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What changed in New Oriental Education & Technology Group Inc.'s 20-F — 2023 vs 2024

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Paragraph-level year-over-year comparison of New Oriental Education & Technology Group Inc.'s 2023 and 2024 20-F annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+894 added−895 removedSource: 20-F (2024-09-25) vs 20-F (2023-09-25)

Top changes in New Oriental Education & Technology Group Inc.'s 2024 20-F

894 paragraphs added · 895 removed · 716 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

298 edited+73 added−71 removed519 unchanged
Biggest changeFor the Years Ended May 31, (in thousands of US$ except share and per share data) 2019 2020 2021 2022 2023 Selected Consolidated Statement of Operations Data: Net revenues: Net service revenues 3,043,263 3,529,650 4,230,638 3,050,022 2,544,729 Net product revenues 53,228 49,032 45,901 55,224 453,031 Total net revenues 3,096,491 3,578,682 4,276,539 3,105,246 2,997,760 Operating cost and expenses: (1) Cost of revenues (1,376,269 ) (1,588,899 ) (2,036,875 ) (1,754,291 ) (1,409,438 ) Selling and marketing (384,287 ) (445,259 ) (600,778 ) (466,895 ) (444,693 ) General and administrative (1,028,783 ) (1,145,521 ) (1,489,826 ) (1,866,573 ) (953,583 ) Impairment loss on intangible assets and goodwill (5,245 ) — (31,794 ) — — Selected Consolidated Statement of Operations Data: Total operating cost and expenses (2,794,584 ) (3,179,679 ) (4,159,273 ) (4,087,759 ) (2,807,714 ) Gain on disposal of a subsidiary 3,627 — — — — Operating income/(loss) 305,534 399,003 117,266 (982,513 ) 190,046 Other income/(expense): Interest income 97,530 116,117 141,511 123,542 114,453 Interest expense (1,615 ) (4,627 ) (6,747 ) (4,050 ) (707 ) Realized gain from long-term investments 26,379 407 3,535 22,004 767 Impairment loss from long-term investments (5,919 ) (31,750 ) (40,207 ) (129,350 ) (8,056 ) Loss from fair value change of long-term investments (104,636 ) (18,451 ) (3,824 ) (14,933 ) (860 ) Loss on deconsolidation of subsidiaries — — — (79,609 ) — Miscellaneous (loss)/income, net (1,424 ) 27,137 103,443 32,411 12,888 Provision for income taxes: Current (103,031 ) (142,992 ) (127,313 ) (44,378 ) (97,594 ) Deferred 17,317 8,630 43,725 (91,934 ) 31,528 Provision for income taxes (85,714 ) (134,362 ) (83,588 ) (136,312 ) (66,066 ) (Loss)/Gain from equity method investments (2,289 ) 1,385 (1,368 ) (51,466 ) (7,102 ) Net income/(loss) 227,846 354,859 230,021 (1,220,276 ) 235,363 Less: Net (loss)/income attributable to non-controlling interests (10,219 ) (58,474 ) (104,393 ) (32,555 ) 58,022 12 Table of Contents For the Years Ended May 31, (in thousands of US$ except share and per share data) 2019 2020 2021 2022 2023 Net income/(loss) attributable to New Oriental Education & Technology Group Inc.’s shareholders 238,065 413,333 334,414 (1,187,721 ) 177,341 -Basic 0.15 0.26 0.20 (0.70 ) 0.11 -Diluted 0.15 0.26 0.20 (0.70 ) 0.10 Weighted average shares used in calculating basic net income/(loss) per common share (3) 1,582,938,900 1,584,295,760 1,645,463,440 1,696,419,232 1,678,264,547 Weighted average shares used in calculating diluted net income/(loss) per common share (3) 1,590,393,450 1,595,368,900 1,651,982,384 1,696,419,232 1,685,631,987 (1) Share-based compensation expenses are included in our operating cost and expenses as follows: (2) Each ADS represents ten common shares.
Biggest changeGAAP. 10 Table of Contents For the Years Ended May 31, ( in thousands of US$ except share and per share data) 2020 2021 2022 2023 2024 Selected Consolidated Statement of Operations Data: Net revenues: Net service revenues 3,529,650 4,230,638 3,050,022 2,544,729 3,500,998 Net product revenues 49,032 45,901 55,224 453,031 812,588 Total net revenues 3,578,682 4,276,539 3,105,246 2,997,760 4,313,586 Operating cost and expenses: (1) Cost of revenues (1,588,899 ) (2,036,875 ) (1,754,291 ) (1,409,438 ) (2,050,960 ) Selling and marketing (445,259 ) (600,778 ) (466,895 ) (444,693 ) (660,586 ) General and administrative (1,145,521 ) (1,489,826 ) (1,866,573 ) (953,583 ) (1,251,615 ) Impairment loss on intangible assets and goodwill — (31,794 ) — — — Selected Consolidated Statement of Operations Data: Total operating cost and expenses (3,179,679 ) (4,159,273 ) (4,087,759 ) (2,807,714 ) (3,963,161 ) Operating income/(loss) 399,003 117,266 (982,513 ) 190,046 350,425 Other income/(expense): Interest income 116,117 141,511 123,542 114,453 153,589 Interest expense (4,627 ) (6,747 ) (4,050 ) (707 ) (298 ) Realized gain from long-term investments 407 3,535 22,004 767 185 Impairment loss from long-term investments (31,750 ) (40,207 ) (129,350 ) (8,056 ) (30,007 ) (Loss)/gain from fair value change of investments (18,451 ) (3,824 ) (14,933 ) (860 ) 19,025 Loss on deconsolidation of subsidiaries — — (79,609 ) — — Miscellaneous (loss)/income, net 27,137 103,443 32,411 12,888 922 Provision for income taxes: Current (142,992 ) (127,313 ) (44,378 ) (97,594 ) (130,927 ) Deferred 8,630 43,725 (91,934 ) 31,528 21,237 Provision for income taxes (134,362 ) (83,588 ) (136,312 ) (66,066 ) (109,690 ) (Loss)/Gain from equity method investments 1,385 (1,368 ) (51,466 ) (7,102 ) (58,933 ) Net income/(loss) 354,859 230,021 (1,220,276 ) 235,363 325,218 Less: Net (loss)/income attributable to non-controlling interests (58,474 ) (104,393 ) (32,555 ) 58,022 15,627 Net income/(loss) attributable to New Oriental Education & Technology Group Inc.’s shareholders 413,333 334,414 (1,187,721 ) 177,341 309,591 -Basic 0.26 0.20 (0.70 ) 0.11 0.19 -Diluted 0.26 0.20 (0.70 ) 0.10 0.18 Weighted average shares used in calculating basic net income/(loss) per common share (3) 1,584,295,760 1,645,463,440 1,696,419,232 1,678,264,547 1,653,597,432 Weighted average shares used in calculating diluted net income/(loss) per common share (3) 1,595,368,900 1,651,982,384 1,696,419,232 1,685,631,987 1,669,499,952 (1) Share-based compensation expenses are included in our operating cost and expenses as follows: For the Years Ended May 31, 2020 2021 2022 2023 2024 (in thousands of US$) Cost of revenues 2,224 6,698 (131 ) 2,749 19,967 Selling and marketing 4,227 6,922 (2,437 ) 5,750 26,052 General and administrative 55,606 55,260 135,536 81,289 76,439 Total 62,057 68,880 132,968 89,788 122,458 11 Table of Contents (2) Each ADS represents ten common shares.
Yu’s mother, completed the transfer of the equity interest in Century Friendship held by her to Mr. Michael Minhong Yu and Mr. Zhihui Yang, prior to such transfer, Century Friendship was 80% owned by Mr. Yu and 20% owned by Ms. Bamei Li.
Bamei Li, Mr. Yu’s mother, completed the transfer of the equity interest in Century Friendship held by her to Mr. Michael Minhong Yu and Mr. Zhihui Yang, prior to such transfer, Century Friendship was 80% owned by Mr. Yu and 20% owned by Ms. Bamei Li.
The PRC regulatory authorities could disallow the variable interest entity structure, which would likely result in a material adverse change in our operations, and our ADSs and/or common shares may decline significantly in value or become worthless.
The PRC regulatory authorities could disallow the variable interest entity structure, which would likely result in a material adverse change in our operations, and our ADSs and common shares may decline significantly in value or become worthless.
These risks could result in a material adverse change in our operations and the value of our ADSs and/or common shares, significantly limit or completely hinder our ability to continue to offer securities to investors, or cause the value of such securities to significantly decline. For a detailed description of risks related to doing business in China, “Item 3.
These risks could result in a material adverse change in our operations and the value of our ADSs and common shares, significantly limit or completely hinder our ability to continue to offer securities to investors, or cause the value of such securities to significantly decline. For a detailed description of risks related to doing business in China, “Item 3.
Risk Factors—Risks Related to Doing Business in China—The PRC government’s oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs and/or common shares.” The Holding Foreign Companies Accountable Act Pursuant to the Holding Foreign Companies Accountable Act, or the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares or the ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.
Risk Factors—Risks Related to Doing Business in China—The PRC government’s oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs and common shares.” The Holding Foreign Companies Accountable Act Pursuant to the Holding Foreign Companies Accountable Act, or the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares or the ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.
Any evaluation of our business and our prospects must be considered in light of the risks related to the recent change of regulatory policies on after-school tutoring services market.
Any evaluation of our business and our prospects must be considered in light of the risks related to the recent change of regulatory policies on the after-school tutoring services market.
In the event that the provision of digital academic educational resources through our intelligent learning systems and devices is deemed as after-school tutoring activities, the academic educational resources provided by our intelligent learning systems and devices to K-9 students shall comply with all regulations related to academic after-school tutoring, including, among others, the Alleviating Burden Opinion.
In the event that the provision of digital academic educational resources through our intelligent learning systems and devices is deemed as after-school tutoring activities, the academic educational resources provided by our intelligent learning systems and devices to K-9 students shall comply with all regulations related to academic after-school tutoring, including, among others, the Alleviating Burden Opinion.
