports separately.
If a foreign-invested enterprise investing in the PRC has finished submitting its reports for its 66 establishment, modifications and cancellation and its annual reports, the relevant information will be shared by the competent market regulation department to the competent commercial department, and does not require such foreign-invested enterprise to submit the reports separately.
Any person applying for the registration of a trademark may not prejudice the existing right first obtained by others, nor may any person register in advance a trademark that has already been used by another party and has already gained a “sufficient degree of reputation” through such party’s use.
Any person applying for the registration of a trademark may not prejudice the existing right first obtained by others, nor may any person register in advance a trademark that has already been used by another 76 party and has already gained a “sufficient degree of reputation” through such party’s use.
Pursuant to SAT Bulletin 7, where a non-resident enterprise indirectly transfers properties such as equity in PRC resident enterprises without any justifiable business purposes and aiming to avoid the payment of enterprise income tax, such indirect transfer must be reclassified as a direct transfer of equity in PRC resident enterprise.
Pursuant to SAT Bulletin 7, where a non-resident enterprise indirectly transfers properties such as equity in PRC resident enterprises without any justifiable business purposes and aiming to avoid the payment of 79 enterprise income tax, such indirect transfer must be reclassified as a direct transfer of equity in PRC resident enterprise.
Content Offerings The Group supports the learning experience with a wide range of educational content designed to help them capture key takeaways from, and reinforce what is taught in, the live streaming lessons, and to assess learning outcomes both during 60 and after class hours.
Content Offerings The Group supports the learning experience with a wide range of educational content designed to help them capture key takeaways from, and reinforce what is taught in, the live streaming lessons, and to assess learning outcomes both during and after class hours.
The Group has also introduced systems and tools that enable teachers to monitor student activities and outcomes and take appropriate actions when the students demonstrate a low level of engagement. 62 Evaluation and compensation The Group uses various metrics in terms of student engagement to measure the performance of mentors.
The Group has also introduced systems and tools that enable teachers to monitor student activities and outcomes and take appropriate actions when the students demonstrate a low level of engagement. Evaluation and compensation The Group uses various metrics in terms of student engagement to measure the performance of mentors.
In addition, the Group launches advertisements on various platforms, where the Group is able to obtain the contact information 63 of the prospective students if they indicate interest in the Group’s courses. The Group then invites prospective students to join the online learning group and provide them with access to the trial courses.
In addition, the Group launches advertisements on various platforms, where the Group is able to obtain the contact information of the prospective students if they indicate interest in the Group’s courses. The Group then invites prospective students to join the online learning group and provide them with access to the trial courses.
On March 17, 2010, SAPPRFT promulgated the Provisional Implementation of the 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.
On March 17, 2010, SAPPRFT promulgated the Provisional Implementation of the Tentative Categories of Internet Audio-Visual Program Services, or the Categories, which clarified the scope of Internet audio-visual programs services, 72 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 training the Group provides to teachers is designed to allow teachers to develop their own teaching style and methodology while maintaining high teaching quality. 61 Recruitment The Group hires the Group’s teachers based on numerous criteria, including educational backgrounds, teaching experience, and performance in mock lessons.
The training the Group provides to teachers is designed to allow teachers to develop their own teaching style and methodology while maintaining high teaching quality. Recruitment The Group hires the Group’s teachers based on numerous criteria, including educational backgrounds, teaching experience, and performance in mock lessons.
Where a trademark for which a registration has been made is identical or similar to another trademark which has already been registered or been subject to a preliminary 76 examination and approval for use on the same kind of or similar commodities or services, the application for registration of such trademark may be rejected.
Where a trademark for which a registration has been made is identical or similar to another trademark which has already been registered or been subject to a preliminary examination and approval for use on the same kind of or similar commodities or services, the application for registration of such trademark may be rejected.
At the same time, many of them cannot identify their specific education needs or solutions for such needs, especially given that education products and services can be complex and the relatively high costs may deter them from fulfilling their educational needs.
At the same time, many of them cannot identify their specific education needs or solutions for such needs, especially given that education products and services can be complex and the relatively high 60 costs may deter them from fulfilling their educational needs.
Based on student feedback and the latest updates on exam policies, the Group further updates the educational content in the Learning Outcome Trees to continually improve teaching quality. 57 The Group seeks to hire experienced and passionate teachers who can make learning fun and interactive.
Based on student feedback and the latest updates on exam policies, the Group further updates the educational content in the Learning Outcome Trees to continually improve teaching quality. The Group seeks to hire experienced and passionate teachers who can make learning fun and interactive.
When a license is required to enter a certain industry, the foreign investor must apply for one, and the government must treat the application the same as one by a domestic enterprise, except where 66 laws or regulations provide otherwise.
When a license is required to enter a certain industry, the foreign investor must apply for one, and the government must treat the application the same as one by a domestic enterprise, except where laws or regulations provide otherwise.
The live streaming application has a “tipping” 59 function that allows students to “tip” the teacher with virtual gifts if they like the course, which improves student engagement and student-teacher interaction. • Greater learning flexibility .
The live streaming application has a “tipping” function that allows students to “tip” the teacher with virtual gifts if they like the course, which improves student engagement and student-teacher interaction. • Greater learning flexibility .
Wuhan Zhongtudao is wholly owned by FireSky Investment. 55 Currently, substantially all of the Group’s business operations are conducted in the PRC through our subsidiaries incorporated in the PRC, and the contractual arrangements among our PRC subsidiaries and the VIEs.
Wuhan Zhongtudao is wholly owned by FireSky Investment. Currently, substantially all of the Group’s business operations are conducted in the PRC through our subsidiaries incorporated in the PRC, and the contractual arrangements among our PRC subsidiaries and the VIEs.
ITEM 4. Informati on on the Company 4.A. History and Development of the Company The Group commenced education service business in August 2003. The Group remained an offline, classroom-based education service provider until the Group transitioned to an exclusively online education model in 2014.
ITEM 4. INFORMATION ON THE COMPANY 4.A. History and Development of the Company The Group commenced education service business in August 2003. The Group remained an offline, classroom-based education service provider until the Group transitioned to an exclusively online education model in 2014.
The Group has built the integrated IT infrastructure primarily based on tools, technologies and platforms that the Group has developed in-house and, to a lesser extent, third-party software and applications that the Group has licensed or purchased. The Group maintains a dedicated IT development and support team. As of December 31, 2022, the Group had 197 technology development personnel.
The Group has built the integrated IT infrastructure primarily based on tools, technologies and platforms that the Group has developed in-house and, to a lesser extent, third-party software and applications that the Group has licensed or purchased. The Group maintains a dedicated IT development and support team. As of December 31, 2023, the Group had 138 technology development personnel.
To comply with the above-mentioned foreign ownership restrictions, the Group operates its online platform in China through Beijing Sunlands and its wholly owned subsidiary, Shangren Chongye, all of the shareholders of Beijing Sunlands are PRC domestically funded entities, and Beijing Sunlands is controlled by Wuhan Zhibo, our PRC subsidiary, through a series of contractual arrangements.
To comply with the above-mentioned foreign ownership restrictions, the Group operates its online platform in China through Beijing Sunlands, all of the shareholders of Beijing Sunlands are PRC domestically funded entities, and Beijing Sunlands is controlled by Wuhan Zhibo, our PRC subsidiary, through a series of contractual arrangements.
As of December 31, 2022, the Group had a total of 1,501 sales and marketing personnel. The Group maintains sales and marketing personnel in major regional markets, such as Beijing, Wuhan, Shenzhen and Guangzhou. The Group’s sales and marketing force adopt sales and marketing strategies customized based on the needs and profile of prospective students in different markets.
As of December 31, 2023, the Group had a total of 1,614 sales and marketing personnel. The Group maintains sales and marketing personnel in major regional markets, such as Beijing, Wuhan, Shenzhen and Guangzhou. The Group’s sales and marketing force adopt sales and marketing strategies customized based on the needs and profile of prospective students in different markets.
The Group maintains offices in Beijing, China, with an aggregate of approximately 24,436 square meters. These facilities currently accommodate the Group’s management headquarters, as well as the sales and marketing, course and educational content development, and general and administrative activities.
The Group maintains offices in Beijing, China, with an aggregate of approximately 9,580 square meters. These facilities currently accommodate the Group’s management headquarters, as well as the sales and marketing, course and educational content development, and general and administrative activities.
In October 2015, our wholly owned subsidiary, Sunlands Online Education HK Limited, or Sunlands HK, was incorporated in Hong Kong. In July 2017, Tianjin Alaman Education Technology Co., Ltd. (formerly known as “Tianjin Studyvip Education Co., Limited”), or Tianjin Alaman, our wholly owned subsidiary, was incorporated in the PRC.
In October 2015, our wholly-owned subsidiary, Sunlands Online Education HK Limited, or Sunlands HK, was incorporated in Hong Kong. In July 2017, Tianjin Alaman Education Technology Co., Ltd. (formerly known as “Tianjin Studyvip Education Co., Limited”), or Tianjin Alaman, our wholly-owned subsidiary, was incorporated in the PRC. It was renamed as Tianjin Alaman Education Technology Co., Ltd. in February 2021.
See “Item 3. Key Information—3.D. Risk Factors—Risks Related to the Group’s Business—The Group may face risks associated with the installment tuition payment plan the Group offers to students.” In 2020, 2021 and 2022, the Group’s student loan coverage ratios were 54.9%, 24.8% and 5.1%, respectively.
See “Item 3. Key Information—3.D. Risk Factors—Risks Related to the Group’s Business—The Group may face risks associated with the installment tuition payment plan the Group offers to its students.” In 2021, 2022 and 2023, the Group’s student loan coverage ratios were 24.8%, 5.1% and 1.3%, respectively.
Accordingly, Sunlands HK may be able to benefit from the 5% withholding tax rate for the dividends it receives from Wuhan Zhibo and Tianjin Alaman, if it satisfies the conditions prescribed under SAT Circular 81 and other relevant tax rules and regulations.
Accordingly, Sunlands HK, FireSky Investment and Cheerwins HK may be able to benefit from the 5% withholding tax rate for the dividends it receives from Wuhan Zhibo, Wuhan Zhongtudao and Tianjin Alaman, respectively, if it satisfies the conditions prescribed under SAT Circular 81 and other relevant tax rules and regulations.
Regulations on Foreign Debt A loan made by a foreign entity as direct or indirect shareholder in an FIE is considered to be foreign debt in China and is regulated by various laws and regulations, including the Regulation of the People’s Republic of China on Foreign Exchange Administration, the Interim Provisions on the Management of Foreign Debts, the Statistical Monitoring of Foreign Debts Tentative Provisions, the Detailed Rules for the Implementation of Provisional Regulations on Statistics and Supervision of External Debt, and the Administrative Measures for Registration of Foreign Debts.
Regulations on Foreign Debt A loan made by a foreign entity as direct or indirect shareholder in an FIE is considered to be foreign debt in China and is regulated by various laws and regulations, including the Regulation of the People’s Republic of China on Foreign Exchange Administration, the Interim Provisions on the Management of Foreign Debts, the Statistical Monitoring of Foreign Debts Tentative Provisions, and the Administrative Measures for Registration of Foreign Debts.
During the same periods, the Group made interest payments of RMB83.3 million, RMB36.9 million and RMB6.0 million (US$0.9 million), respectively, to the credit providers. The Group generally offers students a full, unconditional refund within 24 hours upon enrollment.
During the same periods, the Group made interest payments of RMB36.9 million, RMB6.0 million and RMB1.5 million (US$0.2 million), respectively, to the credit providers. The Group generally offers students a full, unconditional refund within 24 hours upon enrollment.
As of December 31, 2022, the Group’s faculty primarily consisted of 141 teachers and 202 mentors based in Beijing, Guangzhou and Wuhan, China. Teachers and mentors assume different roles and responsibilities. Generally, teachers are responsible for delivering courses and educational content to students, while mentors focus on providing academic and administrative support throughout the students’ learning process.
As of December 31, 2023, the Group’s faculty primarily consisted of 100 teachers and 75 mentors based in Beijing and Wuhan, China. Teachers and mentors assume different roles and responsibilities. Generally, teachers are responsible for delivering courses and educational content to students, while mentors focus on providing academic and administrative support throughout the students’ learning process.
We believe the live streaming format and highly interactive learning experience makes the Group’s services highly attractive to students. In 2020, 2021 and 2022, the Group’s new student enrollments were 434,240, 434,228 and 534,280, respectively.
We believe the live streaming format and highly interactive learning experience makes the Group’s services highly attractive to students. In 2021, 2022 and 2023, the Group’s new student enrollments were 434,228, 534,280 and 616,341, respectively.
In addition, the professional certification preparation, professional skills and interest courses represented approximately 43.5%, 69.6% and 90.4%, respectively, of the Group’s new student enrollments in 2020, 2021 and 2022. See also “Item 3. Key Information—3.D.
In addition, the interest, professional skills and professional certification preparation courses represented approximately 69.6%, 90.4% and 95.0%, respectively, of the Group’s new student enrollments in 2021, 2022 and 2023. See also “Item 3. Key Information—3.D.
According to the Circular on Administration of Foreign Exchange on Further Promoting the Facilitation of Cross-border Trade and Investment promulgated by SAFE on October 23, 2019, non-investment FIEs are allowed to make domestic equity investment with their capital funds provided that the existing negative list for foreign investment are complied with and the projects invested thereby in China are true and comply with applicable laws and regulations.
According to the Circular on Administration of Foreign Exchange on Further Promoting the Facilitation of Cross-border Trade and Investment promulgated by SAFE on October 23, 2019, which was amended by SAFE Notice on Further Deepening the Reform to Facilitate Cross-border Trade and Investment on December 4, 2023, non-investment FIEs are allowed to make domestic equity investment with their capital funds provided that the existing negative list for foreign investment are complied with and the projects invested thereby in China are true and comply with applicable laws and regulations.
Under the loan agreement between the borrowing student and the lending credit provider, the borrowing student 64 is required to repay the loan principal in installments over a period generally ranging from three to 18 months.
Under the loan agreement between the borrowing student and the lending credit provider, the borrowing student is required to repay the loan principal in installments over a period generally ranging from 3 to 12 months.
As part of our efforts to streamline our corporate structure, the VIE Contractual Arrangements between Wuhan Zhibo and (i) Wuhan Xiaoyan, (ii) Beijing Odysseus, (iii) Guangzhou Wudawei, (iv) Guangzhou Tianyong, and (v) Wuhan Hadeliang, as well as their shareholders, were terminated respectively through a series of transactions from April 2021 to June 2022.
As part of our efforts to streamline our corporate structure, the VIE Contractual Arrangements between Wuhan Zhibo and (i) Wuhan Xiaoyan, (ii) Beijing Odysseus, (iii) Guangzhou Wudawei, (iv) Guangzhou Tianyong, (v) Wuhan Hadeliang, (vi) Wuhan Jiayan and (vii) Tianjin Shangde, as well as their shareholders, were terminated respectively through a series of transactions from April 2021 to October 2023.
As of the date of this annual report, the Group has registered 125 trademarks with the Trademark Office of the PRC State Administration of Industry and Commerce, registered 120 software copyrights with the PRC State Copyright Bureau, and registered 250 domain names.
As of the date of this annual report, the Group has registered 312 trademarks with the Trademark Office of the PRC State Administration of Industry and Commerce, registered 179 software copyrights with the PRC State Copyright Bureau, and registered 273 domain names.
Students The Group has a large student base, primarily as a result of the Group’s well-established brand and effective sales and marketing efforts. In 2020, 2021 and 2022, the Group had 1,130,650, 1,104,630 and 1,067,042 students, respectively, and the Group’s new student enrollments were 434,240, 434,228 and 534,280, respectively.
Students The Group has a large student base, primarily as a result of the Group’s well-established brand and effective sales and marketing efforts. In 2021, 2022 and 2023, the Group had 1,104,630, 1,067,042 and 1,131,435 students, respectively, and the Group’s new student enrollments were 434,228, 534,280 and 616,341, respectively.
Organizational Structure The following chart illustrates the Group’s organizational structure, including our significant subsidiaries as that term is defined under Section 1-02 of Regulation S-X under the Securities Act, the VIEs and certain other subsidiaries as of the date of this annual report. 81 See “Item 3.
Organizational Structure The following chart illustrates the Group’s organizational structure, including our significant subsidiaries and the significant VIE as “significant” is defined under Section 1-02 of Regulation S-X under the Securities Act and certain other subsidiaries as of the date of this annual report. 81 ———— Equity interest ------------ Contractual arrangements See “Item 3.
Beijing Sunlands and Shangren Chongye are the holders of the domain names, trademarks and facilities necessary for daily operations of the Group’s online platforms in compliance with the MIIT Circular 2006.
Beijing Sunlands is the holder of the domain names, trademarks and facilities necessary for daily operations of the Group’s online platforms in compliance with the MIIT Circular 2006.
From September 2019 to December 2020, Wuhan Zhibo entered into the VIE Contractual Arrangements with (i) Wuhan Xiaoyan Technology Co., Ltd., or Wuhan Xiaoyan, (ii) Wuhan Jiayan Online Education Technology Co., Ltd., or Wuhan Jiayan, (iii) Beijing Odysseus Education Technology Co., Ltd., or Beijing Odysseus, (iv) Guangzhou Wudawei Education Technology Co., Ltd., or Guangzhou Wudawei, (v) Guangzhou Tianyong Online Education Technology Co., Ltd., or Guangzhou Tianyong, and (vi) Wuhan Hadeliang Online Education Technology Co., Ltd., or Wuhan Hadeliang, and (vii) Tianjin Shangde, as well as their shareholders.
From September 2019 to December 2020, Wuhan Zhibo entered into the VIE Contractual Arrangements with (i) Wuhan Xiaoyan Technology Co., Ltd., or Wuhan Xiaoyan, (ii) Wuhan Jiayan Online Education Technology Co., Ltd., or Wuhan Jiayan, (iii) Beijing Odysseus Education Technology Co., Ltd., or Beijing Odysseus, (iv) Guangzhou Wudawei Education Technology Co., Ltd., or Guangzhou Wudawei, (v) Guangzhou Tianyong Online Education Technology Co., 55 Ltd., or Guangzhou Tianyong, and (vi) Wuhan Xingui Online Technology Co., Ltd.
In 2020, 2021 and 2022, the professional certification preparation, professional skills and interest courses represented approximately 12.2%, 31.7% and 47.9%, respectively, of the Group’s net revenues, and approximately 19.9%, 46.0% and 83.1%, respectively, of the Group’s gross billings.
In 2021, 2022 and 2023, the interest, professional skills and professional certification preparation courses represented approximately 31.7%, 47.9% and 67.1%, respectively, of the Group’s net revenues, and approximately 46.0%, 83.1% and 98.4%, respectively, of the Group’s gross billings.
On July 6, 2021, General Office of the State Council of the PRC together with another authority jointly promulgated the Opinions on Strictly Cracking Down on Illegal Securities Activities, or the Securities Activities Opinions, which called for the enhanced administration and supervision of overseas-listed China-based companies, proposed to revise the relevant regulation governing the overseas issuance and listing of shares by such companies and clarified the responsibilities of competent domestic industry regulators and government authorities. 67 On February 17, 2023, with the approval of the State Council, 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, effective on March 31, 2023.
On July 6, 2021, General Office of the State Council of the PRC together with another authority jointly promulgated the Opinions on Strictly Cracking Down on Illegal Securities Activities, or the Securities Activities Opinions, which called for the enhanced administration and supervision of overseas-listed China-based companies, proposed to revise the relevant regulation governing the overseas issuance and listing of shares by such companies and clarified the responsibilities of competent domestic industry regulators and government authorities.
Comparing to the version of Education Laws that was amended and came into effect on 2009, which provided that no organization or individual may establish or operate a school or any other educational institution for commercial purposes, the current Education Law narrowed the provision prohibiting the establishment or operation of schools or other educational institutions for commercial purposes to only restricting a school or other educational institution founded with governmental funds or donated assets in the amended Education Law. 69 On April 20, 2022, Standing Committee of the National People’s Congress, or the SCNPC, adopted the amended Vocational Education Law of the PRC, or the Amended Vocational Education Law, which became effective on May 1, 2022 and replace the previous Vocational Education Law of the PRC adopted in 1996.
Comparing to the version of Education Laws that was amended and came into effect on 2009, which provided that no organization or individual may establish or operate a school or any other educational institution for commercial purposes, the current Education Law narrowed the provision prohibiting the establishment or operation of schools or other educational institutions for commercial purposes to only restricting a school or other educational institution founded with governmental funds or donated assets in the amended Education Law.
Risk Factors—Risks Related to the Group’s Business—The Group may from time to time be subject to infringement claims relating to intellectual properties of third parties.” and “—If the Group fails to protect the Group’s intellectual property rights, the Group’s brand and business may suffer.” Competition The Group primarily competes with offline, classroom-based education service providers.
Risk Factors—Risks Related to the Group’s Business—If the Group fails to protect the Group’s intellectual property rights, the Group’s brand and business may suffer.” Competition The Group primarily competes with offline, classroom-based education service providers.
It was renamed as Tianjin Alaman Education Technology Co., Ltd. in February 2021. In August 2017, Wuhan Studyvip Online Education Co. Limited, or Wuhan Zhibo, our wholly owned subsidiary, was incorporated in the PRC. Wuhan Zhibo is wholly owned by Sunlands HK. In June 2019, Wuhan Zhidao Online Education Technology Co., Ltd.
In August 2017, Wuhan Studyvip Online Education Co. Limited, or Wuhan Zhibo, our wholly-owned subsidiary, was incorporated in the PRC. Wuhan Zhibo is wholly owned by Sunlands HK. In June 2019, Wuhan Zhidao Online Education Technology Co., Ltd. (formerly known as “Wuhan Shangde Online Education Technology Co., Ltd.”), or Wuhan Shangde, our wholly-owned subsidiary, was incorporated in the PRC.
Provisions on Talent Market Administration Provisions on Talent Market Administration promulgated by Ministry of Human Resources and Social Security on April 30, 2015 and last amended on December 31, 2019, provides that “job agencies”, which means the organizations specializing in the provision of intermediary services or other related services for the employers and job seekers, either as their core business or as a sideline, shall obtain the approval and the Job Agency Service License from the personnel administration department of the local government before it engages in the business of providing intermediary job services; the Internet information service providers engaged in Internet-based intermediary job services, either as their core business or as a sideline, must apply for the License.
In addition, Pilot Free Trade Zones are granted to formulate data negative lists at their own discretion, where data processors may provide overseas parties with any data not included in the negative list without security assessment. 75 Provisions on Talent Market Administration Provisions on Talent Market Administration promulgated by Ministry of Human Resources and Social Security on April 30, 2015 and last amended on December 31, 2019, provides that “job agencies”, which means the organizations specializing in the provision of intermediary services or other related services for the employers and job seekers, either as their core business or as a sideline, shall obtain the approval and the Job Agency Service License from the personnel administration department of the local government before it engages in the business of providing intermediary job services; the Internet information service providers engaged in Internet-based intermediary job services, either as their core business or as a sideline, must apply for the License.
The terms of the agreements the Group enters into with the search engine and mobile marketing partners are typically one year. The Group pays the search engine and mobile marketing partners generally on a cost-per-click basis.
The terms of the agreements the Group enters into with the search engine and mobile marketing partners are typically one year.
After the end of such one-year period, the method of foreign-invested enterprises to carry out cross-broader financing in foreign currency will be determined by PBOC and SAFE.
After the end of such one-year period, the method of foreign-invested enterprises to carry out cross-broader financing in foreign currency will be determined by PBOC and SAFE. To date, though the one-year period has expired, no further regulations or guidance promulgated by PBOC and SAFE in this regard.
As of December 31, 2022, STE courses covered 16 majors, including Chinese Language and Literature, Law, Pre-School Education, Marketing, English, Human Resource Management, Business Administration, Business Management, Financial Management, Advertising, Accounting, Administrative Management, Computer Information Management, Finance, Chain Operation Management, and Visual Communication Design and Production.
As of December 31, 2023, STE courses covered 12 majors, including Chinese Language and Literature, Law, Pre-School Education, Marketing, English, Human Resource Management, Business 58 Administration, Business Management, Financial Management, Accounting, Administrative Management and Computer Information Management.
The Group’s deferred revenues were RMB3,024.4 million, RMB2,348.2 million and RMB1,690.9 million (US$245.2 million), respectively, as of December 31, 2020, 2021 and 2022. Business Model and Online Education Services The Group offers online education services through online and mobile platforms to adult students pursuing post-secondary and professional education.
The Group’s deferred revenues were RMB2,348.2 million, RMB1,690.9 million and RMB1,113.9 million (US$156.9 million), respectively, as of December 31, 2021, 2022 and 2023. Business Model and Online Education Services The Group offers adult online education services and adult personal interest learning courses through online and mobile platforms to adult students.
In addition, the Group offers students a refund for the undelivered courses excluding the registration fees. Prior to June 2019, such refund was provided only within seven days upon enrollment while starting from June 2019, the Group offers such refund during the entire service period.
In addition, the Group offers students a refund for the undelivered courses excluding the registration fees. Starting from June 2019, the Group offers such refund during the entire service period.
We believe that the principal competitive factors in China’s post-secondary and professional education market include the following: • brand awareness and reputation; • scope of course offerings; • course pricing; • interactive, engaging and customized learning experience; • teaching quality and level of academic and administrative student support; • ease of deployment and use of the course delivery format; and • expertise in sales and marketing, and student acquisition and retention; and • proven track record of performance.
The Group competes with the Group’s competitors for student enrollments and engagement, high-quality faculty members, sales and marketing effectiveness, among other things. 64 We believe that the principal competitive factors in China’s adult online education market and adult personal interest learning market include the following: • brand awareness and reputation; • scope of course offerings; • course pricing; • interactive, engaging and customized learning experience; • teaching quality and level of academic and administrative student support; • ease of deployment and use of the course delivery format; and • expertise in sales and marketing, and student acquisition and retention; and • proven track record of performance.
To date, though the one-year period has expired, no further regulations or guidance promulgated by PBOC and SAFE in this regard. 78 Regulations on Tax PRC Enterprise Income Tax Law The Enterprise Income Tax Law enacted by the National People’s Congress, or the PRC EIT Law, applies a uniform 25% enterprise income tax rate to both foreign-invested enterprises and domestic enterprises, except where tax incentives are granted to special industries and projects.
Regulations on Tax PRC Enterprise Income Tax Law The Enterprise Income Tax Law enacted by the National People’s Congress, or the PRC EIT Law, applies a uniform 25% enterprise income tax rate to both foreign-invested enterprises and domestic enterprises, except where tax incentives are granted to special industries and projects.
In December 2020, Cheerwins Technology Group, or Cheerwins Cayman, our wholly owned subsidiary, was incorporated in Cayman. In January 2021, Cheerwins Online Education HK limited, or Cheerwins HK, our wholly owned subsidiary, was incorporated in Hong Kong. Cheerwins HK is wholly owned by Cheerwins Cayman and currently holds 100% of the equity interests of Tianjin Alaman.
Cheerwins HK is wholly owned by Cheerwins Cayman and currently holds 100% of the equity interests of Tianjin Alaman. In April 2021, FireSky Investment HK Limited, or FireSky Investment, our wholly-owned subsidiary, was incorporated in Hong Kong. In June 2021, Wuhan Zhongtudao Technology Co., Ltd, or Wuhan Zhongtudao, our wholly-owned subsidiary, was incorporated in the PRC.