Our PRC operating entities of the intelligent learning systems and devices may then be deemed as Academic AST Institutions, and these entities will be prohibited from being controlled by us as the Alleviating Burden Opinion prohibits foreign ownership in Academic AST Institutions, including through contractual arrangements.
Our PRC operating entities of the intelligent learning systems and devices may then be deemed as Academic AST Institutions, and these entities will be prohibited from being controlled by us as the Alleviating Burden Opinion prohibits foreign ownership in Academic AST Institutions, including through contractual arrangements.
For example, on July 6, 2021, relevant PRC government authorities promulgated the Opinions on Lawfully and Strictly Cracking Down Illegal Securities Activities, which stated that the administration and supervision of overseas-listed China-based companies will be strengthened, and the special provisions of the State Council on overseas issuance and listing of shares by such companies will be revised, clarifying the responsibilities of the relevant domestic industry regulatory authorities and other regulatory authorities.
For example, on July 6, 2021, PRC government authorities promulgated the Opinions on Lawfully and Strictly Cracking Down Illegal Securities Activities, which stated that the administration and supervision of overseas-listed China-based companies will be strengthened, and the special provisions of the State Council on overseas issuance and listing of shares by such companies will be revised, clarifying the responsibilities of the relevant domestic industry regulatory authorities and other regulatory authorities.
The Overseas Listing Trial Measures became effective on March 31, 2023. Pursuant to the Overseas Listing Trial Measures, PRC domestic companies that seek to offer and list securities in overseas markets, either in direct or indirect means, are required to fulfill the filing procedure with the CSRC and report relevant information.
The Overseas Listing Trial Measures became effective on March 31, 2023. Pursuant to the Overseas Listing Trial Measures, PRC domestic companies that seek to offer and list securities in overseas markets, either in direct or indirect means, are required to fulfill the filing procedure with the CSRC and report relevant information.
According to the Circular of Overseas Listing and Offering, issuers that have already been listed in an overseas market by March 31, 2023, such as our company, are not required to make any immediate filing.
According to the Circular of Overseas Listing and Offering, issuers that have already been listed in an overseas market by March 31, 2023, such as our company, are not required to make any immediate filing.
According to Circular 7, if “PRC individuals” (meaning both PRC residents and non-PRC residents who reside in the PRC for a continuous period of not less than one year, excluding the foreign diplomatic personnel and representatives of international organizations) participate in any share incentive plan of an overseas listed company, a qualified PRC domestic agent, which could be the PRC subsidiaries of such overseas listed company, shall, among other things, file, on behalf of such individuals, an application with SAFE to conduct the SAFE registration with respect to such share incentive plan, and obtain approval for an annual allowance with respect to the purchase of foreign exchange in connection with the share purchase or share option exercise.
According to Circular 7, if “PRC individuals” (meaning both PRC residents and non-PRC residents who reside in the PRC for a continuous period of not less than one year, excluding the foreign diplomatic personnel and representatives of international organizations) participate in any share incentive plan of an overseas listed company, a qualified PRC domestic agent, which could be the PRC subsidiaries of such overseas listed company, shall, among other things, file, on behalf of such individuals, an application with SAFE to conduct SAFE registration with respect to such share incentive plan, and obtain approval for an annual allowance with respect to the purchase of foreign exchange in connection with the share purchase or share option exercise.
The Overseas Listing Trial Measures became effective on March 31, 2023. Pursuant to the Overseas Listing Trial Measures, PRC domestic companies that seek to offer and list securities in overseas markets, either in direct or indirect means, are required to fulfill the filing procedure with the CSRC and report relevant information.
The Overseas Listing Trial Measures became effective on March 31, 2023. Pursuant to the Overseas Listing Trial Measures, PRC domestic companies that seek to offer and list securities in overseas markets, either in direct or indirect means, are required to fulfill the filing procedure with the CSRC and report relevant information.
According to the Circular of Overseas Listing and Offering, issuers that have already been listed in an overseas market by March 31, 2023, such as our company, are not required to make any immediate filing.
According to the Circular of Overseas Listing and Offering, issuers that have already been listed in an overseas market by March 31, 2023, such as our company, are not required to make any immediate filing.
We may rely entirely on dividends and/or other fees paid to us by our subsidiaries and New Oriental China and its schools and subsidiaries in China. Any significant appreciation or depreciation of Renminbi may materially and adversely affect our revenues, earnings and financial position, and the value of, and any dividends payable on, our common shares and/or ADSs.
We may rely entirely on dividends and/or other fees paid to us by our subsidiaries and New Oriental China and its schools and subsidiaries in China. Any significant appreciation or depreciation of Renminbi may materially and adversely affect our revenues, earnings and financial position, and the value of, and any dividends payable on, our common shares and ADSs.
On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.
On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.
Furthermore, according to Article 177 of the PRC Securities Law, or Article 177, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC.
Furthermore, according to Article 177 of the PRC Securities Law, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC.
In addition, the performance and fluctuation of the market prices of other companies with business operations located mainly in China that have listed their securities in Hong Kong and/or the United States may affect the volatility in the prices of and trading volumes of our common shares and/or ADSs.
In addition, the performance and fluctuation of the market prices of other companies with business operations located mainly in China that have listed their securities in Hong Kong and/or the United States may affect the volatility in the prices of and trading volumes of our common shares and ADSs.
The trading market for our common shares and/or ADSs will be influenced by the research reports and ratings that securities or industry analysts or ratings agencies publish about us, our business and the private education market in China in general. We do not have any control over these analysts or agencies.
The trading market for our common shares and ADSs will be influenced by the research reports and ratings that securities or industry analysts or ratings agencies publish about us, our business and the private education market in China in general. We do not have any control over these analysts or agencies.
If one or more of the analysts or agencies who cover us downgrades us or our securities, the price of our common shares and/or ADSs may decline.
If one or more of the analysts or agencies who cover us downgrades us or our securities, the price of our common shares and ADSs may decline.
If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of our common shares and/or ADSs or trading volume to decline.
If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of our common shares and ADSs or trading volume to decline.
See “Risks Related to Doing Business in China—The interpretation and implementation of the Foreign Investment Law are subject to changes and it remains uncertain as to how it may impact the viability of our current corporate structure, corporate governance, business, financial condition and results of operations.” We have been further advised by our PRC legal counsel that if we and/or any of our PRC subsidiaries or consolidated affiliated entities are found to be in violation of any existing or future PRC laws or regulations or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities, including the Ministry of Education, which regulates the education industry, would have wide discretion within their scope of authority in dealing with such violations, including: • revoking the business and operating licenses of our PRC subsidiaries or consolidated affiliated entities; • confiscating any of our income that they deem to be obtained through illegal operations; • discontinuing or restricting the operations of any related-party transactions among our PRC subsidiaries and the consolidated affiliated entities; • restricting our right to collect revenues or limiting our business expansion in China by way of entering into contractual arrangements; • imposing fines or other requirements with which we may not be able to comply; • requiring us to restructure our corporate structure or operations; • restricting or prohibiting our use of the proceeds of our future offering to finance our business and operations in China; or • taking other regulatory or enforcement actions that could be harmful to our business.
See “—Risks Related to Doing Business in China—The interpretation and implementation of the Foreign Investment Law are subject to changes and it remains uncertain as to how it may impact the viability of our current corporate structure, corporate governance, business, financial condition and results of operations.” We have been further advised by our PRC legal counsel that if we and/or any of our PRC subsidiaries or consolidated affiliated entities are found to be in violation of any existing or future PRC laws or regulations or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities, including the Ministry of Education, which regulates the education industry, would have wide discretion within their scope of authority in dealing with such violations, including: • revoking the business and operating licenses of our PRC subsidiaries or consolidated affiliated entities; • confiscating any of our income that they deem to be obtained through illegal operations; • discontinuing or restricting the operations of any related-party transactions among our PRC subsidiaries and the consolidated affiliated entities; • restricting our right to collect revenues or limiting our business expansion in China by way of entering into contractual arrangements; • imposing fines or other requirements with which we may not be able to comply; • requiring us to restructure our corporate structure or operations; • restricting or prohibiting our use of the proceeds of our future offering to finance our business and operations in China; or • taking other regulatory or enforcement actions that could be harmful to our business.
For example, we face risks associated with regulatory approvals on offshore offerings, anti-monopoly regulatory actions, regulations on the use of variable interest entities, regulations on the education industry, regulations on online live-streaming and advertising, and oversight on cybersecurity and data privacy, as well as the lack of inspection on our auditors by the Public Company Accounting Oversight Board, or the PCAOB, which may impact our ability to conduct certain businesses, accept foreign investments, or list and conduct offerings on a United States or other foreign exchange.
For example, we face risks associated with regulatory approvals, anti-monopoly regulatory actions, regulations on the use of variable interest entities, regulations on the education industry, regulations on online live-streaming and advertising, and oversight on cybersecurity and data privacy, as well as the lack of inspection on our auditors by the Public Company Accounting Oversight Board, or the PCAOB, which may impact our ability to conduct certain businesses, accept foreign investments, or list and conduct offerings on a United States or other foreign exchange.
With respect to the legal risks associated with being based in and having operations in China as discussed in relevant risk factors under “Risk Factors—Risks Related to Doing Business in China,” the laws, regulations and the discretion of China governmental authorities discussed in this annual report are expected to apply to PRC entities and businesses, rather than entities or businesses in Hong Kong which operate under a different set of laws from mainland China.
With respect to the legal risks associated with being based in and having operations in China as discussed in risk factors under “Risk Factors—Risks Related to Doing Business in China,” the laws, regulations and the discretion of China governmental authorities discussed in this annual report are expected to apply to PRC entities and businesses, rather than entities or businesses in Hong Kong which operate under a different set of laws from mainland China.
We may fail to use new technologies effectively or adapt our online products or services and related technology on a timely and cost-effective basis. In addition, we developed the OMO standardized digital classroom teaching system in 2014, which has since evolved into an online education system that complements and supports students’ offline learning activities.