The Group provides professional assistance and counseling to help students make informed decisions that best suit their learning needs. In addition, the Group’s enrollment consultants also help them formulate effective study plans throughout their enrollments in the courses. Students can access the Group’s services either through PC or mobile applications.
In addition, the Group’s enrollment consultants also help them formulate effective study plans throughout their enrollments in the courses. Students can access the Group’s services either through PC or mobile applications.
Enrollment process The Group uses multi-layer lead-nurturing strategies to acquire new student enrollments in a cost-effective manner. Each of the leads generated are initially directed to the live chat support team who is responsible for answering prospective students’ enquires, encouraging them to register with the Group’s platforms, and collecting necessary information.
Each of the leads generated are initially directed to the live chat support team who is responsible for answering prospective students’ enquires, encouraging them to register with the Group’s platforms, and collecting necessary information.
The Group’s Sunlands mobile app, available on both iOS and Android, is built with a clear and functional interface that enables access to course and educational content offerings and virtual learning community. The Group has also built mobile WAP pages which allow students and faculty to enjoy a similar level of functionality as the Group’s mobile app without installation.
The Group’s Sunlands mobile app, available on both iOS and Android, is built with a clear and functional interface that enables access to course and educational content offerings and virtual learning community.
In December 2021, we approved a share repurchase program under which our company is authorized to repurchase up to US$15.0 million of Class A ordinary shares in the form of ADSs over the next 24 months. 56 In June 2022, our board of directors declared a special cash dividend in the amount of US$1.36 per ordinary share, or US$0.68 per ADS to holders of our ordinary shares and ADSs as of June 30, 2022.
In December 2023, we extended such share repurchase program for another 24 months until December 2025. In June 2022, our board of directors declared a special cash dividend in the amount of US$1.36 per ordinary share, or US$0.68 per ADS to holders of our ordinary shares and ADSs as of June 30, 2022.
In recent years, the Group’s course offerings have become more diversified, and the professional certification preparation, professional skills and interest course offerings have contributed to an increasing proportion of the Group’s overall revenues.
The Group’s solid foundation and rich resources in course portfolio has enabled the Group to successfully grasp market opportunities and effectively scale up the Group’s offerings. In recent years, the Group’s course offerings have become more diversified, and the interest, professional skills and professional certification preparation course offerings have contributed to an increasing proportion of the Group’s overall revenues.
Overview The Group is the leader in China’s online post-secondary and professional education. The Group has a deep understanding of the educational needs of the Group’s prospective students and offer solutions that help them achieve their goals. The Group offers various degree-and diploma-oriented post-secondary courses through the Group’s online platforms.
Overview The Group is a leader in China’s adult online education market and China’s adult personal interest learning market. The Group has a deep understanding of the educational needs of the Group’s prospective students and offer solutions that 56 help them achieve their goals.
The Group’s net revenues were RMB2,203.8 million, RMB2,507.8 million and RMB2,323.1 million (US$336.8 million) respectively, and the Group’s gross billings were RMB2,350.4million, RMB1,970.0 million and RMB1,496.7 million (US$217.0 million), respectively, in 2020, 2021 and 2022. The Group recorded net loss of RMB431.0 million in 2020, and net profit of RMB212.4 million and RMB643.0 million (US$93.2 million) in 2021 and 2022.
The Group’s net revenues were RMB2,507.8 million, RMB2,323.1 million and RMB2,159.6 million (US$304.2 million) respectively, and the Group’s gross billings were RMB1,970.0 million, RMB1,496.7 million and RMB1,504.6 million (US$211.9 million), respectively, in 2021, 2022 and 2023. The Group recorded net income of RMB212.4 million, RMB643.0 million and RMB640.8 million (US$90.3 million) in 2021, 2022 and 2023.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Risk Factors—Risks Related to the Group’s Business—If the Group fails to manage the its business growth effectively, the success of the Group’s business model will be compromised.” The Group’s ability to continue to increase the number of students and new student enrollments is primarily driven by factors including the quality of the Group’s education services, the range and attractiveness of the Group’s course offerings, the brand reputation, the ability to convert leads into student enrollments cost-effectively, and the availability of loans from third-party credit providers to students.
Risk Factors—Risks Related to the Group’s Business—If the Group fails to manage its business growth effectively, the success of the Group’s business model will be compromised.” The Group’s ability to continue to increase the number of students and new student enrollments is primarily driven by factors including the quality of the Group’s education services, the range and attractiveness of the Group’s course offerings, the brand reputation, the ability to convert leads into student enrollments cost-effectively, and the availability of loans from third-party credit providers to students.
Critical Accounting Estimates For our critical accounting estimates, see “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Critical Accounting Policies and Estimates.”
Critical Accounting Estimates For our critical accounting estimates, see “Item 5. Operating and Financial Review and Prospects—5.A. Operating Results—Critical Accounting Policies and Estimates.”
Risk Factors—Risks Related to the Group’s Business—The Group may face risks associated with the installment tuition payment plan the Group offers to students.” The Group’s ability to attract prospective students in target markets and expand course offerings has a direct impact on maintaining growths in the number of students and new student enrollments, which in turn is subject to several other factors largely beyond the Group’s control, including the perception of the effectiveness of online education as compared to offline, classroom-based courses and the popularity of the degrees, diplomas, certifications, professions, professional skills or interests students are pursuing.
Risk Factors—Risks Related to the Group’s Business—The Group may face risks associated with the installment tuition payment plan the Group offers to its students.” The Group’s ability to attract prospective students in target markets and expand course offerings has a direct impact on maintaining growths in the number of students and new student enrollments, which in turn is subject to several other factors largely beyond the Group’s control, including the perception of the effectiveness of online education as compared to offline, classroom-based courses and the popularity of the degrees, diplomas, certifications, professions, professional skills or interests students are pursuing.
Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of these subsidiaries in the PRC, including Hong Kong, to make payments to us could have a material and adverse effect on our ability to conduct business.” For the purpose of illustration, the below table reflects the hypothetical taxes that might be required to be paid within China, assuming that: (i) we have taxable earnings, and (ii) we determine to pay a dividend in the future: Taxation Scenario (1) Statutory Tax and Standard Rates Hypothetical pre-tax earnings (2) 100 % Tax on earnings at statutory rate of 25% (3) (25 )% Net earnings available for distribution 75 % Withholding tax at standard rate of 10% (4) (7.5 )% Net distribution to Parent/Shareholders 67.5 % Notes: (1) The tax calculation has been simplified for the purpose of this example.
Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of these subsidiaries in the PRC, including Hong Kong, to make payments to us could have a material and adverse effect on our ability to conduct the Group’s business.” For the purpose of illustration, the below table reflects the hypothetical taxes that might be required to be paid within China, assuming that: (i) we have taxable earnings, and (ii) we determine to pay a dividend in the future: 94 Taxation Scenario (1) Statutory Tax and Standard Rates Hypothetical pre-tax earnings (2) 100 % Tax on earnings at statutory rate of 25% (3) (25 )% Net earnings available for distribution 75 % Withholding tax at standard rate of 10% (4) (7.5 )% Net distribution to Parent/Shareholders 67.5 % Notes: (1) The tax calculation has been simplified for the purpose of this example.
Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of these subsidiaries in the PRC, including Hong Kong, to make payments to us could have a material and adverse effect on our ability to conduct business” and “Item 3.
Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of these subsidiaries in the PRC, including Hong Kong, to make payments to us could have a material and adverse effect on our ability to conduct the Group’s business” and “Item 3.
We believe that gross billings and EBITDA provide valuable insight into the sales of course packages and the performance of business. These non-GAAP financial measures should not be considered in isolation from, or as a substitute for, their respective most directly comparable financial measure prepared in accordance with GAAP.
We believe that gross billings and EBITDA provide valuable insight into the sales of course packages and the performance of business. 88 These non-GAAP financial measures should not be considered in isolation from, or as a substitute for, their respective most directly comparable financial measure prepared in accordance with GAAP.
As a Cayman Islands holding company, we are permitted under PRC laws and regulations to provide funding from the proceeds of our fund raising activities to our PRC subsidiaries only through loans or capital contributions, and to the VIEs only through loans, in each case subject to the satisfaction of the applicable government registration and reporting, approval requirements.
As a Cayman Islands holding company, we are permitted under PRC laws and regulations to provide funding from the proceeds of our fund raising activities to our PRC subsidiaries only through loans or capital contributions, and to the VIEs only through loans, in each case subject to the satisfaction of the applicable government registration and reporting, approval 95 requirements.
Business Overview—Business—Tuition and Fees.” The Group expects the cost of revenues to increase in an absolute amount in line with the expansion of business and student base growth. 84 Operating expenses The Group’s operating expenses consist of sales and marketing expenses and, to a lesser extent, general and administrative expenses and product development expenses.
Business Overview—Tuition and Fees.” The Group expects the cost of revenues to increase in an absolute amount in line with the expansion of business and student base growth. Operating expenses The Group’s operating expenses consist of sales and marketing expenses and, to a lesser extent, general and administrative expenses and product development expenses.
For all the periods presented, these fees are recognized as cost of revenues of the VIEs, with a corresponding amount as service income by our PRC subsidiaries and eliminated in 94 consolidation. For income tax purposes, our PRC subsidiaries and the VIEs file income taxes on a separate company basis.
For all the periods presented, these fees are recognized as cost of revenues of the VIEs, with a corresponding amount as service income by our PRC subsidiaries and eliminated in consolidation. For income tax purposes, our PRC subsidiaries and the VIEs file income taxes on a separate company basis.
The major factor for the Group’s negative working capital position as of December 31, 2021 and 2022 was deferred revenue. We intend to finance the Group’s future working capital requirements and capital expenditures from existing cash balance, cash generated from operating activities and funds raised from financing activities.
The major factor for the Group’s negative working capital position as of December 31, 2022 was deferred revenue. We intend to finance the Group’s future working capital requirements and capital expenditures from existing cash balance, cash generated from operating activities and funds raised from financing activities.
We are permitted under PRC laws and regulations to provide funding to our PRC subsidiaries in China through capital contributions or loans, subject to the approval of government authorities and limits on the amount of capital contributions and loans. In addition, our subsidiaries in China may provide Renminbi funding to the VIEs only through entrusted loans.
We are permitted under PRC laws and regulations to provide funding to our PRC 91 subsidiaries in China through capital contributions or loans, subject to the approval of government authorities and limits on the amount of capital contributions and loans. In addition, our subsidiaries in China may provide Renminbi funding to the VIEs only through entrusted loans.
Since the use of estimates is an integral component of the financial reporting 89 process, the Group’s actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.
Since the use of estimates is an integral component of the financial reporting process, the Group’s actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.
History and Development of the Company—Condensed Consolidating Schedule,” and consolidated financial statements included elsewhere in this annual report. As of December 31, 2022, Sunlands Technology Group had made cumulative capital contributions of US$200.0 million to our PRC subsidiaries through an intermediate holding company. These funds have been used by our PRC subsidiaries for their operations.
History and Development of the Company—Condensed Consolidating Schedule,” and consolidated financial statements included elsewhere in this annual report. As of December 31, 2023, Sunlands Technology Group had made cumulative capital contributions of US$200.0 million to our PRC subsidiaries through an intermediate holding company. These funds have been used by our PRC subsidiaries for their operations.
The tuition the Group collects from a student is initially recorded as deferred revenue and is generally recognized proportionally throughout the duration of the programs that student has enrolled in.
The tuition the Group collects from a student 83 is initially recorded as deferred revenue and is generally recognized proportionally throughout the duration of the programs that student has enrolled in.
Risk Factors—Risks Related to Doing Business in China—If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to the Group and our non-PRC shareholders and ADS holders.” Critical Accounting Policies and Estimate We prepare financial statements in accordance with U.S.
Risk Factors—Risks Related to Doing Business in China—If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to the Group and our non-PRC shareholders and ADS holders.” Critical Accounting Policies and Estimates We prepare financial statements in accordance with U.S.
Other than those shown above, the Group did not have any significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2022. Transfer of Funds and Other Assets Under relevant PRC laws and regulations, we are permitted to remit funds to the VIEs through loans rather than capital contributions.
Other than those shown above, the Group did not have any significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2023. Transfer of Funds and Other Assets Under relevant PRC laws and regulations, we are permitted to remit funds to the VIEs through loans rather than capital contributions.
A significant portion of the gross billings from professional certification preparation, professional skills and interest courses generated in 2022 were recognized as net revenues in the same year, primarily because revenues generated from professional certification preparation, professional skills and interest courses are generally recognized over a shorter period of time than degree- or diploma-oriented post-secondary courses.
A significant portion of the gross billings from interest, professional skills and professional certification preparation courses generated in 2023 were recognized as net revenues in the same year, primarily because revenues generated from interest, professional skills and professional certification preparation courses are generally recognized over a shorter period of time than degree- or diploma-oriented post-secondary courses.
The Group’s actual results may differ materially from those currently anticipated as a result of many factors, including those described under “Item 3.D. Risk Factors” and elsewhere in this annual report on Form 20-F. 5.A.
The Group’s actual results may differ materially from those currently anticipated as a result of many factors, including those described under “Item 3. Key Information—3.D. Risk Factors” and elsewhere in this annual report on Form 20-F. 5.A.
We did not have any off-balance sheet arrangements as of December 31, 2022. As a holding company with no material operations of our own, the Group’s operations are primarily conducted through our subsidiaries and the VIEs in China.
We did not have any off-balance sheet arrangements as of December 31, 2023. As a holding company with no material operations of our own, the Group’s operations are primarily conducted through our subsidiaries and the VIEs in China.
Deferred revenue consisted primarily of tuition paid upfront by students at the time of purchase of course packages. Deferred cost consisted primarily of the incremental sales commissions and service fees relating to obtaining of customer contracts which is expected to be recovered and capitalized.
Deferred revenue consisted primarily of tuition paid upfront by students at the time of purchase of course packages. Deferred costs consisted primarily of the incremental sales commissions and service fees relating to obtaining of customer contracts which is expected to be recovered and capitalized.
The outstanding balance of service fees owed by the VIEs to our PRC subsidiaries was nil as of each of December 31, 2020, 2021 and 2022. There were no other assets transferred between us and the VIEs in 2020, 2021 and 2022.
The outstanding balance of service fees owed by the VIEs to our PRC subsidiaries was nil as of each of December 31, 2021, 2022 and 2023. There were no other assets transferred between us and the VIEs in 2021, 2022 and 2023.
Except for that, we have no plan to declare or pay any dividends in the near future on our shares or the ADSs representing our ordinary shares. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand the Group’s business. See “Item 8. Financial Information—A.
We have no plan to declare or pay any dividends in the near future on our shares or the ADSs representing our ordinary shares. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand the Group’s business. See “Item 8. Financial Information—A.
The Group’s services are subject to VAT at the rate of 6% for general-VAT-payer entities in accordance with tax rule, except that certain subsidiaries were subject to a simple VAT collection method at a rate of 3% before June 2019.
The Group’s services are subject to VAT at the rate of 6% for general-VAT-payer entities in accordance with tax rule, except that certain subsidiaries were subject to a simple VAT collection method at a rate of 3%.
The cost of revenues also included service fees paid to educational institutions, cooperation costs, related rental expenses, server management costs, bandwidth costs, payment processing costs, insurance cost, depreciations for property and equipment and amortizations for intangible assets. See “Item 4. Information on the Company—4.B.
The cost of revenues also included cost of printed books and learning materials, service fees paid to educational institutions, cooperation costs, related rental expenses, server management costs, bandwidth costs, payment processing costs, insurance cost, depreciations for property and equipment and amortizations for intangible assets. See “Item 4. Information on the Company—4.B.
Under the agreements, the Group is obligated to repay the loans in equal instalment every three months with maturity terms ranging from eight years to ten years. The Group repaid RMB32.5 million, RMB34.0 million and RMB38.7 million (US$5.6 million) for the principals of loans during the years ended December 31, 2020, 2021 and 2022, respectively.
Under the agreements, the Group is obligated to repay the loans in equal instalment every three months with maturity terms ranging from eight years to ten years. The Group repaid RMB34.0 million, RMB38.7 million and RMB38.7 million (US$5.4 million) for the principals of loans during the years ended December 31, 2021, 2022 and 2023, respectively.
Operating and Financial Review and Prospects—5.B. Liquidity and Capital Resources—Cash Flows and Working Capital” beginning on page 94 of our Form 20-F for the fiscal year ended December 31, 2021 filed with the Securities and Exchange Commission on April 27, 2021 (Securities Act File No. 333-234009).
Operating and Financial Review and Prospects—5.B. Liquidity and Capital Resources—Cash Flows and Working Capital” beginning on page 94 of our Form 20-F for the fiscal year ended December 31, 2021 filed with the Securities and Exchange Commission on April 27, 2022 (Securities Act File No. 001-38423).
Trend Information Other than as disclosed elsewhere in this annual report on Form 20-F, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2022 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial condition. 5.E.
Business Overview—Licenses and Approvals.” 5.D.Trend Information Other than as disclosed elsewhere in this annual report on Form 20-F, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2023 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial condition. 5.E.
Material Cash Requirements 92 The Group’s material cash requirements as of December 31, 2022 and any subsequent interim period primarily include the Group’s operating lease commitments, investment commitments, long-term loans, capital expenditures and working capital requirements. The Group’s operating lease commitments consist of the commitments under the lease agreements for office premises.
Material Cash Requirements The Group’s material cash requirements as of December 31, 2023 and any subsequent interim period primarily include the Group’s operating lease commitments, long-term loans, capital expenditures and working capital requirements. The Group’s operating lease commitments consist of the commitments under the lease agreements for office premises.
Accordingly, Sunlands Online Education HK Limited may be able to benefit from the 5% withholding tax rate for the dividends it receives from Wuhan Zhibo and Tianjin Alaman, if it satisfies the conditions prescribed under SAT Circular 81 and other relevant tax rules and regulations.
Accordingly, Sunlands Online Education HK Limited, FireSky Investment HK Limited and Cheerwins Online Education HK Limited may be able to benefit from the 5% withholding tax rate for the dividends it receives from Wuhan Zhibo, Wuhan Zhongtudao and Tianjin Alaman, respectively, if it satisfies the conditions prescribed under SAT Circular 81 and other relevant tax rules and regulations.
Financing Activities Net cash used in financing activities in 2022 was RMB67.9 million (US$9.8 million), which was primarily attributable to repayment of bank debt of RMB38.7 million (US$5.6 million) and settlement of dividend payable for an amount of RMB32.6 million (US$4.7 million).
Net cash used in financing activities in 2022 was RMB67.9 million, which was primarily attributable to repayment of bank debt of RMB38.7 million and settlement of dividend payable for an amount of RMB32.6 million.
This would result in the double taxation of earnings: one at the VIE level (for non-deductible expenses) and one at the PRC subsidiary level (for presumptive earnings on the transfer). Such a transfer and the related tax burdens would reduce our after-tax income by approximately 5.5% of the pre-tax income.
This would result in the double taxation of earnings: one at the VIE level (for non-deductible expenses) and one at the PRC subsidiary level (for presumptive earnings on the transfer). Such a transfer and the related tax burdens would reduce our after-tax income to approximately 50.6% of the pre-tax income.
The tuition the Group collects from a student is initially recorded as deferred revenue and is generally recognized proportionally over a weighted average period of 21 months for the degree-or diploma-oriented post-secondary courses and a weighted average period of seven months for the professional certification preparation, professional skills and interest courses for the year ended December 31, 2022.
The tuition the Group collects from a student is initially recorded as deferred revenue and is generally recognized proportionally over a weighted average period of 5 months for the interest, professional skills and professional certification preparation courses and a weighted average period of 15 months for the degree- or diploma-oriented post-secondary courses for the year ended December 31, 2023.
The difference between the Group’s net income of RMB643.0 million (US$93.2 million), after netting non-cash reconciliation items, and the net cash used in operating activities was mainly due to (i) a decrease in deferred revenue of RMB657.0 million (US$95.3 million), (ii) a decrease in accrued expenses and other current liabilities of RMB178.9 million (US$25.9 million), and(iii) a decrease in lease liability of RMB84.5 million (US$12.3 million); partially offset by (i) a decrease in right-of-use asset of RMB87.7 million (US$12.7 million) (ii) a decrease in prepaid expenses and other current assets of RMB77.8 million (US$11.3 million), and (iii) a decrease in deferred costs of RMB76.6 million (US$11.1 million).
The difference between the Group’s net income of RMB643.0 million, after netting non-cash reconciliation items, and the net cash used in operating activities was mainly due to (i) a decrease in deferred revenue of RMB657.0 million, (ii) a decrease in accrued expenses and other current liabilities of RMB178.9 million, and(iii) a decrease in lease liability of RMB84.5 million; partially offset by (i) a decrease in right-of-use asset of RMB87.7 million (ii) a decrease in prepaid expenses and other current assets of RMB77.8 million, and (iii) a decrease in deferred costs of RMB76.6 million.
The Group’s capital expenditures were RMB27.0 million, RMB16.5 million and RMB3.2 million (US$0.5 million), respectively, for the years ended December 31, 2020, 2021 and 2022. We intend to fund our future working capital requirements and capital expenditures from the Group’s existing cash balance, cash generated from operating activities and funds raised from financing activities.
The Group’s capital expenditures were RMB16.5 million, RMB3.2 million and RMB6.4 million (US$0.9 million), respectively, for the years ended December 31, 2021, 2022 and 2023. We intend to fund our future working capital requirements and capital expenditures from the Group’s existing cash balance, cash generated from operating activities and funds raised from financing activities.
In 2020, 2021 and 2022, the percentage of the Group’s sales and marketing expenses divided by the Group’s gross billings was 90.4%, 88.8% and 75.5%, respectively. 83 The Group has acquired many of the existing students through search engine marketing channels, mobile marketing channels and, to a lesser extent, offline channels.
In 2021, 2022 and 2023, the percentage of the Group’s sales and marketing expenses divided by the Group’s gross billings was 88.8%, 75.5% and 75.9%, respectively. The Group has acquired many of the existing students through search engine marketing channels, mobile marketing channels and, to a lesser extent, offline channels.
The annual interest rate for the loan agreements dated in 2018 was 1.472% prior to April 15, 2021 and 1.25% after April 15, 2021 on top of base rate of one-year interest rate released by the People’s Bank of China.
The annual interest rate for the loan agreements dated in 2018 was 1.472% prior to April 15, 2021, 1.25% from April 16, 2021 to August 25, 2023 and 0.7% after August 25, 2023 on top of base rate of one-year interest rate released by the People’s Bank of China.
Refund liabilities are estimated based on a historical refund ratio on a portfolio basis using the expected value method and current period experience factors, such as the anticipated cash refund that would occur in the normal course of business. Estimation of refund liabilities may require significant judgment and the actual amount of refund may differ from the Group’s estimates.
Refund liabilities are estimated based on a historical refund ratio on a portfolio basis using the expected value method and current period experience factors, such as the anticipated cash refund that would occur in the normal course of business. This may requires significant judgments and the actual amount of refund may differ from the Group’s estimates. 5.B.
Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of these subsidiaries in the PRC, including Hong Kong, to make payments to us could have a material and adverse effect on our ability to conduct business.” Sunlands Technology Group has previously declared a special cash dividend of US$1.36 per ordinary share (or US$0.68 per ADS) to holders of its ordinary shares and ADSs on June 14, 2022, and is in the process of the distribution of such dividend as of the date of this annual report.
Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC and Hong Kong subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of these subsidiaries in the PRC, including Hong Kong, to make payments to us could have a material and adverse effect on our ability to conduct the Group’s business.” Sunlands Technology Group has previously declared a special cash dividend of US$1.36 per ordinary share (or US$0.68 per ADS) to holders of its ordinary shares and ADSs on June 14, 2022, which has been fully paid as of December 31, 2023.
As of December 31, 2022, the Group had RMB757.4 million (US$109.8 million) in cash, cash equivalents and restricted cash, the majority of which were held by our company, our PRC subsidiaries, the VIEs and the VIEs’ subsidiaries in China. The Group’s cash and cash equivalents consist primarily of bank deposits and are primarily denominated in U.S. dollars and Renminbi.
As of December 31, 2023, the Group had RMB766.4 million (US$107.9 million) in cash, cash equivalents and restricted cash, the majority of which were held by our company, our PRC subsidiaries, the VIEs and the VIEs’ subsidiaries in China. The Group’s cash and cash equivalents consist primarily of bank deposits and are primarily denominated in U.S. dollars and Renminbi.
For the year ended December 31, 2022, the weighted average length of the Group’s degree-or diploma-oriented post-secondary courses was approximately 21 months, and the weighted average length of the Group’s professional certification preparation, professional skills and interest courses was approximately seven months.
For the year ended December 31, 2023, the weighted average length of the Group’s interest, professional skills and professional certification preparation courses was approximately 5 months, and the weighted average length of the Group’s degree- or diploma-oriented post-secondary courses was approximately 15 months.
Changes to China’s economy and GDP growth also have a material impact on the online post-secondary and professional education market. In addition, the industry the Group operates in is fragmented, and the Group faces competition from traditional offline players.
Changes to China’s economy and GDP growth also have a material impact on the adult online education market and the adult personal interest learning market. In addition, the industry the Group operates in is fragmented, and the Group faces competition from traditional offline players.
The Group’s new student enrollments remained relatively stable, primarily due to the increase in professional skills and general interest courses catering to growing demands for diverse personal education, partially offset by the decrease in STE courses.
The Group’s new student enrollments remained relatively stable, primarily due to the increase in professional skills and general interest courses catering to growing demands for diverse personal education, partially offset by the decrease in degree- or diploma-oriented post-secondary courses.
The Group also plans to further strengthen the mobile marketing endeavors, which we believe are particularly critical to attracting prospective students who are not yet aware of solutions available to satisfy their desire to pursue post-secondary and professional education.
The Group also plans to further strengthen the mobile marketing endeavors, which we believe are particularly critical to attracting prospective students who are not yet aware of solutions available to satisfy their desire to pursue adult online education and adult personal interest learning education.
In 2020, 2021 and 2022, the Group generated net revenues of RMB2,203.8 million, RMB2,507.8 million and RMB2,323.1 million (US$336.8 million), respectively. The Group generally bills students for the entire course tuition upfront at the time of sale of the course packages.
In 2021, 2022 and 2023, the Group generated net revenues of RMB2,507.8 million, RMB2,323.1 million and RMB2,159.6 million (US$304.2 million), respectively. The Group generally bills students for the entire course tuition upfront at the time of sale of the course packages.
In 2020 and 2021, the net amounts of working capital support provided by our PRC subsidiaries to the VIEs were RMB1,475.3 million and RMB12.5 million, respectively. In 2022, the net amount of working capital support provided by the VIEs to our PRC subsidiaries was RMB538.3 million (US$78.1 million). For more information, see “Item 4. Information on the Company—4.A.
In 2021, the net amount of working capital support provided by our PRC subsidiaries to the VIEs was RMB12.5 million. In 2022 and 2023, the net amounts of working capital support provided by the VIEs to our PRC subsidiaries were RMB538.3 million and RMB602.9 million (US$84.9 million), respectively. For 93 more information, see “Item 4. Information on the Company—4.A.
Deferred revenue consisted primarily of tuition paid upfront by students at the time of purchase of course packages. Deferred costs consisted primarily of the incremental sales commissions and service fees relating to obtaining of customer contracts which is expected to be recovered and capitalized. Net cash used in operating activities was RMB373.3 million in 2021.