We may fail to use new technologies effectively or adapt our online products or services and related technology on a timely and cost-effective basis. In addition, we developed our OMO standardized digital classroom teaching system in 2014, which has since evolved into an online education system that complements and supports students’ offline learning activities.
Risk Factors—Risks Related to Doing Business in China—The PRC government’s oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs and/or common shares.” Risks and uncertainties arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in China, could result in a material adverse change in our operations and the value of our ADSs.
Risk Factors—Risks Related to Doing Business in China—The PRC government’s oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs and common shares.” Risks and uncertainties arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in China, could result in a material adverse change in our operations and the value of our ADSs.
Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material and adverse effect on the trading price of our common shares and/or ADSs. We are subject to the reporting obligations under the U.S. securities laws.
Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material and adverse effect on the trading price of our common shares and ADSs. We are subject to the reporting obligations under the U.S. securities laws.
To ensure the confidentiality and integrity of our data, including confidential student, parent and teaching staff information, we have taken security measures and adopted internal policies to protect such data. However, our computer networks may be vulnerable to unauthorized access, hacking, computer viruses and other security problems. Computer hackers may attempt to penetrate our network security and our website.
To ensure the confidentiality and integrity of our data, including confidential student, parent, teaching staff and consumer information, we have taken security measures and adopted internal policies to protect such data. However, our computer networks may be vulnerable to unauthorized access, hacking, computer viruses and other security problems. Computer hackers may attempt to penetrate our network security and our website.
In addition, if we are deemed to be a PRC resident enterprise, dividends distributed to our non-PRC entity investors by us, or the gain our non-PRC entity investors may realize from the transfer of our common shares or ADSs, may be treated as PRC-sourced income and therefore be subject to a 10% PRC withholding tax pursuant to the EIT Law.
In addition, if we are deemed to be a PRC resident enterprise, dividends distributed to our non-PRC entity investors by us, or the gain our non-PRC entity investors may realize from the transfer of our common shares or ADSs, may be treated as PRC-sourced income and therefore be subject to a 10% PRC withholding tax pursuant to the PRC Enterprise Income Tax Law.
If we or any of the VIEs is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required licenses, permits or approvals, the relevant PRC regulatory authorities would have wide discretion within their scope of authority to take action in dealing with such violations or failures.
If we or any of the VIEs is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required licenses, permits or approvals, the PRC regulatory authorities would have wide discretion within their scope of authority to take action in dealing with such violations or failures.
Given the interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities are subject to changes, we may be required to obtain additional licenses, permits, filings or approvals for the services of our company in the future. For more detailed information, see “Item 3. Key Information—D.
Given the interpretation and implementation of laws and regulations and the enforcement practice by government authorities are subject to changes, we may be required to obtain additional licenses, permits, filings or approvals for the services of our company in the future. For more detailed information, see “Item 3. Key Information—D.
For the years ended May 31, 2019, 2020 and 2021, the number of shares used in calculating basic and diluted net income per common share have been retrospectively adjusted to reflect the ADS ratio change from one ADS representing one common share to one ADS representing ten common shares, which became effective on April 8, 2022.
For the years ended May 31, 2020 and 2021, the number of shares used in calculating basic and diluted net income per common share have been retrospectively adjusted to reflect the ADS ratio change from one ADS representing one common share to one ADS representing ten common shares, which became effective on April 8, 2022.
Effective internal control over financial reporting is necessary for us to produce reliable financial reports. Any failure to maintain effective internal control over financial reporting could result in the loss of investor confidence in the reliability of our financial statements, which in turn could have a material and adverse effect on the trading price of our common shares and/or ADSs.
Effective internal control over financial reporting is necessary for us to produce reliable financial reports. Any failure to maintain effective internal control over financial reporting could result in the loss of investor confidence in the reliability of our financial statements, which in turn could have a material and adverse effect on the trading price of our common shares and ADSs.
To ensure compliance with the PRC laws and regulations, our online education business and online livestreaming business are operated by our majority-owned subsidiary, East Buy Holding Limited, or East Buy, through a series of contractual arrangements with Beijing New Oriental Xuncheng Network Technology Co., Ltd., or Beijing Xuncheng, and its subsidiaries and then shareholders.
To ensure compliance with the PRC laws and regulations, our online livestreaming business are operated by our majority-owned subsidiary, East Buy Holding Limited, or East Buy, through a series of contractual arrangements with Beijing New Oriental Xuncheng Network Technology Co., Ltd., or Beijing Xuncheng, and its subsidiaries and then shareholders.
For example, the COVID-19 pandemic since the beginning of 2020 had adversely affected our financial and operating results in the third and fourth fiscal quarters of 2020. We expect quarterly fluctuations in our revenues and results of operations to continue. These fluctuations could result in volatility and adversely affect the price of our common shares and/or ADSs.
For example, the COVID-19 pandemic since the beginning of 2020 had adversely affected our financial and operating results in the third and fourth fiscal quarters of 2020. We expect quarterly fluctuations in our revenues and results of operations to continue. These fluctuations could result in volatility and adversely affect the price of our common shares and ADSs.
For instance, in fiscal year 2022, East Buy (formerly known as Koolearn) established an e-commerce platform under the brand name East Buy ( 东方甄选 ) for the sale of agricultural and other products through livestreaming activities. East Buy has made notable progress in its sale of private label products and livestreaming e-commerce business in fiscal year 2023.
For instance, in fiscal year 2022, East Buy (formerly known as Koolearn) established an e-commerce platform under the brand name East Buy ( 东方甄选 ) for the sale of agricultural and other products through livestreaming activities. East Buy has made notable progress in its sale of private label products and livestreaming e-commerce business in fiscal year 2023 and 2024.
For example, if Beijing Century Friendship Education Investment Co., Ltd., or Century Friendship, the sole shareholder of New Oriental China, were to refuse to transfer its equity interest in New Oriental China to us or our designee when we exercise the call option pursuant to the option agreement, or if it otherwise acts in bad faith toward us, then we may have to take legal action to compel it to fulfill its contractual obligations, which could be time consuming and costly. 43 Table of Contents These contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC or through the PRC courts.
For example, if Beijing Century Friendship Education Investment Co., Ltd., or Century Friendship, the sole shareholder of New Oriental China, were to refuse to transfer its equity interest in New Oriental China to us or our designee when we exercise the call option pursuant to the option agreement, or if it otherwise acts in bad faith toward us, then we may have to take legal action to compel it to fulfill its contractual obligations, which could be time consuming and costly. 41 Table of Contents These contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC or through the PRC courts.
In that case, however, dividend income we receive from our PRC subsidiaries may be exempt from PRC enterprise income tax because the EIT Law and its implementation rules generally provide that dividends received by a PRC resident enterprise from its directly invested entity that is also a PRC resident enterprise is exempt from enterprise income tax.
In that case, however, dividend income we receive from our PRC subsidiaries may be exempt from PRC enterprise income tax because the PRC Enterprise Income Tax Law and its implementation rules generally provide that dividends received by a PRC resident enterprise from its directly invested entity that is also a PRC resident enterprise is exempt from enterprise income tax.
These contractual agreements mainly include: Contractual Arrangements with New Oriental China, Its Schools and Subsidiaries and Its Shareholder (i) equity pledge agreements, pursuant to which, Century Friendship agreed to pledge its equity interests in New Oriental China to our subsidiaries to secure New Oriental China’s and its schools and subsidiaries’ performance of their obligations under the relevant principal agreements, and Century Friendship has agreed not to transfer, sell, pledge, dispose of or otherwise create any encumbrance on its equity interests in New Oriental China without the prior written consents of our wholly-owned subsidiaries in China; (ii) exclusive option agreement, pursuant to this agreement, Century Friendship is obligated to sell to Beijing Decision, and Beijing Decision has an exclusive, irrevocable and unconditional right to purchase from Century Friendship, in its sole discretion, part or of all of Century Friendship’s equity interests in New Oriental China when and to the extent that applicable PRC law permits it to own part or all of the equity interest in New Oriental China; (iii) powers of attorney, whereby Century Friendship irrevocably appoints and constitutes Beijing Pioneer as its attorney-in-fact to exercise on Century Friendship’s behalf any and all rights that Century Friendship has in respect of its equity interests in New Oriental China; (iv) service agreements, which enable our wholly-owned subsidiaries in China to receive substantially all of the economic benefits of New Oriental China and its schools and subsidiaries.
These contractual agreements mainly include: Contractual Arrangements with New Oriental China, Its Schools and Subsidiaries and Its Shareholder (i) equity pledge agreements, pursuant to which, Century Friendship agreed to pledge its equity interests in New Oriental China to our subsidiaries to secure New Oriental China’s and its schools and subsidiaries’ performance of their obligations under the relevant principal agreements, and Century Friendship has agreed not to transfer, sell, pledge, dispose of or otherwise create any encumbrance on its equity interests in New Oriental China without the prior written consents of our wholly-owned subsidiaries in China; 3 Table of Contents (ii) exclusive option agreement, pursuant to this agreement, Century Friendship is obligated to sell to Beijing Decision, and Beijing Decision has an exclusive, irrevocable and unconditional right to purchase from Century Friendship, in its sole discretion, part or of all of Century Friendship’s equity interests in New Oriental China when and to the extent that applicable PRC law permits it to own part or all of the equity interest in New Oriental China; (iii) powers of attorney, whereby Century Friendship irrevocably appoints and constitutes Beijing Pioneer as its attorney-in-fact to exercise on Century Friendship’s behalf any and all rights that Century Friendship has in respect of its equity interests in New Oriental China; (iv) service agreements, which enable our wholly-owned subsidiaries in China to receive substantially all of the economic benefits of New Oriental China and its schools and subsidiaries.
An enterprise that qualifies as a “software enterprise” is exempt from enterprise income tax for the two years beginning in the enterprise’s first profitable year and then is entitled to a reduced tax rate of 12.5% for the succeeding three years.
In addition, an enterprise that qualifies as a “software enterprise” is exempt from enterprise income tax for the two years beginning in the enterprise’s first profitable year and then is entitled to a reduced tax rate of 12.5% for the succeeding three years.
Any limitation on the ability of our subsidiaries to distribute dividends to us or on the ability of New Oriental China and its schools and subsidiaries to make payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends, or otherwise fund and conduct our business. 46 Table of Contents PRC regulation of loans to, and direct investment in, PRC entities by offshore holding companies and governmental control of currency conversion may restrict or prevent us from making loans to our PRC subsidiaries or New Oriental China and its schools and subsidiaries or making additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
Any limitation on the ability of our subsidiaries to distribute dividends to us or on the ability of New Oriental China and its schools and subsidiaries to make payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends, or otherwise fund and conduct our business. 44 Table of Contents PRC regulation of loans to, and direct investment in, PRC entities by offshore holding companies and governmental control of currency conversion may restrict or prevent us from making loans to our PRC subsidiaries or New Oriental China and its schools and subsidiaries or making additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
Contractual Arrangements with Beijing Xuncheng, Its Subsidiaries and Shareholders (i) equity pledge agreements, pursuant to which, each of the then shareholders of Beijing Xuncheng agreed to irrevocably and unconditionally pledge its equity interest in Beijing Xuncheng to Dexin Dongfang to secure the performance of obligations of Beijing Xuncheng, its then shareholders, and relevant subsidiaries under the exclusive option agreement, the powers of attorney, the exclusive management consultancy and business cooperation agreement, and the letters of undertaking; 4 Table of Contents (ii) exclusive option agreement, pursuant to this agreement, Beijing Xuncheng’s then shareholders unconditionally and irrevocably agreed to grant Dexin Dongfang an exclusive option to purchase all or part of the equity interests in Beijing Xuncheng for the minimum amount of consideration permitted by PRC law; (iii) powers of attorney, whereby each of Beijing Xuncheng’s then shareholders irrevocably appoints Dexin Dongfang or any person designated by Dexin Dongfang as its attorney-in-fact to exercise on the shareholder’s behalf any and all rights the shareholder has in respect of its equity interests in Beijing Xuncheng; (iv) exclusive management consultancy and cooperation agreement, pursuant to which, Dexin Dongfang has the exclusive right to provide, or designate any third party to provide Beijing Xuncheng and its subsidiaries with corporate management services, intellectual property licenses, technical and business supports, and other additional services as the parties may agree from time to time.
Contractual Arrangements with Beijing Xuncheng, Its Subsidiaries and Shareholders (i) equity pledge agreements, pursuant to which, each of the then shareholders of Beijing Xuncheng agreed to irrevocably and unconditionally pledge its equity interest in Beijing Xuncheng to Dexin Dongfang to secure the performance of obligations of Beijing Xuncheng, its then shareholders, and relevant subsidiaries under the exclusive option agreement, the powers of attorney, the exclusive management consultancy and business cooperation agreement, and the letters of undertaking; (ii) exclusive option agreement, pursuant to this agreement, Beijing Xuncheng’s then shareholders unconditionally and irrevocably agreed to grant Dexin Dongfang an exclusive option to purchase all or part of the equity interests in Beijing Xuncheng for the minimum amount of consideration permitted by PRC law; (iii) powers of attorney, whereby each of Beijing Xuncheng’s then shareholders irrevocably appoints Dexin Dongfang or any person designated by Dexin Dongfang as its attorney-in-fact to exercise on the shareholder’s behalf any and all rights the shareholder has in respect of its equity interests in Beijing Xuncheng; (iv) exclusive management consultancy and cooperation agreement, pursuant to which, Dexin Dongfang has the exclusive right to provide, or designate any third party to provide Beijing Xuncheng and its subsidiaries with corporate management services, intellectual property licenses, technical and business supports, and other additional services as the parties may agree from time to time.
We may be treated as a resident enterprise for PRC tax purposes under the EIT Law, which may subject us to PRC income tax for our global income and withholding for any dividends we pay to our non-PRC shareholders and ADS holders.
We may be treated as a resident enterprise for PRC tax purposes under the PRC Enterprise Income Tax Law, which may subject us to PRC income tax for our global income and withholding for any dividends we pay to our non-PRC shareholders and ADS holders.
Risk Factors— Risks Related to Our Corporate Structure—Our ability to enforce the equity pledge agreements between us and the shareholders of the variable interest entities may be subject to limitations based on PRC laws and regulations” on page 44 for details. • The controlling shareholder of Century Friendship, which is the sole shareholder of New Oriental China, may have potential conflicts of interest with us, and if any such conflicts of interest are not resolved in our favor, our business may be materially and adversely affected.
Risk Factors—Risks Related to Our Corporate Structure—Our ability to enforce the equity pledge agreements between us and the shareholders of the variable interest entities may be subject to limitations based on PRC laws and regulations” on page 42 for details. • The controlling shareholder of Century Friendship, which is the sole shareholder of New Oriental China, may have potential conflicts of interest with us, and if any such conflicts of interest are not resolved in our favor, our business may be materially and adversely affected.
Risk Factors—Risks Related to Doing Business in China—The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections” on page 60 for details • Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China.
Risk Factors—Risks Related to Doing Business in China—The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections” on page 57 for details • Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China.
All these laws and regulations may result in additional expenses and obligations to us and subject us to negative publicity, which could harm our reputation and negatively affect the trading price of the ADSs and/or common shares.
All these laws and regulations may result in additional expenses and obligations to us and subject us to negative publicity, which could harm our reputation and negatively affect the trading price of the ADSs and common shares.
However, due to the ambiguity of the definition of “Audio-visual Programs”, there is uncertainty as to whether our online business falls within the definition of “Audio-visual Programs” and whether we are required to obtain the License for Online Transmission of Audio-Visual Programs.
However, due to the ambiguity of the definition of “Audio-visual Programs,” there is uncertainty as to whether our online business falls within the definition of “Audio-visual Programs” and whether we are required to obtain the License for Online Transmission of Audio-Visual Programs.
East Buy has made notable progress in its sale of private label products and livestreaming e-commerce business in fiscal year 2023. We are also exploring business opportunities in culture and tourism market.
East Buy has made notable progress in its sale of private label products and livestreaming e-commerce business in fiscal year 2023 and 2024. We are also exploring business opportunities in culture and tourism market.
A non-U.S. corporation, such as our company, will be a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes for any taxable year if either, (1) 75% or more of its gross income for such year consists of certain types of “passive” income or (2) 50% or more of the value of its assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce passive income or are held for the production of passive income.
A non-U.S. corporation, such as our company, will be a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes for any taxable year if either, (1) 75% or more of its gross income for such year consists of certain types of “passive” income or (2) 50% or more of the value of its assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce passive income or are held for the production of passive income (the “asset test”).
The Confidentiality and Archives Administration Provisions require, among others, that PRC domestic enterprises seeking offering and listing of securities in overseas markets, either directly or indirectly, shall establish the confidentiality and archives system, and shall complete approval and filing procedures with competent authorities, if such PRC domestic enterprises or their overseas listing entities provide or publicly disclose documents or materials involving state secrets and work secrets of PRC government agencies to relevant securities companies, securities service institutions, overseas regulatory agencies and other entities and individuals.
These provisions require, among others, that PRC domestic enterprises seeking offering and listing of securities in overseas markets, either directly or indirectly, shall establish the confidentiality and archives system, and shall complete approval and filing procedures with competent authorities, if such PRC domestic enterprises or their overseas listing entities provide or publicly disclose documents or materials involving state secrets and work secrets of PRC government agencies to relevant securities companies, securities service institutions, overseas regulatory agencies and other entities and individuals.
Under the Hong Kong Stamp Duty Ordinance, any person who effects any sale or purchase of Hong Kong stock, defined as stock the transfer of which is required to be registered in Hong Kong, is required to pay Hong Kong stamp duty.
Under the Hong Kong Stamp Duty Ordinance, any person who effects a sale or purchase of Hong Kong stock, defined as stock the transfer of which is required to be registered in Hong Kong, is required to pay Hong Kong stamp duty.
For this reason, we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report on Form 20-F for the fiscal year ended May 31, 2023. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions.
For this reason, we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report on Form 20-F for the fiscal year ended May 31, 2024. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions.
Operating Results.” Our audited consolidated financial statements are prepared and presented in accordance with generally accepted accounting principles in the United States, or U.S. GAAP.
Operating Results.” Our audited consolidated financial statements are prepared and presented in accordance with generally accepted accounting principles in the United States, or U.S.
Organizational Structure— Contractual Arrangements with New Oriental China, Its Schools and Subsidiaries and Its Shareholder.” 40 Table of Contents In addition, foreign ownership in entities provided value-added telecommunication services, with a few exceptions, is subject to restrictions under the current PRC laws and regulations. Specifically, foreign ownership of an internet information service provider may not exceed 50%.
Organizational Structure—Contractual Arrangements with New Oriental China, Its Schools and Subsidiaries and Its Shareholder.” 38 Table of Contents In addition, foreign ownership in entities provided value-added telecommunication services, with a few exceptions, is subject to restrictions under the current PRC laws and regulations. Specifically, foreign ownership of an internet information service provider may not exceed 50%.
The occurrence of these events may have a material adverse effect on our cash flow and liquidity. 38 Table of Contents Failure to control rental costs, obtain leases at desired locations at reasonable prices or protect our leasehold interests could materially and adversely affect our business. Our office, schools and learning centers are mainly located on leased premises.
The occurrence of these events may have a material adverse effect on our cash flow and liquidity. 35 Table of Contents Failure to control rental costs, obtain leases at desired locations at reasonable prices or protect our leasehold interests could materially and adversely affect our business. Our office, schools and learning centers are mainly located on leased premises.
However, given the potential changes in the interpretation and application of existing PRC laws and regulations, we may be required to obtain the Internet Culture Operation License for business operations in the future. 59 Table of Contents We cannot assure that the competent PRC government authorities will not subsequently take a contrary view, especially in light of new regulatory developments.