Deferred revenue consisted primarily of tuition paid upfront by students at the time of purchase of course packages. Deferred cost consisted primarily of the incremental sales commissions and service fees relating to obtaining of customer contracts which is expected to be recovered and capitalized. Net cash generated from operating activities was RMB9.1 million in 2022.
The weighted average “service period” (i.e., the period over which revenues for the online courses are recognized on a straight line basis) of the professional certification preparation, professional skills and interest courses in 2021 and 2022 was both approximately seven months as compared to 24 months and 21 months of degree- or diploma-oriented post-secondary courses in 2021 and 2022, respectively. 86 Cost of revenues The Group’s cost of revenues decreased by 7.5% from RMB376.2 million in 2021 to RMB348.2 million (US$50.5 million) in 2022.
The weighted average “service period” (i.e., the period over which revenues for the online courses are recognized on a straight line basis) of the interest, professional skills and professional certification preparation courses in 2022 and 2023 was 7 months and 5 months as compared to 21 months and 15 months of degree- or diploma-oriented post-secondary courses in 2022 and 2023, respectively. 87 Cost of revenues The Group’s cost of revenues decreased by 23.7% from RMB348.2 million in 2022 to RMB265.5 million (US$37.4 million) in 2023.
Our PRC subsidiaries maintained certain personnel for sales and marketing, research and development, and general and administrative functions to support the operations of the VIEs. 93 In 2020, 2021 and 2022, the VIEs transferred RMB17.1 million, RMB62.6 million and RMB51.6 million (US$7.5 million) of service fees to our PRC subsidiaries pursuant to the contractual arrangements, respectively.
Our PRC subsidiaries maintained certain personnel for sales and marketing, research and development, and general and administrative functions to support the operations of the VIEs. In 2021, 2022 and 2023, the VIEs transferred RMB62.6 million, RMB51.6 million and RMB26.8 million (US$3.8 million) of service fees to our PRC subsidiaries pursuant to the contractual arrangements, respectively.
The selection of critical accounting policies, the judgments and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors that should be considered when reviewing the Group’s financial statements. For further information on our critical accounting policies, see Note 2 to the consolidated financial statements.
The selection of critical accounting policies, the judgments and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors that should be considered when reviewing the Group’s financial statements.
As of December 31, 2020, 2021 and 2022, the Group’s deferred revenues were RMB3,024.4 million, RMB2,348.2 million and RMB1,690.9 million (US$245.2 million), respectively. The Group continually evaluates the mix of course length.
As of December 31, 2021, 2022 and 2023, the Group’s deferred revenues were RMB2,348.2 million, RMB1,690.9 million and RMB1,113.9 million (US$156.9 million), respectively. The Group continually evaluates the mix of course length.
Operating Results Major Factors Affecting Results of Operations The Group operates in China’s online post-secondary and professional education market, and the Group’s results of operations and financial condition are significantly affected by general factors affecting this market.
Operating Results Major Factors Affecting Results of Operations 82 The Group operates in China’s adult online education market and adult personal interest learning market, and the Group’s results of operations and financial condition are significantly affected by general factors affecting this market.
The Group leases the office facilities under non-cancelable operating leases with various expiration dates. The majority of the Group’s operating lease commitments are related to our office lease agreements in China. The Group’s investment commitments represent long-term investments in a private company.
The Group leases the office facilities under non-cancelable operating leases with various expiration dates. The majority of the Group’s operating lease commitments are related to our office lease agreements in China.
In 2020, 2021 and 2022, salaries and benefits paid to teachers and mentors that the Group recorded as cost of revenues were RMB220.2 million, RMB209.1 million and RMB160.5 million (US$23.3 million), respectively, accounting for 56.9%, 55.6% and 46.1%, respectively, of the cost of revenues for the same periods.
In 2021, 2022 and 2023, salaries and benefits paid to teachers and mentors that the Group recorded as cost of revenues were RMB209.1 million, RMB160.5 million and RMB91.4 million (US$12.9 million), respectively, accounting for 55.6%, 46.1% and 34.4%, respectively, of the cost of revenues for the same periods.
The transaction price of the integrated online education service package is determined by the contract amount net of any discount. Students are offered a full, unconditional refund within 24 hours upon enrollment. Prior to June 2019, undelivered courses were eligible for refund, excluding registration fees, within 7 days after enrollment.
The transaction price of the integrated online education service package is determined by the contract amount net of any discount. Students are offered a full, unconditional refund within 24 hours upon enrollment and undelivered courses are eligible for refund during the entire service period, excluding registration fees.
Cost of revenues The Group recorded cost of revenues of RMB387.3 million, RMB376.2 million and RMB348.2 million (US$50.5 million) in 2020, 2021 and 2022, respectively. Salaries and benefits paid to teachers and mentors accounted for a significant portion of cost of revenues.
Cost of revenues The Group recorded cost of revenues of RMB376.2 million, RMB348.2 million and RMB265.5 million (US$37.4 million) in 2021, 2022 and 2023, respectively. Salaries and benefits paid to teachers and mentors accounted for a primary portion of cost of revenues.
As of December 31, 2020, 2021 and 2022, the Group had deferred revenue of RMB3,024.4 million, RMB2,348.2 million and RMB1,690.9 million (US$245.2 million), respectively.
As of December 31, 2021, 2022 and 2023, the Group had deferred revenue of RMB2,348.2 million, RMB1,690.9 million and RMB1,113.9 million (US$156.9 million), respectively.
Product development expenses The Group’s product development expenses decreased by 30.2% from RMB61.3 million in 2021 to RMB42.8 million (US$6.2 million) in 2022. The decrease was primarily due to declined compensation expenses related to headcount reduction of the product development personnel. Other income Other income for 2022 was RMB24.5 million (US$3.6 million), compared with RMB39.2 million in 2021.
Product development expenses The Group’s product development expenses decreased by 21.3% from RMB42.8 million in 2022 to RMB33.7 million (US$4.8 million) in 2023. The decrease was primarily due to declined compensation expenses related to headcount reduction of the product development personnel. Other income Other income for 2023 was RMB34.1 million (US$4.8 million), compared with RMB24.5 million in 2022.
In 2020, 2021 and 2022, the Group’s new student enrollments were 434,240, 434,228 and 534,280, respectively, and the numbers of students were 1,130,650, 1,104,630 and 1,067,042, respectively.
In 2021, 2022 and 2023, the Group’s new student enrollments were 434,228, 534,280 and 616,341, respectively, and the numbers of students were 1,104,630, 1,067,042 and 1,131,435, respectively.
In addition, driven by a strong desire for employment, career promotion, salary increases and local residence qualification, post-secondary and professional education in China has grown rapidly in the past several years and is expected to continue to grow in the future.
In addition, driven by a strong desire for employment, career promotion, salary increases and local residence qualification, adult online education and adult personal interest learning education in China have grown rapidly in the past several years and are expected to continue to grow in the future.
Sales and marketing expenses have historically represented a substantial portion of the Group’s total operating expenses. In 2020, 2021 and 2022, the Group’s sales and marketing expenses were RMB2,123.6 million, RMB1,748.4 million and RMB1,129.5 million (US$163.8 million), respectively.
Sales and marketing expenses have historically represented a substantial portion of the Group’s total operating expenses. In 2021, 2022 and 2023, the Group’s sales and marketing expenses were RMB1,748.4 million, RMB1,129.5 million and RMB1,142.2 million (US$160.9 million), respectively.
The following table sets forth the Group’s operating expenses, in absolute amounts and as percentages of total operating expenses, for the years indicated: For the Year Ended December 31, 2020 2021 2022 RMB % RMB % RMB US$ % (in thousands, except for percentages) Sales and marketing 2,123,618 86.1 1,748,436 86.7 1,129,508 163,763 83.2 General and administrative 275,391 11.2 207,602 10.3 185,667 26,919 13.7 Product development 66,528 2.7 61,325 3.0 42,834 6,210 3.1 Total operating expenses 2,465,537 100.0 2,017,363 100.0 1,358,009 196,892 100.0 Sales and marketing expenses The following table sets forth a breakdown of the Group’s sales and marketing expenses, in absolute amounts and as percentages of total sales and marketing expenses, for the years indicated: For the Year Ended December 31, 2020 2021 2022 RMB % RMB % RMB US$ % (in thousands, except for percentages) Expenses incurred in relation to sales and marketing personnel 842,432 39.7 833,019 47.6 564,666 81,869 50.0 Marketing spending 1,101,789 51.9 819,563 46.9 511,931 74,223 45.3 Rentals and related expenses 86,579 4.1 38,935 2.2 9,313 1,350 0.8 Others 92,818 4.3 56,919 3.3 43,598 6,321 3.9 Total sales and marketing expenses 2,123,618 100.0 1,748,436 100.0 1,129,508 163,763 100.0 The Group’s expenses incurred in relation to sales and marketing personnel consist of (i) salaries paid to the sales and marketing personnel; (ii) commissions for the sales and marketing personnel; and (iii) business process outsourcing service fees and commissions.
The following table sets forth the Group’s operating expenses, in absolute amounts and as percentages of total operating expenses, for the years indicated: For the Year Ended December 31, 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentages) Sales and marketing 1,748,436 86.7 1,129,508 83.2 1,142,154 160,869 86.6 General and administrative 207,602 10.3 185,667 13.7 143,286 20,181 10.9 Product development 61,325 3.0 42,834 3.1 33,723 4,750 2.5 Total operating expenses 2,017,363 100.0 1,358,009 100.0 1,319,163 185,800 100.0 Sales and marketing expenses The following table sets forth a breakdown of the Group’s sales and marketing expenses, in absolute amounts and as percentages of total sales and marketing expenses, for the years indicated: 85 For the Year Ended December 31, 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentages) Expenses incurred in relation to sales and marketing personnel 833,019 47.6 564,666 50.0 518,040 72,964 45.4 Marketing spending 819,563 46.9 511,931 45.3 590,565 83,179 51.7 Rentals and related expenses 38,935 2.2 9,313 0.8 5,158 726 0.5 Others 56,919 3.3 43,598 3.9 28,391 4,000 2.4 Total sales and marketing expenses 1,748,436 100.0 1,129,508 100.0 1,142,154 160,869 100.0 The Group’s expenses incurred in relation to sales and marketing personnel consist of (i) salaries paid to the sales and marketing personnel; (ii) commissions for the sales and marketing personnel; and (iii) business process outsourcing service fees and commissions.
Risk Factors—Risks Related to Doing Business in China—If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders and ADS holders.” The following table sets forth a summary of the Group’s cash flows for the years indicated: 91 For the Year Ended December 31, 2021 2022 RMB RMB US$ (in thousands) Net cash (used in)/generated from operating activities (373,251 ) 9,144 1,329 Net cash generated from investing activities 342,681 96,182 13,947 Net cash used in financing activities (38,904 ) (67,911 ) (9,845 ) Effect of exchange rate changes (14,513 ) 43,266 6,266 Net (decrease)/increase in cash, cash equivalents and restricted cash (83,987 ) 80,681 11,697 Cash, cash equivalents and restricted cash at beginning of the year 760,710 676,723 98,116 Cash, cash equivalents and restricted cash at end of the year 676,723 757,404 109,813 For a summary of the Group’s cash flows in 2020, see “Item 5.
Risk Factors—Risks Related to Doing Business in China—If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders and ADS holders.” The following table sets forth a summary of the Group’s cash flows for the years indicated: For the Year Ended December 31, 2022 2023 RMB RMB US$ (in thousands) Net cash generated from operating activities 9,144 140,798 19,830 Net cash generated from/(used in) investing activities 96,182 (71,818 ) (10,116 ) Net cash used in financing activities (67,911 ) (74,658 ) (10,515 ) Effect of exchange rate changes 43,266 14,652 2,065 Net increase in cash, cash equivalents and restricted cash 80,681 8,974 1,264 Cash, cash equivalents and restricted cash at beginning of the year 676,723 757,404 106,678 Cash, cash equivalents and restricted cash at end of the year 757,404 766,378 107,942 For a summary of the Group’s cash flows in 2021, see “Item 5.
Operating Results—Year Ended December 31, 2021 Compared to Year Ended December 31, 2020” beginning on page 89 of our Form 20-F for the fiscal year ended December 31, 2021 filed with the Securities and Exchange Commission on April 27, 2022 (Securities Act File No. 333-234009).
Operating and Financial Review and Prospects—5.A. Operating Results— Year Ended December 31, 2022 Compared to Year Ended December 31, 2021” beginning on page 86 of our Form 20-F for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission on April 25, 2023 (Securities Act File No. 001-38423).
The decrease was mainly due to the declined compensation expenses related to headcount deduction of the cost of revenues personnel, including teachers and mentors from RMB209.1 million in 2021 to RMB160.5 million (US$23.3 million) in 2022.
The decrease was mainly due to the declined compensation expenses related to headcount deduction, including teachers and mentors, from RMB160.5 million in 2022 to RMB91.4 million (US$12.9 million) in 2023.
Our revenue is reported net of discount, value added tax and related surcharges. The primary sources of the Group’s revenues are as follows: For online education services, the Group provides an integrated online education service package to students, including online live streaming audio-video interactive course content, recorded previous live audio-video course content, quiz banks, online chat rooms, and educational contents.
For online education services, the Group provides an integrated online education service package to students, including online live streaming audio-video interactive course content, recorded previous live audio-video course content, quiz banks, online chat rooms, and educational contents.
For a reconciliation of the Group’s gross billings and net revenues, see “—Non-GAAP Financial Measures.” The following table sets forth a breakdown of the Group’s total net revenues for the years indicated: For the Year Ended December 31, 2020 2021 2022 RMB % RMB % RMB US$ % (in thousands, except for percentages) Degree-or diploma-oriented post-secondary courses 1,904,477 86.4 1,634,575 65.1 1,084,857 157,289 46.7 STE courses 1,471,745 66.8 1,038,169 41.3 667,921 96,839 28.8 Other degree- or diploma- oriented post-secondary course 432,732 19.6 596,406 23.8 416,936 60,450 17.9 Professional certification preparation, professional skills and interest courses 268,051 12.2 793,881 31.7 1,112,707 161,327 47.9 Others (1) 31,263 1.4 79,361 3.2 125,537 18,202 5.4 Total net revenues 2,203,791 100 2,507,817 100.0 2,323,101 336,818 100.0 Note: (1) Include commissions received for providing referral services to third-party companies and revenues from sales of goods such as books and learning tools, among others.
For a reconciliation of the Group’s gross billings and net revenues, see “—Non-GAAP Financial Measures.” The following table sets forth a breakdown of the Group’s total net revenues for the years indicated: 84 For the Year Ended December 31, 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentages) Interest, professional skills and professional certification preparation courses 793,881 31.7 1,112,707 47.9 1,449,858 204,208 67.1 Degree- or diploma-oriented post-secondary courses 1,634,575 65.1 1,084,857 46.7 534,041 75,218 24.8 Others (1) 79,361 3.2 125,537 5.4 175,685 24,745 8.1 Total net revenues 2,507,817 100.0 2,323,101 100.0 2,159,584 304,171 100.0 Note: (1) Include commissions received for providing referral services to third-party companies and revenues from sales of goods such as books and learning materials, among others.
Investing Activities Net cash generated from investing activities was RMB96.2 million (US$13.9 million) in 2022, which was primarily attributable to proceeds from maturity of short-term investments of RMB1,357.9 million (US$196.9 million), partially offset by purchase of short-term investments of RMB1,244.6 million (US$180.5 million).
Net cash generated from investing activities was RMB96.2 million in 2022, which was primarily attributable to proceeds from maturity of short-term investments of RMB1,357.9 million, partially offset by purchase of short-term investments of RMB1,244.6 million. 92 Financing Activities Net cash used in financing activities in 2023 was RMB74.7 million (US$10.5 million), which was primarily attributable to repayment of bank debt of RMB38.7 million (US$5.4 million) and settlement of dividend payable of RMB31.3 million (US$4.4 million).
For this reason, we believe the ability to continue to grow net revenues and gross billings significantly depends on the Group’s ability to continue to convert students to embrace online education formats over traditional offline education format. 82 Ability to increase the number of students and new student enrollments at optimal pricing The Group’s net revenues and gross billings primarily consist of tuition payments from students and are therefore affected by the number of students and new student enrollments and the pricing of the Group’s educational services.
Ability to increase the number of students and new student enrollments at optimal pricing The Group’s net revenues and gross billings primarily consist of tuition payments from students and are therefore affected by the number of students and new student enrollments and the pricing of the Group’s educational services.
The Group incurred net losses of RMB431.0 million for the year ended December 31, 2020, and recorded net profit of RMB212.4 million and RMB643.0 million (US$93.2 million), for the years ended December 31 2021 and 2022, respectively. The Group had negative working capital of RMB779.4 million and RMB509.0 million (US$73.8 million) as of December 31, 2021 and 2022.
The Group recorded net income of RMB212.4 million, RMB643.0 million and RMB640.8 million (US$90.3 million) for the years ended December 31, 2021, 2022 and 2023, respectively. The Group had negative working capital of RMB509.0 million and positive working capital of RMB21.6 million (US$3.0 million) as of December 31, 2022 and 2023.
The operating results in any period are not necessarily indicative of the results that may be expected for any future period. 85 For the Year Ended December 31, 2020 2021 2022 RMB RMB RMB US$ (in thousands, except for share and per share data) Net revenues 2,203,791 2,507,817 2,323,101 336,818 Cost of revenues (1) (387,272 ) (376,189 ) (348,150 ) (50,477 ) Gross profit 1,816,519 2,131,628 1,974,951 286,341 Operating expenses Sales and marketing expenses (1) (2,123,618 ) (1,748,436 ) (1,129,508 ) (163,763 ) Product development expenses (1) (66,528 ) (61,325 ) (42,834 ) (6,210 ) General and administrative expenses (1) (275,391 ) (207,602 ) (185,667 ) (26,919 ) Total operating expenses (2,465,537 ) (2,017,363 ) (1,358,009 ) (196,892 ) (Loss)/income from operations (649,018 ) 114,265 616,942 89,449 Interest income 25,809 16,175 16,248 2,356 Interest expense (11,692 ) (10,929 ) (10,059 ) (1,458 ) Other income, net 203,210 39,156 24,527 3,556 Impairment loss on long-term investments (882 ) (5,000 ) (500 ) (72 ) Gain on disposal of subsidiaries — 43,967 1,390 202 (Loss)/income before income tax expenses and gain/(loss) from equity method investments (432,573 ) 197,634 648,548 94,033 Income tax (expenses)/benefits 236 19,618 (11,992 ) (1,739 ) Gain/(loss) from equity method investments 1,349 (4,886 ) 6,453 936 Net (loss)/income (430,988 ) 212,366 643,009 93,230 Less: Net loss attributable to non-controlling interest (446 ) (6,690 ) (950 ) (138 ) Net (loss)/income attributable to Sunlands Technology Group (430,542 ) 219,056 643,959 93,368 Net (loss)/income per share attributable to ordinary shareholders of Sunlands Technology Group—basic and diluted (63.74 ) 32.56 94.14 13.65 Weighted average shares used in calculating net loss/income per ordinary share—basic and diluted 6,754,134 6,727,552 6,840,079 6,840,079 Note: (1) Share-based compensation expenses are included in: For the Year Ended December 31, 2020 2021 2022 RMB RMB RMB US$ (in thousands) Cost of revenues 146 101 33 5 Sales and marketing expenses 14,278 (14 ) 4,166 604 Product development expenses — — — — General and administrative expenses 15,324 681 2,982 432 Total 29,748 768 7,181 1,041 Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Net revenues The Group’s net revenues decreased by 7.4% from RMB2,507.8 million in 2021 to RMB2,323.1 million (US$336.8 million) in 2022, primarily due to the decrease in the gross billings.
The operating results in any period are not necessarily indicative of the results that may be expected for any future period. 86 For the Year Ended December 31, 2021 2022 2023 RMB RMB RMB US$ (in thousands, except for share and per share data) Net revenues 2,507,817 2,323,101 2,159,584 304,171 Cost of revenues (1) (376,189 ) (348,150 ) (265,528 ) (37,399 ) Gross profit 2,131,628 1,974,951 1,894,056 266,772 Operating expenses Sales and marketing expenses (1) (1,748,436 ) (1,129,508 ) (1,142,154 ) (160,869 ) Product development expenses (1) (61,325 ) (42,834 ) (33,723 ) (4,750 ) General and administrative expenses (1) (207,602 ) (185,667 ) (143,286 ) (20,181 ) Total operating expenses (2,017,363 ) (1,358,009 ) (1,319,163 ) (185,800 ) Income from operations 114,265 616,942 574,893 80,972 Interest income 16,175 16,248 31,094 4,379 Interest expense (10,929 ) (10,059 ) (7,657 ) (1,078 ) Other income, net 39,156 24,527 34,097 4,802 Impairment loss on long-term investments (5,000 ) (500 ) (61 ) (9 ) Gain on disposal of subsidiaries 43,967 1,390 43,715 6,157 Income before income tax benefits/(expenses) and (loss)/gain from equity method investments 197,634 648,548 676,081 95,223 Income tax benefits/(expenses) 19,618 (11,992 ) (25,166 ) (3,545 ) (Loss)/gain from equity method investments (4,886 ) 6,453 (10,084 ) (1,420 ) Net income 212,366 643,009 640,831 90,258 Less: Net (loss)/income attributable to non-controlling interest (6,690 ) (950 ) 1 — Net income attributable to Sunlands Technology Group 219,056 643,959 640,830 90,258 Net income per share attributable to ordinary shareholders of Sunlands Technology Group—basic and diluted 32.56 94.14 92.88 13.08 Weighted average shares used in calculating net income per ordinary share—basic and diluted 6,727,552 6,840,079 6,899,456 6,899,456 Note: (1) Share-based compensation expenses are included in: For the Year Ended December 31, 2021 2022 2023 RMB RMB RMB US$ (in thousands) Cost of revenues 101 33 — — Sales and marketing expenses (14 ) 4,166 — — Product development expenses — — — — General and administrative expenses 681 2,982 — — Total 768 7,181 — — Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Net revenues The Group’s net revenues decreased by 7.0% from RMB2,323.1 million in 2022 to RMB2,159.6 million (US$304.2 million) in 2023, primarily due to the decrease in the gross billings from degree- or diploma-oriented post-secondary courses.
For the Year Ended December 31, 2020 2021 2022 RMB RMB RMB US$ (in thousands) Net revenues 2,203,791 2,507,817 2,323,101 336,818 Less: other revenues (1) (31,272 ) (79,444 ) (125,864 ) (18,249 ) Add: tax and surcharges 277,831 177,966 66,638 9,662 Add: ending deferred revenue 3,024,443 2,348,179 1,690,946 245,164 Add: deferred revenue in connection with disposal of subsidiaries — 29,572 259 38 Add: ending refund liability 232,859 243,236 133,066 19,293 Less: beginning deferred revenue (3,228,770 ) (3,024,443 ) (2,348,179 ) (340,454 ) Less: beginning refund liability (128,478 ) (232,859 ) (243,236 ) (35,266 ) Gross billings (non-GAAP) 2,350,404 1,970,024 1,496,731 217,006 Note: (1) Include commissions received for providing referral services to third-party companies and revenues from sales of goods such as books and learning tools, among others.
For the Year Ended December 31, 2021 2022 2023 RMB RMB RMB US$ (in thousands) Net revenues 2,507,817 2,323,101 2,159,584 304,171 Less: other revenues (1) (79,444 ) (125,864 ) (176,014 ) (24,791 ) Add: tax and surcharges 177,966 66,638 62,352 8,782 Add: ending deferred revenue 2,348,179 1,690,946 1,113,923 156,893 Add: deferred revenue in connection with disposal of subsidiaries 29,572 259 23,220 3,270 Add: ending refund liability 243,236 133,066 143,744 20,246 Less: beginning deferred revenue (3,024,443 ) (2,348,179 ) (1,690,946 ) (238,165 ) Less: beginning refund liability (232,859 ) (243,236 ) (133,066 ) (18,742 ) Less: beginning refund liability in connection with disposal of subsidiaries — — 1,820 256 Gross billings (non-GAAP) 1,970,024 1,496,731 1,504,617 211,920 Note: (1) Include commissions received for providing referral services to third-party companies and revenues from sales of goods such as books and learning materials, among others.
The difference between the Group’s net income of RMB212.4 million, after netting non-cash reconciliation items, and the net cash used in operating activities was mainly due to (i) a decrease in deferred costs of RMB129.9 million, (ii) an increase prepaid expenses and other current assets of RMB24.9 million, (iii) a decrease in right-of-use asset of RMB126.5 million, and (iv) a decrease in accrued expenses and other current liabilities of RMB22.6 million; all offset by (i) a decrease in deferred revenue of RMB646.7 million (US$101.5 million), and (ii) a decrease in lease liability of RMB144.8 million.
The difference between the Group’s net income of RMB640.8 million (US$90.3 million), after netting non-cash reconciliation items, and the net cash used in operating activities was mainly due to (i) a decrease in deferred revenue of RMB553.8 million (US$78.0 million), (ii) a decrease in lease liability of RMB168.6 million (US$23.8 million), (iii) non-cash gain from disposal of subsidiaries of RMB43.7 million (US$6.2 million); partially offset by (i) a decrease in right-of-use asset of RMB142.3 million (US$20.0 million), (ii) a decrease in deferred costs of RMB37.3 million (US$5.3 million), (iii) an increase in accrued expenses and other current liabilities of RMB35.1 million (US$4.9million), (iv) depreciation and amortization of RMB30.6 million (US$4.3 million).
PRC Our subsidiaries and the VIEs and their subsidiaries in China are companies incorporated under PRC law and, as such, are subject to PRC enterprise income tax on their taxable income in accordance with the relevant PRC income tax laws. 88 Pursuant to the PRC Enterprise Income Tax Law, or PRC EIT Law, a uniform 25% enterprise income tax rate is generally applicable to both foreign-invested enterprises and domestic enterprises, except where a special preferential rate applies.
Pursuant to the PRC Enterprise Income Tax Law, or PRC EIT Law, a uniform 25% enterprise income tax rate is generally applicable to both foreign-invested enterprises and domestic enterprises, except where a special preferential rate applies.
As of December 31, 2022, the Group’s cash and cash equivalents denominated in U.S. dollars and Renminbi amounted to RMB504.3 million (US$73.1 million) and RMB248.6 million (US$36.0 million), respectively.
As of December 31, 2023, the Group’s cash and cash equivalents denominated in U.S. dollars and Renminbi amounted to RMB560.8 million (US$79.0 million) and RMB202.5 million (US$28.5 million), respectively.
Revenues for online education services are recognized on a straight line basis over the service period from the registration day to the day on which the service period ends. For certain online courses, the Group provided students the right to apply for refund or cash incentive if certain pre-agreed conditions are achieved.
Revenues for online education services are recognized on a straight line basis over the service period from the registration day to the day on which the service period ends.
For the Year Ended December 31, 2020 2021 2022 RMB RMB RMB US$ (in thousands) Net (loss)/income (430,988 ) 212,366 643,009 93,230 Add: Income tax (benefit)/expenses (236 ) (19,618 ) 11,992 1,739 Depreciation and amortization 40,267 37,916 46,684 6,769 Interest expense 11,692 10,929 10,059 1,458 Less: interest income (25,809 ) (16,175 ) (16,248 ) (2,356 ) EBITDA (non-GAAP) (405,074 ) 225,418 695,496 100,840 Taxation The Cayman Islands We are incorporated in the Cayman Islands.