However, given the potential changes in the interpretation and application of existing PRC laws and regulations, we may be required to obtain the Internet Culture Operation License for business operations in the future. 56 Table of Contents We cannot assure that the competent PRC government authorities will not subsequently take a contrary view, especially in light of new regulatory developments.
The trading prices of our ADSs and common shares have been and are likely to continue to be volatile, which could result in substantial losses to holders of our common shares and/or ADSs.
The trading prices of our ADSs and common shares have been and are likely to continue to be volatile, which could result in substantial losses to holders of our common shares and ADSs.
The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment” on page 60 for details Risks Related to Our ADSs and Common Shares • We adopt different practices as to certain matters as compared with many other companies listed on the Hong Kong Stock Exchange. See “Item 3.
The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment” on page 58 for details Risks Related to Our ADSs and Common Shares • We adopt different practices as to certain matters as compared with many other companies listed on the Hong Kong Stock Exchange. See “Item 3.
Under such circumstances, we may be requested to unwind the contractual arrangements with respect to the operating entities of intelligent learning systems and devices. 42 Table of Contents It is uncertain whether any new PRC laws, rules or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide.
Under such circumstances, we may be requested to unwind the contractual arrangements with respect to the operating entities of intelligent learning systems and devices. 40 Table of Contents It is uncertain whether any new PRC laws, rules or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide.
We are subject to PRC laws and regulations governing the collecting, storing, sharing, using, processing, disclosure and protection of personal information and other data on the Internet and mobile platforms as well as privacy protection and cybersecurity. 34 Table of Contents In June 2021, the Standing Committee of the NPC promulgated the PRC Data Security Law, which took effect in September 2021.
We are subject to PRC laws and regulations governing the collecting, storing, sharing, using, processing, disclosure and protection of personal information and other data on the Internet and mobile platforms as well as privacy protection and cybersecurity. 31 Table of Contents In June 2021, the Standing Committee of the NPC promulgated the PRC Data Security Law, which took effect in September 2021.
In particular, our compliance with the Opinions on Further Alleviating the Burden of Homework and After-School Tutoring for Students in Compulsory Education and the implementation measures issued thereunder by the relevant PRC government authorities has had, and could have further, material adverse effect on us. See “Item 3. Key Information—Risk Factors—D.
In particular, our compliance with the Opinions on Further Alleviating the Burden of Homework and After-School Tutoring for Students in Compulsory Education and the implementation measures issued thereunder by the relevant PRC government authorities has had, and could have further, material adverse effect on us. See “Item 3. Key Information—D.
We may have to take corporate or legal action, which could involve significant time and resources to resolve while distracting management from our operations. 45 Table of Contents Our ability to operate private schools may be subject to significant limitations or may otherwise be materially and adversely affected by changes in PRC laws, regulations and policies.
We may have to take corporate or legal action, which could involve significant time and resources to resolve while distracting management from our operations. 43 Table of Contents Our ability to operate private schools may be subject to significant limitations or may otherwise be materially and adversely affected by changes in PRC laws, regulations and policies.
The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.” 9 Table of Contents Cash and Asset Flows through Our Organization New Oriental Education & Technology Group Inc. is a Cayman Islands holding company with no operations of its own.
The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.” 8 Table of Contents Cash and Asset Flows through Our Organization New Oriental Education & Technology Group Inc. is a Cayman Islands holding company with no operations of its own.
Risk Factors—Risks Related to Our Business—If we fail to successfully execute our business strategies, our business and prospects may be materially and adversely affected” on page 23 for details. • Significant risks exist in relation to the interpretation and implementation of or proposed changes to, the PRC laws, regulations and policies regarding the private education industry.
Risk Factors—Risks Related to Our Business—If we fail to successfully execute our business strategies, our business and prospects may be materially and adversely affected” on page 20 for details. • Significant risks exist in relation to the interpretation and implementation of, or proposed changes to, the PRC laws, regulations and policies regarding the private education industry.
Furthermore, based on the facts that (i) the Draft Data Security Regulations and Draft Amendment to PRC Cybersecurity Law have not been formally adopted, and the implementation and interpretation of both are subject to changes, (ii) we have not been involved in any investigations on cybersecurity review initiated by the CAC, nor have we received any inquiry, notice, warning, or sanctions from any competent PRC regulatory authorities related to cybersecurity, data security and personal data protection, we believe, as of the date of this annual report, to the best of our knowledge, our business operations are compliant with the currently effective PRC laws relating to cybersecurity, data security, and personal data and privacy laws in all material respects, and based on the advice of our PRC legal counsel, Tian Yuan Law Firm, except as otherwise disclosed in “—Failure to comply with governmental regulation and other legal obligations concerning privacy, data protection and cybersecurity may subject us to penalties, damage our reputation and brand, and may materially and adversely affect our business, as we routinely collect, store and use data during our business”, our business operations are compliant with the permission and approval requirements of the CAC in all material respects.
Furthermore, based on the facts that (i) the Draft Data Security Regulations and Draft Amendment to PRC Cybersecurity Law have not been formally adopted, and the implementation and interpretation of both are subject to changes, (ii) we have not been involved in any investigations on cybersecurity review initiated by the Cyberspace Administration of China, nor have we received any inquiry, notice, warning, or sanctions from any competent PRC regulatory authorities related to cybersecurity, data security and personal data protection, we believe, as of the date of this annual report, to the best of our knowledge, our business operations are compliant with the currently effective PRC laws relating to cybersecurity, data security, and personal data and privacy laws in all material respects, and based on the advice of our PRC legal counsel, Tian Yuan Law Firm, except as otherwise disclosed in “—Failure to comply with governmental regulation and other legal obligations concerning privacy, data protection and cybersecurity may subject us to penalties, damage our reputation and brand, and may materially and adversely affect our business, as we routinely collect, store and use data during our business,” our business operations are compliant with the permission and approval requirements of the Cyberspace Administration of China in all material respects.
The PRC private education industry, especially the after-school tutoring sector, has experienced intense scrutiny and has been subject to significant regulatory changes recently.
The PRC private education industry, especially the after-school tutoring sector, has experienced intense scrutiny and has been subject to significant regulatory changes.
While detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigations or evidence collection activities within China may further increase difficulties faced by our shareholders in protecting their interests.
While detailed interpretation of or implementation rules under Article 177 of the PRC Securities Law have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigations or evidence collection activities within China may further increase difficulties faced by our shareholders in protecting their interests.
Moreover, on February 8, 2022, the Chinese Ministry of Education, or the MOE issued its key tasks for 2022 on its website, which specifies that administration over academic subjects tutoring for students in grade ten to twelve shall be strictly implemented by reference to the relevant provisions regarding administration over academic subjects tutoring for students in compulsory education.
Moreover, on February 8, 2022, the Chinese Ministry of Education issued its key tasks for 2022 on its website, which specifies that administration over academic subjects tutoring for students in grade ten to twelve shall be strictly implemented by reference to the relevant provisions regarding administration over academic subjects tutoring for students in compulsory education.
The SAT has issued a circular providing that a foreign enterprise controlled by a PRC company or a PRC company group will be classified as a “resident enterprise” with its “de facto management bodies” located within China if the following requirements are satisfied: (1) the senior management and core management departments in charge of its daily operations function mainly in the PRC; (2) its financial and human resources decisions are subject to determination or approval by persons or bodies in the PRC; (3) its major assets, accounting books, company seals, and minutes and files of its board and shareholders’ meetings are located or kept in the PRC; and (4) at least half of the enterprise’s directors or senior management with voting rights reside in the PRC.
The State Administration of Taxation has issued a circular providing that a foreign enterprise controlled by a PRC company or a PRC company group will be classified as a “resident enterprise” with its “de facto management bodies” located within China if the following requirements are satisfied: (1) the senior management and core management departments in charge of its daily operations function mainly in the PRC; (2) its financial and human resources decisions are subject to determination or approval by persons or bodies in the PRC; (3) its major assets, accounting books, company seals, and minutes and files of its board and shareholders’ meetings are located or kept in the PRC; and (4) at least half of the enterprise’s directors or senior management with voting rights reside in the PRC.
The selected consolidated statement of operations data for the fiscal years ended May 31, 2021, 2022 and 2023 and the consolidated balance sheet data as of May 31, 2022 and 2023 have been derived from our audited consolidated financial statements, which are included in this annual report beginning on page F-1.
The selected consolidated statement of operations data for the fiscal years ended May 31, 2022, 2023 and 2024 and the consolidated balance sheet data as of May 31, 2023 and 2024 have been derived from our audited consolidated financial statements, which are included in this annual report beginning on page F-1.
We also may be subject to claims for indemnification related to these matters, and we cannot predict the impact that indemnification claims may have on our business or financial results. 37 Table of Contents We may need additional capital, and financing may not be available on terms acceptable to us, or at all.
We also may be subject to claims for indemnification related to these matters, and we cannot predict the impact that indemnification claims may have on our business or financial results. 34 Table of Contents We may need additional capital, and financing may not be available on terms acceptable to us, or at all.
On October 23, 2019, SAFE promulgated the Notice for Further Advancing the Facilitation of Cross-border Trade and Investment, or the SAFE Circular 28, which, among other things, allows all foreign-invested companies to use RMB converted from foreign currency-denominated capital for equity investments in China, for so long as there is a truthful equity investment, and such equity investment does not violate applicable laws and complies with the negative list on foreign investment.
On October 23, 2019, SAFE promulgated the Notice for Further Advancing the Facilitation of Cross-border Trade and Investment, which, among other things, allows all foreign-invested companies to use RMB converted from foreign currency-denominated capital for equity investments in China, for so long as there is a truthful equity investment, and such equity investment does not violate applicable laws and complies with the negative list on foreign investment.
See “Item 3. Key Information—D. Risk Factors— Risks Related to Our ADSs and Common Shares—If securities or industry analysts publish negative reports about our business, the price and trading volume of our common shares and/or ADSs securities could decline” on page 63 for details.