For the Year Ended December 31, 2021 2022 2023 RMB RMB RMB US$ (in thousands) Net income 212,366 643,009 640,831 90,258 Add: Income tax (benefit)/expenses (19,618 ) 11,992 25,166 3,545 Depreciation and amortization 37,916 46,684 30,648 4,317 Interest expense 10,929 10,059 7,657 1,078 Less: interest income (16,175 ) (16,248 ) (31,094 ) (4,379 ) EBITDA (non-GAAP) 225,418 695,496 673,208 94,819 Taxation The Cayman Islands We are incorporated in the Cayman Islands.
The decrease in the sales and marketing expenses from 2021 to 2022 was mainly due to (i) lower spending on branding and marketing activities; and (ii) declined compensation expenses related to headcount reduction of sales and marketing personnel. The Group’s sales and marketing expenses are primarily composed of marketing spending and expenses incurred in relation to sales and marketing personnel.
The increase in the sales and marketing expenses from 2022 to 2023 was mainly due to increased spending on branding and marketing activities, partially offset by the declined compensation expenses related to headcount reduction of sales and marketing personnel.
Business Overview—Business—Our Tuition and Fees.” The Group’s management uses gross billings as a performance measurement because the Group generally bills students for the entire course tuition at the time of sale of course packages and recognize revenue proportionally over a period. 87 EBITDA is defined as net loss/income excluding depreciation and amortization, interest expense, interest income, and income tax expenses.
For a more detailed discussion of our tuition refund policy, see “Item 4. Information on the Company—4.B. Business Overview—Tuition and Fees.” The Group’s management uses gross billings as a performance measurement because the Group generally bills students for the entire course tuition at the time of sale of course packages and recognize revenue proportionally over a period.
Gross profit As a result of the foregoing, the Group’s gross profit decreased by 7.4% from RMB2,131.6 million in 2021 to RMB1,975.0 million (US$286.3 million) in 2022, and gross margin remained stable at 85.0% in 2021 and 2022. Operating expenses The Group’s operating expenses decreased by 32.7% from RMB2,017.4 million in 2021 to RMB1,358.0 million (US$196.9 million) in 2022.
Gross profit As a result of the foregoing, the Group’s gross profit decreased by 4.1% from RMB1,975.0 million in 2022 to RMB1,894.1 million (US$266.8 million) in 2023, and gross margin increased from 85.0% in 2022 to 87.7% in 2023. Operating expenses The Group’s operating expenses decreased by 2.9% from RMB1,358.0 million in 2022 to RMB1,319.2 million (US$185.8 million) in 2023.
Net cash generated from investing activities was RMB342.7 million in 2021, which was primarily attributable to proceeds from maturity of short-term investments of RMB2,166.9 million, partially offset by purchase of short-term investments of RMB1,833.7 million.
Investing Activities Net cash used in investing activities was RMB71.8 million (US$10.1 million) in 2023, which was primarily attributable to purchase of short-term investments of RMB773.3 million (US$108.9 million), partially offset by proceeds from maturity of short-term investments of RMB701.7 million (US$ 98.8 million).

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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The number of beneficial owners of our ADSs in the United States is likely to be much larger than the number of record holders of our ordinary shares in the United States. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. 6.F.
The number of beneficial owners of the ADSs in the United States is likely to be much larger than the number of record holders of our ordinary shares in the United States. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. 6.F.
A director will be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) dies or is found by our company to be of unsound mind; (iii) resigns by notice in writing to our company; (iv) is prohibited by law or the rules of the New York Stock Exchange from being a director; or (v) is removed from office pursuant to any other provisions of our fourth amended and restated memorandum and articles of association. 6.D.
A director will be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or 100 composition with his creditors; (ii) dies or is found by our company to be of unsound mind; (iii) resigns by notice in writing to our company; (iv) is prohibited by law or the rules of the New York Stock Exchange from being a director; or (v) is removed from office pursuant to any other provisions of our fourth amended and restated memorandum and articles of association. 6.D.
None of our directors has a service contract with us that provides for benefits upon termination of service as a director. 98 Committees of the Board of Directors We have established an audit committee, a compensation committee and a nominating and corporate governance committee under our board of directors. We have adopted a charter for each of the three committees.
None of our directors has a service contract with us that provides for benefits upon termination of service as a director. Committees of the Board of Directors We have established an audit committee, a compensation committee and a nominating and corporate governance committee under our board of directors. We have adopted a charter for each of the three committees.
For share incentive grants to our directors and executive officers, see “—Share Incentive Plan.” We do not set aside any amount to provide pension, retirement or similar benefits. Share Incentive Plan 2017 Plan We adopted an employee share incentive plan in October 2017, or the 2017 Plan.
For share incentive grants to our directors and executive officers, see “—Share Incentive Plan.” We do not set aside any amount to provide pension, retirement or similar benefits. Share Incentive Plan 2017 Plan 97 We adopted an employee share incentive plan in October 2017, or the 2017 Plan.
Each award under the 2017 Plan is designated in an award agreement, which is a written agreement evidencing the grant of an award executed by the company and the grantee, including any amendments thereto. 97 Conditions of Award .
Each award under the 2017 Plan is designated in an award agreement, which is a written agreement evidencing the grant of an award executed by the company and the grantee, including any amendments thereto. Conditions of Award .
As of the date of this annual report, there was no outstanding equity awards granted to our directors and executive officers under the 2017 Plan. As of the same date, our other employees as a group held options to purchase 31,550 Class C ordinary shares, with an exercise price of US$84.75 per share.
As of the date of this annual report, there were no outstanding equity awards granted to our directors and executive officers under the 2017 Plan. As of the same date, our other employees as a group held options to purchase 31,550 Class C ordinary shares, with an exercise price of US$84.75 per share.
(6) Represents (i) 309,326 Class A ordinary shares directly held by Diamond Tower Investments Limited; and (ii) 43,450 Class A ordinary shares in the form of ADSs beneficially owned Ms. Lam Lai Ming. Diamond Tower Investments Limited is part of Orchid Asia V Group, Limited, an investment complex that focuses on companies in Asia and China in particular.
(5) Represents (i) 309,326 Class A ordinary shares directly held by Diamond Tower Investments Limited; and (ii) 43,450 Class A ordinary shares in the form of ADSs beneficially owned Ms. Lam Lai Ming. Diamond Tower Investments Limited is part of Orchid Asia V Group, Limited, an investment complex that focuses on companies in Asia and China in particular.
(7) Represents 826,389 Class B ordinary shares held of record by PV PLUTO LIMITED, a British Virgin Islands company. The sole shareholder of PV PLUTO LIMITED is Primavera Capital Fund II L.P. The business address of PV PLUTO LIMITED is Wickhams Cay II, Road Town, Tortola, VG1110, the British Virgin Islands.
(6) Represents 826,389 Class B ordinary shares held of record by PV PLUTO LIMITED, a British Virgin Islands company. The sole shareholder of PV PLUTO LIMITED is Primavera Capital Fund II L.P. The business address of PV PLUTO LIMITED is Wickhams Cay II, Road Town, Tortola, VG1110, the British Virgin Islands.
For discussions of our accounting policies for awards granted pursuant to the 2017 Plan, see Note 2 to our consolidated financial statements. 6.C. Board Practices Board of Directors Our board of directors consists of seven directors, including two independent directors, namely Mr. Yifan Li and Mr. Zheng Zhao.
For discussions of our accounting policies for awards granted pursuant to the 2017 Plan, see Note 2 to our consolidated financial statements. 6.C. Board Practices Board of Directors Our board of directors consists of six directors, including two independent directors, namely Mr. Yifan Li and Mr. Zheng Zhao.
(5) Represents 564,209 Class A ordinary shares directly held of record by ELITE CONCEPT HOLDINGS LIMITED, a Hong Kong company. The business address of ELITE CONCEPT HOLDINGS LIMITED is Flat/RM 4308B 43 AIA Tower, 183 Electric Road North Point, Hong Kong.
(4) Represents 564,209 Class A ordinary shares directly held of record by ELITE CONCEPT HOLDINGS LIMITED, a Hong Kong company. The business address of ELITE CONCEPT HOLDINGS LIMITED is Flat/RM 4308B 43 AIA Tower, 183 Electric Road North Point, Hong Kong.
The payment of compensation to our independent directors for their services rendered for the year ended December 31, 2022 is in a total amount of RMB1.7 million (US$0.2 million), which has been fully paid in cash.
The payment of compensation to our independent directors for their services rendered for the year ended December 31, 2023 is in a total amount of RMB1.7 million (US$0.2 million), which has been fully paid in cash.
Share Ownership The following table sets forth information concerning the beneficial ownership of our ordinary shares as of March 31, 2023 by: • each of our directors and executive officers; and • each person known to the Group to beneficially own more than 5% of each class of our ordinary shares.
Share Ownership The following table sets forth information concerning the beneficial ownership of our ordinary shares as of March 31, 2024 by: • each of our directors and executive officers; and • each person known to the Group to beneficially own more than 5% of each class of our ordinary shares.
The compensation committee is also responsible for, among other things: • reviewing and approving the compensation of our chief executive officer and each of our other executive officers; • in consultation with our chief executive officer, periodically reviewing our management succession planning; • reviewing and evaluating our executive compensation and benefits policies generally (subject, if applicable, to shareholder approval), including the review and recommendation of any incentive-compensation and equity-based plans that are subject to the approval of our board of directors; • reviewing and reassessing the adequacy of the committee charter; • selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management; and • reporting regularly to our board of directors. 99 Nominating and Corporate Governance Committee Our nominating and corporate governance committee consists of Mr.
The compensation committee is also responsible for, among other things: 99 • reviewing and approving the compensation of our chief executive officer and each of our other executive officers; • in consultation with our chief executive officer, periodically reviewing our management succession planning; • reviewing and evaluating our executive compensation and benefits policies generally (subject, if applicable, to shareholder approval), including the review and recommendation of any incentive-compensation and equity-based plans that are subject to the approval of our board of directors; • reviewing and reassessing the adequacy of the committee charter; • selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management; and • reporting regularly to our board of directors.
These shares, however, are not included in the computation of the percentage ownership of any other person. 101 Ordinary Shares Beneficially Owned Class A Class B Class C % of Voting Power Number Percentage Number Percentage Number Percentage ** Directors and Executive Officers:† Peng Ou (1) 111,120 4.0 — — 2,721,904 81.7 65.3 Tongbo Liu (2) 30,385 1.1 — — 482,732 14.5 11.6 Lu Lv (3) 31,866 1.1 — — 127,426 3.8 3.1 Jing Gao (4) 60,383 2.2 — — — — * Zheng Zhao — — — — — — — Yang Wang — — — — — — — Yifan Li — — — — — — — All directors and executive officers as a group 233,754 8.4 — — 3,332,062 100.0 80.1 Principal Shareholders: ELITE CONCEPT HOLDINGS LIMITED (5) 564,209 20.4 — — — — 1.3 Affiliates of Orchid Asia (6) 352,776 12.7 — — — — * PV PLUTO LIMITED (7) — — 826,389 100.0 — — 13.8 Studyvip Online Education Limited (8) — — — — 2,084,772 62.6 49.8 MARBLE FAITH LIMITED (9) — — — — 637,132 19.1 15.2 SCuPt Global Limited (10) — — — — 355,306 10.7 8.5 Notes: * Less than 1% of our total outstanding shares on an as-converted basis. ** For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our ordinary shares as a single class. † The address of our directors and executive officers Mr.
These shares, however, are not included in the computation of the percentage ownership of any other person. 101 Ordinary Shares Beneficially Owned Class A Class B Class C % of Voting Power Number Percentage Number Percentage Number Percentage ** Directors and Executive Officers:† Peng Ou (1) 111,120 4.1 — — 2,721,904 81.7 65.4 Tongbo Liu (2) 30,385 1.1 — — 482,732 14.5 11.6 Jing Gao (3) 60,383 2.2 — — — — * Yang Wang — — — — — — — Hangyu Li * * — — — — * Zheng Zhao — — — — — — — Yifan Li — — — — — — — All directors and executive officers as a group 208,119 7.7 — — 3,204,636 96.2 77.2 Principal Shareholders: ELITE CONCEPT HOLDINGS LIMITED (4) 564,209 20.9 — — — — 1.3 Affiliates of Orchid Asia (5) 352,776 13.1 — — — — * PV PLUTO LIMITED (6) — — 826,389 100.0 — — 13.8 Studyvip Online Education Limited (7) — — — — 2,084,772 62.6 49.9 MARBLE FAITH LIMITED (8) — — — — 637,132 19.1 15.2 SCuPt Global Limited (9) — — — — 355,306 10.7 8.5 Notes: * Less than 1% of our total outstanding shares on an as-converted basis. ** For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our ordinary shares as a single class. † The address of our directors and executive officers Mr.
Peng Ou, Mr. Tongbo Liu and Mr. Zheng Zhao, and is chaired by Mr. Peng Ou. We have determined that Mr. Zheng Zhao satisfies the “independence” requirements of Section 303A of the Corporate Governance Rules of the NYSE.
Nominating and Corporate Governance Committee Our nominating and corporate governance committee consists of Mr. Peng Ou, Mr. Tongbo Liu and Mr. Zheng Zhao, and is chaired by Mr. Peng Ou. We have determined that Mr. Zheng Zhao satisfies the “independence” requirements of Section 303A of the Corporate Governance Rules of the NYSE.
Employees The Group had 7,347, 4,064 and 2,318 full-time employees as of December 31, 2020, 2021 and 2022, respectively. The decrease in the number of full-time employees was mainly driven by the strategic contraction of the business. As of December 31, 2022, most of the Group’s employees were in Beijing, Guangzhou, Wuhan and Shenzhen.
Employees The Group had 4,064, 2,318 and 2,113 full-time employees as of December 31, 2021, 2022 and 2023, respectively. The decrease in the number of full-time employees was mainly driven by the strategic contraction of the business. As of December 31, 2023, most of the Group’s employees were in Beijing, Guangzhou and Wuhan.
The calculations in the table below are based on 6,926,440 issued and outstanding ordinary shares as of March 31, 2023, comprising (i) 2,767,989 Class A ordinary shares (excluding 5,200 Class A ordinary shares issued to our depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards under our share incentive plans), (ii) 826,389 Class B ordinary shares, and (iii) 3,332,062 Class C ordinary shares.
The calculations in the table below are based on 6,855,745 issued and outstanding ordinary shares as of March 31, 2024, comprising (i) 2,697,294 Class A ordinary shares (excluding 5,200 Class A ordinary shares issued to our depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards under our share incentive plans), (ii) 826,389 Class B ordinary shares, and (iii) 3,332,062 Class C ordinary shares.
(8) Represents 2,084,772 Class C ordinary shares held of record by Studyvip Online Education Limited, a British Virgin Islands company wholly owned by Mr. Peng Ou. The business address of Studyvip Online Education Limited is Start Chambers, Wickham Cay II, P. O.
(7) Represents 2,084,772 Class C ordinary shares held of record by Studyvip Online Education Limited, a British Virgin Islands company wholly owned by Mr. Peng Ou. The business address of Studyvip Online Education Limited is Start Chambers, Wickham Cay II, P. O. Box 2221, Road Town, Tortola, the British Virgin Islands.
Compensation Compensation of Directors and Senior Management For the fiscal year ended December 31, 2022, we paid an aggregate of RMB1.6 million (US$0.2 million) in cash to our executive officers.
Compensation Compensation of Directors and Senior Management For the fiscal year ended December 31, 2023, we paid an aggregate of RMB1.9 million (US$0.3 million) in cash to our executive officers.
Wang also serves as a director at Yum China Holdings, Inc., a leading restaurant company in China, and a director of Geely Automobile Holdings Limited, an auto manufacturing company in China. Mr. Wang received both his master’s and bachelor’s degrees from Shanghai Jiao Tong University. Zheng Zhao has served as our independent director since June 2019. Mr.
Wang also serves as a director at Yum China Holdings, Inc., a leading restaurant company in China, and a director of Geely Automobile Holdings 96 Limited, an auto manufacturing company in China. Mr. Wang received both his master’s and bachelor’s degrees from Shanghai Jiao Tong University. Hangyu Li has served as our finance director since August 2017.
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable.
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation None.
Each of our executive officers is employed for a specified time period, which can be renewed upon both parties’ agreement before the end of the current employment term.
Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers. Each of our executive officers is employed for a specified time period, which can be renewed upon both parties’ agreement before the end of the current employment term.
Tongbo Liu as the beneficiaries; and (iii) 30,385 Class A ordinary shares in the form of ADSs held of record by Mr. Tongbo Liu.
Tongbo Liu as the beneficiaries; and (iii) 30,385 Class A ordinary shares in the form of ADSs held of record by Mr. Tongbo Liu. (3) Represents 60,383 Class A ordinary shares in the form of ADSs held of record by Ms. Jing Gao.
Directors and Executive Officers Age Position/Title Peng Ou (also known as Jianhong Yin) 45 Founder, Chairman, Director Tongbo Liu 36 Chief Executive Officer, Director Lu Lv 39 Chief Financial Officer, Chief Strategy Officer, Director Jing Gao 38 Vice President, Director Yang Wang 48 Director Zheng Zhao (also known as Ching Chiu) 44 Independent Director Yifan Li 55 Independent Director Peng Ou is our Founder and the Chairman of our board of directors.
Directors and Executive Officers Age Position/Title Peng Ou (also known as Jianhong Yin) 46 Founder, Chairman, Director Tongbo Liu 37 Chief Executive Officer, Director Jing Gao 39 Vice President, Director Yang Wang 49 Director Hangyu Li 41 Finance Director Zheng Zhao (also known as Ching Chiu) 45 Independent Director Yifan Li 56 Independent Director Peng Ou is our Founder and the Chairman of our board of directors.
Box 2221, Road Town, Tortola, the British Virgin Islands. 102 (9) Represents 637,132 Class C ordinary shares held of record by MARBLE FAITH LIMITED, a British Virgin Islands company ultimately wholly owned by Vistra Trust (Hong Kong) Limited, as trustee of an irrevocable trust constituted under the laws of the British Virgin Islands, with Mr.
(8) Represents 637,132 Class C ordinary shares held of record by MARBLE FAITH LIMITED, a British Virgin Islands company ultimately wholly owned by Vistra Trust (Hong Kong) Limited, as trustee of an irrevocable trust constituted under the laws of the British Virgin Islands, with Mr. Peng Ou as the settlor and certain family members of Mr.
Zhao is currently the special assistant to the president and general manager of New Oriental Industry Funds, where he leads the company’s strategic development, mergers and acquisitions and strategic collaboration efforts, as well as maintains domestic and international customer relations. Prior to that, Mr. Zhao was a senior auditor at Ernst & Young. Mr.
Zheng Zhao has served as our independent director since June 2019. Mr. Zhao is currently the special assistant to the president and general manager of New Oriental Industry Funds, where he leads the company’s strategic development, mergers and acquisitions and strategic collaboration efforts, as well as maintains domestic and international customer relations. Prior to that, Mr.
The following table sets forth the number of the Group’s employees as of December 31, 2022: 100 Function Number of Full-Time Employees Percentages Academic and administrative faculty (1) 438 18.9 % Sales and marketing staff 1,167 50.3 % Sales operation 334 14.4 % General and administrative 182 7.9 % Technology development 197 8.5 % Total 2,318 100.0 % Note: (1) Consists of teachers, mentors, course and educational content development professionals, and other administrative faculty members.
The following table sets forth the number of the Group’s employees as of December 31, 2023: Function Number of Full-Time Employees Percentages Academic and administrative faculty (1) 223 10.6 % Sales and marketing staff 1,220 57.8 % Sales operation 394 18.6 % General and administrative 138 6.5 % Technology development 138 6.5 % Total 2,113 100.0 % Note: (1) Consists of teachers, mentors, course and educational content development professionals, and other administrative faculty members.
A director who to his knowledge is in any way, whether directly or indirectly, interested in a contract or arrangement or proposed contract or arrangement with our company is required to declare the nature of his or her interest at a meeting of our directors.
We rely on this “home country practice” exception and do not have a majority of independent directors serving on our board of directors. 98 A director who to his knowledge is in any way, whether directly or indirectly, interested in a contract or arrangement or proposed contract or arrangement with our company is required to declare the nature of his or her interest at a meeting of our directors.
Yang Wang is Wickhams Cay II, Road Town, Tortola, VG1110, the British Virgin Islands. The address of Mr. Yifan Li is 1339 Wanfang Road, Minhang Distict, Shanghai, China. The address of Ms. Jing Gao is Building 13, Chaolai Science and Technology Park, Chuangyuan Road, Laiguangying, Chaoyang, Beijing, China.
Peng Ou, Mr. Tongbo Liu, Ms. Jing Gao and Mr. Hangyu Li is Building 6, Chaolai Science Park, No. 36 Chuangyuan Road, Chaoyang District, Beijing, China. The address of Mr. Yang Wang is Wickhams Cay II, Road Town, Tortola, VG1110, the British Virgin Islands. The address of Mr.
(10) Represents 355,306 Class C ordinary shares held of record by SCuPt Global Limited, a British Virgin Islands company wholly owned by Mr. Tongbo Liu. The business address of SCuPt Global Limited is Trinity Chambers, PO Box 4301, Road Town, Tortola, the British Virgin Islands.
Peng Ou as the beneficiaries. The business address of MARBLE FAITH LIMITED is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG 1110, the British Virgin Islands. 102 (9) Represents 355,306 Class C ordinary shares held of record by SCuPt Global Limited, a British Virgin Islands company wholly owned by Mr. Tongbo Liu.
To our knowledge, as of March 31, 2023, 1,789,676 of our Class A ordinary shares were held by one record holder in the United States, which was the Bank of New York Mellon, the depositary of our ADR program.
The business address of SCuPt Global Limited is Trinity Chambers, PO Box 4301, Road Town, Tortola, the British Virgin Islands. To our knowledge, as of March 31, 2024, 1,723,430 of our Class A ordinary shares were held by one record holder in the United States, which was the Bank of New York Mellon, the depositary of our ADR program.
However, the Corporate Governance Rules of the NYSE permit foreign private issuers like us to follow “home country practice” in certain corporate governance matters. We rely on this “home country practice” exception and do not have a majority of independent directors serving on our board of directors.
However, the Corporate Governance Rules of the NYSE permit foreign private issuers like us to follow “home country practice” in certain corporate governance matters.
Zhao currently serves as an independent director of CLOOPEN GROUP HOLDING LIMITED. (a company listed on NYSE with stock ticker: RAAS) Mr.
Zhao was a senior auditor at Ernst & Young. Mr. Zhao currently serves as an independent director of CLOOPEN GROUP HOLDING LIMITED. (a company listed on NYSE with stock ticker: RAAS) Mr. Zhao holds a master’s degree in finance, and a bachelor’s degree in economics, both from Peking University’s School of Economics.
Li also serves as a director at Xinyuan Real Estate Co., Ltd., Qudian Inc. and 36Kr Holdings Inc. Mr. Li received his MBA from the University of Chicago Booth School of Business, his master’s degree in accounting from the University of Texas at Dallas and his bachelor’s degree in world economics from Fudan University.
Li received his MBA from the University of Chicago Booth School of Business, his master’s degree in accounting from the University of Texas at Dallas and his bachelor’s degree in world economics from Fudan University. He is a Certified Public Accountant in the United States and a Chartered Global Management Accountant.
Previously, he was director and vice president of Geely Group, responsible for strategic investments, new business development and overseeing Geely’s financial holding companies. Prior to joining Geely, Mr. Li held CFO positions in various Chinese companies including Sanpower Group, China Zenix Auto International, Standard Water and Time Share Media, where he led initial public offerings and cross-border M&A transactions. Mr.
Li held CFO positions in various Chinese companies including Sanpower Group, China Zenix Auto International, Standard Water and Time Share Media, where he led initial public offerings and cross-border M&A transactions. Mr. Li also serves as a director at Xinyuan Real Estate Co., Ltd., Qudian Inc. and 36Kr Holdings Inc. Mr.
He started as a management trainee and was promoted to vice president in January 2012, responsible for our comprehensive operation in the greater Beijing region. Lu Lv has served as our Chief Strategy Officer since July 2015, director since August 2017 and Chief Financial Officer since April 2020. Prior to joining us, Ms.
He started as a management trainee and was promoted to vice president in January 2012, responsible for our comprehensive operation in the greater Beijing region. Jing Gao has served as our director since March 2021. She has been employed in our company since 2006. Ms. Gao has been a lecturer, project manager and director of the branch.
Peng Ou, Mr. Tongbo Liu and Ms. Lu Lv is Building 4-6, Chaolai Science Park, No. 36 Chuangyuan Road, Chaoyang District, Beijing, China. The address of Mr. Zheng Zhao is Suite 1503, New Oriental South Building, No. 2 Haidiandongsan Street, Beijing 100080, China. The address of Mr.
Zheng Zhao is Suite 1503, New Oriental South Building, No. 2 Haidiandongsan Street, Beijing 100080, China. The address of Mr. Yifan Li is 1 Jumen Road, Apt. 1-2804, Shanghai, China.
Zhao holds a master’s degree in finance, and a bachelor’s degree in economics, both from Peking University’s School of Economics. 96 Yifan Li has served as Chief Financial and Investment Advisor at Human Horizons Group Inc. since March 2022, and served as its Chief Financial Officer from April 2021 to March 2022.
Yifan Li has served as chief financial and investment advisor at Human Horizons Group Inc. since March 2022, and served as its chief financial officer from April 2021 to March 2022. Previously, he was director and vice president of Geely Group, responsible for strategic investments, new business development and overseeing Geely’s financial holding companies. Prior to joining Geely, Mr.
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Lv served as a partner of Taihe Capital, a leading boutique investment bank, from February 2015 to July 2015. From 2012 to 2015, she served as an executive director at Hina Group, an investment bank focused on advising leading companies in the technology, media and telecommunications industries in fund-raising activities.
Added
He has been employed in our company since 2013. Prior to joining us, he served as a financial reporting manager at a pre-IPO company from 2011 to 2012. From 2009 to 2010, Mr. Li served as an internal auditor at Shanghai Pudong Development Bank. From 2005 to 2009, Mr. Li served as a senior auditor at Ernst & Young. Mr.
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She received her MBA from Fudan University in 2010 and her bachelor’s degree in English from Hunan Normal University in 2004. Jing Gao has served as our director since March 2021. She has been employed in our company since 2006. Ms. Gao has been a lecturer, project manager and director of the branch.
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Li received his MBA from Central University of Finance and Economics in 2013 and his bachelor's degree in accounting from Nanjing University in 2005. He is a member of Chinese Institute of Certified Public Accountant (“CICPA”) and a Certified Tax Accountant in China. He also holds CMA (Certified Management Accountant) certificate.
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He is a Certified Public Accountant in the United States and a Chartered Global Management Accountant. Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers.
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(3) Represents (i) 127,426 Class C ordinary shares held of record by Summer Sea Investment Limited, a British Virgin Islands company ultimately wholly owned by Vistra Trust (Hong Kong) Limited, as trustee of an irrevocable trust constituted under the laws of the British Virgin Islands, with Ms. Lu Lv as the settlor and certain family members of Ms.
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Lu Lv as the beneficiaries; and (ii) 31,866 Class A ordinary shares in the form of ADSs held of record by Ms. Lu Lv. (4) Represents 60,383 Class A ordinary shares in the form of ADSs held of record by Ms. Jing Gao.
Removed
Peng Ou as the settlor and certain family members of Mr. Peng Ou as the beneficiaries. The business address of MARBLE FAITH LIMITED is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG 1110, the British Virgin Islands.

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