See “Item 3. Key Information—D. Risk Factors—Risks Related to Our ADSs and Common Shares—If securities or industry analysts publish negative reports about our business, the price and trading volume of our common shares and ADSs securities could decline” on page 60 for details.
Moreover, the Opinions on Guiding and Regulating the Orderly and Healthy Development of Educational Mobile Apps issued jointly by the MOE with certain other PRC government authorities on August 10, 2019, or the Opinions on Educational Apps, require that 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 Education Apps, complete filings with competent provincial regulatory authorities for education.
Moreover, the Opinions on Guiding and Regulating the Orderly and Healthy Development of Educational Mobile Apps issued jointly by the Chinese Ministry of Education with certain other PRC government authorities on August 10, 2019, require that 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 Education Apps, complete filings with competent provincial regulatory authorities for education.
The selected consolidated statement of operations data for the fiscal years ended May 31, 2019 and 2020 and the selected consolidated balance sheet data as of May 31, 2019, 2020 and 2021 have been derived from our audited consolidated financial statements for the fiscal years ended May 31, 2019, 2020 and 2021, which are not included in this annual report.
The selected consolidated statement of operations data for the fiscal years ended May 31, 2020 and 2021 and the selected consolidated balance sheet data as of May 31, 2020, 2021 and 2022 have been derived from our audited consolidated financial statements for the fiscal years ended May 31, 2020, 2021 and 2022, which are not included in this annual report.
Laws, regulations and policies governing PRC private education are subject to ongoing changes, which may materially affect our ability to operate private schools. For example, the Alleviating Burden Opinion has brought and will continuously bring significant impact on our operation.
Laws, regulations and policies governing PRC private education are subject to ongoing changes, which may materially affect our ability to operate private schools. For example, the Alleviating Burden Opinion has brought and will continually bring significant impact on our operation.
We use various cloud data centers which enable us to restore service quickly in case of significant damage to our on-site computer center. 33 Table of Contents Although we have built a backup system that runs on different servers for our operating data, we may still lose important student data or suffer disruption to our operations if there is a failure of the database system or the backup system.
We use various cloud data centers which enable us to restore service quickly in case of significant damage to our on-site computer center. 30 Table of Contents Although we have built a backup system that runs on different servers for our operating data, we may still lose important student or consumer data or suffer disruption to our operations if there is a failure of the database system or the backup system.
Risk Factors—Risks Related to Doing Business in China—Uncertainties with respect to the enforcement of laws, and changes in laws and regulations in China could adversely affect us” on page 49. • We conduct our business primarily in China. Our operations in China are governed by PRC laws and regulations.
Risk Factors—Risks Related to Doing Business in China—Uncertainties with respect to the enforcement of laws, and changes in laws and regulations in China could adversely affect us” on page 47. • We conduct our business primarily in China. Our operations in China are governed by PRC laws and regulations.
In addition, Mr. Yu may breach or cause New Oriental China and its schools and subsidiaries to breach or cause Beijing Xuncheng and its subsidiaries to breach or refuse to renew the existing contractual arrangements with us. Currently, we do not have existing arrangements to address potential conflicts of interest Mr.
Yu may breach or cause New Oriental China and its schools and subsidiaries to breach or cause Beijing Xuncheng and its subsidiaries to breach or refuse to renew the existing contractual arrangements with us. Currently, we do not have existing arrangements to address potential conflicts of interest Mr.
Under the EIT Law, enterprises established outside of China whose “de facto management bodies” are located in China are considered “resident enterprises,” and will generally be subject to the uniform 25% enterprise income tax rate for their global income.
Under the PRC Enterprise Income Tax Law, enterprises established outside of China whose “de facto management bodies” are located in China are considered “resident enterprises,” and will generally be subject to the uniform 25% enterprise income tax rate for their global income.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

240 edited+76 added−38 removed277 unchanged
Biggest changeAccording to the Overseas Listing Trial Measures, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedure and report relevant information to the CSRC; (2) if the issuer meets both of the following conditions, the overseas offering and listing shall be determined as an indirect overseas offering and listing by a domestic company: (i) any of the total assets, net assets, revenues or profits of the domestic operating entities of the issuer in the most recent accounting year accounts for more than 50% of the corresponding figure in the issuer’s audited consolidated financial statements for the same period; (ii) its major operational activities are carried out in China or its main places of business are located in China, or the senior managers in charge of operation and management of the issuer are mostly Chinese citizens or are domiciled in China; and (3) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and where an issuer makes an application for initial public offering and listing in an overseas market, the issuer shall submit filings with the CSRC within three business days after such application is submitted.
Biggest changeAccording to the Overseas Listing Trial Measures, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedure and report relevant information to the CSRC; (2) if the issuer meets both of the following conditions, the overseas offering and listing shall be determined as an indirect overseas offering and listing by a domestic company: (i) any of the total assets, net assets, revenues or profits of the domestic operating entities of the issuer in the most recent accounting year accounts for more than 50% of the corresponding figure in the issuer’s audited consolidated financial statements for the same period; (ii) its major operational activities are carried out in China or its main places of business are located in China, or the senior managers in charge of operation and management of the issuer are mostly Chinese citizens or are domiciled in China; and (3) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and where an issuer makes an application for initial public offering and listing in an overseas market, the issuer shall submit filings with the CSRC within three business days after such application is submitted. 99 Table of Contents On the same day, the CSRC 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 are required to 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.
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 Standing Committee of the National People’s Congress promulgated the PRC 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 Standing Committee of the National People’s Congress promulgated the PRC Data Security Law, which came into effect on September 1, 2021.
On October 23, 2019, the SAFE promulgated SAFE Circular 28, which, among other things, allows all foreign-invested companies to use RMB converted from foreign currency-denominated capital for equity investments in China, for so long as there is a truthful equity investment, such equity investment does not violate applicable laws, and such equity investment complies with the negative list on foreign investment.
On October 23, 2019, SAFE promulgated SAFE Circular 28, which, among other things, allows all foreign-invested companies to use RMB converted from foreign currency-denominated capital for equity investments in China, for so long as there is a truthful equity investment, such equity investment does not violate applicable laws, and such equity investment complies with the negative list on foreign investment.
The SAFE Circular 28 aims to lift the restriction on foreign-invested companies’ equity investment with capital on the ground of business scope implied by SAFE Circular 19.
SAFE Circular 28 aims to lift the restriction on foreign-invested companies’ equity investment with capital on the ground of business scope implied by SAFE Circular 19.
According to the Circular of SAFE on Optimizing Foreign Exchange Administration to Support the Development of Foreign-related Business promulgated and effective on April 10, 2020 by the SAFE, the reform of facilitating the payments of income under the capital accounts shall be promoted nationwide.
According to the Circular of SAFE on Optimizing Foreign Exchange Administration to Support the Development of Foreign-related Business promulgated and effective on April 10, 2020 by SAFE, the reform of facilitating the payments of income under the capital accounts shall be promoted nationwide.
In June 2015, SAFE promulgated SAFE Circular 13, according to which, in order to simplify the procedures of performing the foreign exchange control policy of direct investment, the registration authorities under the SAFE foreign exchange control policies, including the registration of PRC residents under SAFE Circular 37 change from local SAFE branches to local banks authorized by SAFE and SAFE will strengthen the training and supervision for banks in performing the foreign exchange control policy of direct investment.
In June 2015, SAFE promulgated SAFE Circular 13, according to which, in order to simplify the procedures of performing the foreign exchange control policy of direct investment, the registration authorities under SAFE foreign exchange control policies, including the registration of PRC residents under SAFE Circular 37 change from local SAFE branches to local banks authorized by SAFE and SAFE will strengthen the training and supervision for banks in performing the foreign exchange control policy of direct investment.
Exclusive Option Purchase Agreement dated as of May 10, 2018 was entered into by Dexin Dongfang, Beijing Xuncheng and all of its then shareholders.
Exclusive Option Agreement . Exclusive Option Purchase Agreement dated as of May 10, 2018 was entered into by Dexin Dongfang, Beijing Xuncheng and all of its then shareholders.
The key differences between for-profit private schools and non-profit private schools under this system include the following: • sponsors of for-profit private schools are entitled to retain the profits and proceeds from the schools and the operation surplus may be allocated to the sponsors pursuant to the PRC Company Law and other relevant laws and regulations, whereas sponsors of non-profit private schools are not entitled to the distribution of profits or proceed from the non-profit schools and all operation surplus of non-profit schools shall be used for the operation of the schools; • for-profit private schools are entitled to set their own tuition and other miscellaneous fees without seeking prior approval from the relevant government authorities, whereas the collection of fees by non-profit private schools shall be regulated in accordance with rules promulgated by governments at provincial level; • private schools (for-profit and non-profit alike) may enjoy preferential tax treatments; non-profit private schools will be entitled to the same tax benefits as public schools whereas taxation policies for for-profit private schools are still unclear as more specific provisions are yet to be introduced; • for construction or expansion of the school, non-profit schools may acquire the land use rights in the form of allocation by the government as a preferential treatment, whereas for-profit private schools shall acquire the land use rights by purchasing them from the government; • the remaining assets of non-profit private schools after liquidation shall continue to be used for the operation of non-profit schools, whereas the remaining assets of for-profit private schools shall be distributed to the sponsors in accordance with the PRC Company Law; and • governments at or above the county level may support private schools (for-private and non-private alike) by subscribing to their services, providing student loans and scholarships, and leasing or transferring unused state assets to the schools, and the governments may further support non-profit private schools in the form of government subsidies, bonus funds and incentives for donation.
The key differences between for-profit private schools and non-profit private schools under this system include the following: • sponsors of for-profit private schools are entitled to retain the profits and proceeds from the schools and the operation surplus may be allocated to the sponsors pursuant to the PRC Company Law and other relevant laws and regulations, whereas sponsors of non-profit private schools are not entitled to the distribution of profits or proceed from the non-profit schools and all operation surplus of non-profit schools shall be used for the operation of the schools; 72 Table of Contents • for-profit private schools are entitled to set their own tuition and other miscellaneous fees without seeking prior approval from the relevant government authorities, whereas the collection of fees by non-profit private schools shall be regulated in accordance with rules promulgated by governments at provincial level; • private schools (for-profit and non-profit alike) may enjoy preferential tax treatments; non-profit private schools will be entitled to the same tax benefits as public schools whereas taxation policies for for-profit private schools are still unclear as more specific provisions are yet to be introduced; • for construction or expansion of the school, non-profit schools may acquire the land use rights in the form of allocation by the government as a preferential treatment, whereas for-profit private schools shall acquire the land use rights by purchasing them from the government; • the remaining assets of non-profit private schools after liquidation shall continue to be used for the operation of non-profit schools, whereas the remaining assets of for-profit private schools shall be distributed to the sponsors in accordance with the PRC Company Law; and • governments at or above the county level may support private schools (for-private and non-private alike) by subscribing to their services, providing student loans and scholarships, and leasing or transferring unused state assets to the schools, and the governments may further support non-profit private schools in the form of government subsidies, bonus funds and incentives for donation.
Regulations on APPs The Opinion on Guiding and Regulating the Healthy Development of Online Education Applications, issued by the MOE and seven other authorities on August 10, 2019, restates certain requirements that apply to online education application providers, as stated above, and further provides that: (1) online after-school tutoring institutions shall examine the teaching qualifications, education background and capability of their foreign teachers; (2) online education applications providers shall file information about themselves as well as their apps with education administration authorities at provincial level, and the MOE will promulgate detailed filing rules to guide such filing and make such filing results publicly available on official website; (3) online education applications providers whose apps mainly face juveniles shall limit the length of using time, specify age group of target users and strictly review the content of the apps, and the collection of personal information of juveniles shall be permitted by the custodian of such juveniles; (4) online education application providers shall build up data security systems covering the collection, storage, transfer, using and other respects of personal information, and shall set up a name verification system; (5) education authorities at provincial level shall set up negative lists of the online education apps.
Regulations on APPs The Opinion on Guiding and Regulating the Healthy Development of Online Education Applications, issued by the Chinese Ministry of Education and seven other authorities on August 10, 2019, restates certain requirements that apply to online education application providers, as stated above, and further provides that: (1) online after-school tutoring institutions shall examine the teaching qualifications, education background and capability of their foreign teachers; (2) online education applications providers shall file information about themselves as well as their apps with education administration authorities at provincial level, and the Chinese Ministry of Education will promulgate detailed filing rules to guide such filing and make such filing results publicly available on official website; (3) online education applications providers whose apps mainly face juveniles shall limit the length of using time, specify age group of target users and strictly review the content of the apps, and the collection of personal information of juveniles shall be permitted by the custodian of such juveniles; (4) online education application providers shall build up data security systems covering the collection, storage, transfer, using and other respects of personal information, and shall set up a name verification system; (5) education authorities at provincial level shall set up negative lists of the online education apps.
The Education Law stipulates that the State formulates plans for the development of education, establishes and operates schools and other educational institution. Furthermore, it provides that enterprises, other social organizations and individual citizens are encouraged to establish and operate schools and other types of educational institutions in accordance with PRC laws.
It stipulates that the State formulates plans for the development of education, establishes and operates schools and other educational institution. Furthermore, it provides that enterprises, other social organizations and individual citizens are encouraged to establish and operate schools and other types of educational institutions in accordance with PRC laws.
On July 21, 2023, the MIIT issued the Circular of the Ministry of Industry and Information Technology on the Record-filing of Mobile Internet Applications. According to such circular, all Apps shall complete filings with the provincial communications administration of the place where the operator is located.
On July 21, 2023, the Ministry of Industry and Information Technology issued the Circular of the Ministry of Industry and Information Technology on the Record-filing of Mobile Internet Applications. According to such circular, all Apps shall complete filings with the provincial communications administration of the place where the operator is located.
The Internet Information Measures require that commercial Internet content providers, or ICP providers, obtain a license for Internet information services, or ICP license, from the appropriate telecommunications authorities in order to carry on any commercial Internet information services in the PRC. ICP providers shall display their ICP license number in a conspicuous location on their home page.
The Internet Information Measures require that commercial Internet content providers, or ICP providers, obtain ICP license, from the appropriate telecommunications authorities in order to carry on any commercial Internet information services in the PRC. ICP providers shall display their ICP license number in a conspicuous location on their home page.
After-school tutoring services and training services which do not grant certificates or diplomas and non-academic vocational training institutions are not listed on the 2021 Negative List. 94 Table of Contents The PRC Foreign Investment Law and Its Implementation Rules 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.
After-school tutoring services and training services which do not grant certificates or diplomas and non-academic vocational training institutions are not listed on the 2021 Negative List. 93 Table of Contents The PRC Foreign Investment Law and Its Implementation Rules 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.
Based on the Q&A, since our livestreaming e-commerce business through East Buy is for providing the sale of agricultural and other products, we are not required to obtain the Internet Culture Operation License for our livestreaming e-commerce business.
Based on the Q&A, since our livestreaming e-commerce business through East Buy is for providing the sale of agricultural and other products, we are not required to obtain an Internet Culture Operation License for our livestreaming e-commerce business.
Based on the Q&A, since our livestreaming e-commerce business through East Buy is for providing the sale of agricultural and other products, we are not required to obtain the Internet Culture Operation License for our livestreaming e-commerce business.
Based on the Q&A, since our livestreaming e-commerce business through East Buy is for providing the sale of agricultural and other products, we are not required to obtain an Internet Culture Operation License for our livestreaming e-commerce business.
Risk Factors—Risks Related to Our Business—If we fail to obtain and maintain the licenses and approvals required for online business in China, our business, financial condition and results of operations may be materially and adversely affected.” 84 Table of Contents According to the Provisions on the Administration of Information Services of Mobile Internet Apps, which was promulgated on June 14, 2022 and came into effect on August 1, 2022, the term “information services of Apps” means the activities of providing users with production, copying, publishing, spreading and other services of text, picture, voice, video and other information through Apps, including instant messaging, news, knowledge Q&A, forums, online live broadcast, e-commerce, online audio and video, life services and other types.
Risk Factors—Risks Related to Doing Business in China—If we fail to obtain and maintain the licenses and approvals required for online business in China, our business, financial condition and results of operations may be materially and adversely affected.” 81 Table of Contents According to the Provisions on the Administration of Information Services of Mobile Internet Apps, which was promulgated on June 14, 2022 and came into effect on August 1, 2022, the term “information services of Apps” means the activities of providing users with production, copying, publishing, spreading and other services of text, picture, voice, video and other information through Apps, including instant messaging, news, knowledge Q&A, forums, online live broadcast, e-commerce, online audio and video, life services and other types.
Regulations on Travel Agencies promulgated by the State Council, revised on November 29, 2020, and the implementation rules of Regulations on Travel Agencies, provide that, among other things, travel agent shall mean any entity that engages in the business of attracting, organizing, and receiving tourists, providing tourism services for tourists and operating domestic, outbound or border tourism; the aforementioned business shall include but not limit to arranging for transport services, arranging for accommodation services, providing services for tour guides or team leaders, providing services of tourism consultation and tourism activities design.
Regulations on Travel Agencies promulgated by the State Council, revised on November 29, 2020, and the implementation rules of Regulations on Travel Agencies, provide that, among other things, travel agent shall mean any entity that engages in the business of attracting, organizing, and receiving tourists, providing tourism services for tourists and operating domestic, outbound or inbound tourism; the aforementioned business shall include but not limit to arranging for transport services, arranging for accommodation services, providing services for tour guides or team leaders, providing services of tourism consultation and tourism activities design.
Pursuant to the MOFCOM Order No. 1 of 2021, where a citizen, legal person or other organization of China is prohibited or restricted by foreign legislation and other measures from engaging in normal economic, trade and related activities with another country (or region) or its citizens, legal persons or other organizations, he/she/it shall truthfully report such matters to the competent department of commerce of the State Council within 30 days.
Pursuant to the Ministry of Commerce Order No. 1 of 2021, where a citizen, legal person or other organization of China is prohibited or restricted by foreign legislation and other measures from engaging in normal economic, trade and related activities with another country (or region) or its citizens, legal persons or other organizations, he/she/it shall truthfully report such matters to the competent department of commerce of the State Council within 30 days.
Dexin Dofang, Zhuhai Chongsheng, Xi’an Ruiying, Hainan Haiyue, Wuhan Dongfang, Beijing Xuncheng and its subsidiaries and Beijing Xuncheng’s then registered shareholders entered into a third supplemental agreement on May 24, 2023, pursuant to which, from the date which Linzhi Tencent Technology Co., Ltd. and the seven limited partnerships cease to be the shareholders of Beijing Xuncheng, Linzhi Tencent Technology Co., Ltd. and such seven limited partnerships shall cease to have any rights or obligations under the contractual agreements (including the Exclusive Option Agreement, Exclusive Management Consultancy and Cooperation Agreement, Equity Pledge Agreement, Letters of Undertaking and Powers of Attorney), the supplemental agreement and the second supplemental agreement; and from the same date, the New Oriental China shall act as the sole shareholder of Beijing Xuncheng, and each of Dexin Dongfang, Zhuhai Chongsheng, Xi’an Ruiying, Hainan Haiyue, Wuhan Dongfang, Beijing Xuncheng and its subsidiaries and New Oriental China shall continue to performance the contractual agreements, the supplemental agreement and the second supplemental agreement.
Dexin Dongfang, Zhuhai Chongsheng, Xi’an Ruiying, Hainan Haiyue, Wuhan Dongfang, Beijing Xuncheng and its subsidiaries and Beijing Xuncheng’s then registered shareholders entered into a third supplemental agreement on May 24, 2023, pursuant to which, from the date which Linzhi Tencent Technology Co., Ltd. and the seven limited partnerships cease to be the shareholders of Beijing Xuncheng, Linzhi Tencent Technology Co., Ltd., such seven limited partnerships shall cease to have any rights or obligations under the contractual agreements (including the Exclusive Option Agreement, Exclusive Management Consultancy and Cooperation Agreement, Equity Pledge Agreement, Letters of Undertaking and Powers of Attorney), the supplemental agreement and the second supplemental agreement; and from the same date, New Oriental China shall act as the sole shareholder of Beijing Xuncheng, and each of Dexin Dongfang, Zhuhai Chongsheng, Xi’an Ruiying, Hainan Haiyue, Wuhan Dongfang, Beijing Xuncheng and its subsidiaries and New Oriental China shall continue to be bound the contractual agreements, the supplemental agreement and the second supplemental agreement.
On July 13, 2006, the MIIT, issued the Circular on Strengthening the Administration of Foreign Investment in Value-added Telecommunications Services, or the MIIT Circular 2006, which requires that (i) foreign investors can only operate a telecommunications business in China through establishing a telecommunications enterprise with a valid telecommunications business operation license; (ii) domestic license holders are prohibited from leasing, transferring or selling telecommunications business operation licenses to foreign investors in any form, or providing any resource, sites or facilities to foreign investors to facilitate the unlicensed operation of telecommunications business in China; (iii) value-added telecommunications services providers or their shareholders must directly own the domain names and registered trademarks they use in their daily operations; (iv) each value-added telecommunications services provider must have the necessary facilities for its approved business operations and maintain such facilities in the geographic regions covered by its license; and (v) all value-added telecommunications services providers should improve network and information security, enact relevant information safety administration regulations and set up emergency plans to ensure network and information safety.
On July 13, 2006, the Ministry of Industry and Information Technology, issued the Circular on Strengthening the Administration of Foreign Investment in Value-added Telecommunications Services, or the Ministry of Industry and Information Technology Circular 2006, which requires that (i) foreign investors can only operate a telecommunications business in China through establishing a telecommunications enterprise with a valid telecommunications business operation license; (ii) domestic license holders are prohibited from leasing, transferring or selling telecommunications business operation licenses to foreign investors in any form, or providing any resource, sites or facilities to foreign investors to facilitate the unlicensed operation of telecommunications business in China; (iii) value-added telecommunications services providers or their shareholders must directly own the domain names and registered trademarks they use in their daily operations; (iv) each value-added telecommunications services provider must have the necessary facilities for its approved business operations and maintain such facilities in the geographic regions covered by its license; and (v) all value-added telecommunications services providers should improve network and information security, enact relevant information safety administration regulations and set up emergency plans to ensure network and information safety.
The Kindergarten Management Regulations provide some basic principles for the establishment and management of kindergartens enrolling children aged three years or above and call for local regulations following such principles. 82 Table of Contents On November 7, 2018, the Central Committee of the Communist Party of China and State Council jointly promulgated Opinions of the Central Committee of the Communist Party of China and State Council on Deepening Reform in Preschool Education, or the Preschool Opinions.
The Kindergarten Management Regulations provide some basic principles for the establishment and management of kindergartens enrolling children aged three years or above and call for local regulations following such principles. 79 Table of Contents On November 7, 2018, the Central Committee of the Communist Party of China and State Council jointly promulgated Opinions of the Central Committee of the Communist Party of China and State Council on Deepening Reform in Preschool Education, or the Preschool Opinions.
No entity or individual within the territory of the PRC may provide foreign judicial or law enforcement authorities with the data stored within the territory of the PRC without the approval of the competent PRC authorities. 87 Table of Contents On August 17, 2021, the State Council promulgated the Regulations on the Security Protection of Critical Information Infrastructure, which came into effect on September 1, 2021.
No entity or individual within the territory of the PRC may provide foreign judicial or law enforcement authorities with the data stored within the territory of the PRC without the approval of the competent PRC authorities. 84 Table of Contents On August 17, 2021, the State Council promulgated the Regulations on the Security Protection of Critical Information Infrastructure, which came into effect on September 1, 2021.
The EIT Law applies a uniform 25% enterprise income tax rate to both foreign-invested enterprises and domestic enterprises Preferential tax treatments grants to industries and projects that are strongly supported and encouraged by the state, and enterprises otherwise classified as “high and new technology enterprises strongly supported by the state” upon re-examination will be entitled to a 15% enterprise income tax rate.
The PRC Enterprise Income Tax Law applies a uniform 25% enterprise income tax rate to both foreign-invested enterprises and domestic enterprises Preferential tax treatments grants to industries and projects that are strongly supported and encouraged by the state, and enterprises otherwise classified as “high and new technology enterprises strongly supported by the state” upon re-examination will be entitled to a 15% enterprise income tax rate.
According to the Circular On Several Policies for Further Encouraging the Development of Software Industry and Integrated Circuit Industry promulgated by the State Council in January 2011 and the Circular On Policies of Enterprises Income Tax for Further Encouraging the Development of Software Industry and Integrated Circuit Industry, jointly promulgated by the Ministry of Finance and the SAT in April 2012 and effective from January 1, 2011, or Circular 27, an enterprise that qualifies as a “software enterprise” established after January 1, 2011, or a software enterprise, is exempt from enterprise income tax for two years beginning in the enterprise’s first profitable year followed by a tax rate of 12.5% for the succeeding three years.
According to the Circular On Several Policies for Further Encouraging the Development of Software Industry and Integrated Circuit Industry promulgated by the State Council in January 2011 and the Circular On Policies of Enterprises Income Tax for Further Encouraging the Development of Software Industry and Integrated Circuit Industry, jointly promulgated by the Ministry of Finance and the State Administration of Taxation in April 2012 and effective from January 1, 2011, or Circular 27, an enterprise that qualifies as a “software enterprise” established after January 1, 2011, or a software enterprise, is exempt from enterprise income tax for two years beginning in the enterprise’s first profitable year followed by a tax rate of 12.5% for the succeeding three years.
On March 30, 2021, the MOE promulgated the Guiding Opinions of the Ministry of Education on Vigorously Promoting the Scientific Connection of Kindergartens and Primary Schools, which prohibits after-school tutoring institutions from providing training for pre-school children in violation of regulations and provides that after-school tutoring institutions in violation of regulations above shall be included in the blacklist.
On March 30, 2021, the Chinese Ministry of Education promulgated the Guiding Opinions of the Ministry of Education on Vigorously Promoting the Scientific Connection of Kindergartens and Primary Schools, which prohibits after-school tutoring institutions from providing training for pre-school children in violation of regulations and provides that after-school tutoring institutions in violation of regulations above shall be included in the blacklist.
On September 19, 2019, the MOE, jointly with certain other PRC government authorities, issued the Guidance Opinions on Promoting the Healthy Development of Online Education, which provides, among others, that (i) social forces are encouraged to establish online education institutions, develop online education resources, and provide high quality educational services; and (ii) an online education negative list shall be promulgated and industries not included in the negative list are open for all types of entities to enter into.
On September 19, 2019, the Chinese Ministry of Education, jointly with certain other PRC government authorities, issued the Guidance Opinions on Promoting the Healthy Development of Online Education, which provides, among others, that (i) social forces are encouraged to establish online education institutions, develop online education resources, and provide high quality educational services; and (ii) an online education negative list shall be promulgated and industries not included in the negative list are open for all types of entities to enter into.
A circular issued by the SAT in April 2009 provides that a foreign enterprise controlled by a PRC company or a PRC company group will be classified as a “resident enterprise” with its “de facto management bodies” located within China if the following requirements are satisfied: (1) the senior management and core management departments in charge of its daily operations function mainly in the PRC; (2) its financial and human resources decisions are subject to determination or approval by persons or bodies in the PRC; (3) its major assets, accounting books, company seals, and minutes and files of its board and shareholders’ meetings are located or kept in the PRC; and (4) at least half of the enterprise’s directors or senior management with voting rights reside in the PRC.
A circular issued by the State Administration of Taxation in April 2009 provides that a foreign enterprise controlled by a PRC company or a PRC company group will be classified as a “resident enterprise” with its “de facto management bodies” located within China if the following requirements are satisfied: (1) the senior management and core management departments in charge of its daily operations function mainly in the PRC; (2) its financial and human resources decisions are subject to determination or approval by persons or bodies in the PRC; (3) its major assets, accounting books, company seals, and minutes and files of its board and shareholders’ meetings are located or kept in the PRC; and (4) at least half of the enterprise’s directors or senior management with voting rights reside in the PRC.
According to the Circular 102, for the temporary exemption of overseas investors from payment of withholding income tax, the following conditions must be satisfied at the same time: (1) Direct investment made by overseas investors with the profits distributed thereto, includes their activities of equity investment with the distributed profits such as capital increase, new establishment and equity purchase and excludes the increase through purchase or distribution and purchase of the shares of listed companies (excluding the conforming strategic investment), specifically including: (i) Increasing through purchase or distribution of the paid-in capital or capital reserve of resident enterprises within PRC; (ii) Investing in new establishment of resident enterprises within PRC; (iii) Purchasing the shares of resident enterprises within China from nonaffiliated parties; and (iv) Other methods prescribed by the Ministry of Finance and the SAT.
According to the Circular 102, for the temporary exemption of overseas investors from payment of withholding income tax, the following conditions must be satisfied at the same time: (1) Direct investment made by overseas investors with the profits distributed thereto, includes their activities of equity investment with the distributed profits such as capital increase, new establishment and equity purchase and excludes the increase through purchase or distribution and purchase of the shares of listed companies (excluding the conforming strategic investment), specifically including: (i) Increasing through purchase or distribution of the paid-in capital or capital reserve of resident enterprises within PRC; (ii) Investing in new establishment of resident enterprises within PRC; (iii) Purchasing the shares of resident enterprises within China from nonaffiliated parties; and (iv) Other methods prescribed by the Ministry of Finance and the State Administration of Taxation.
On November 30, 2022, the MOE and relevant authorities published Opinions on Regulation of Non-Academic After-School Tutoring for Primary and Secondary School Students, which provide that, among others, (i) local governments shall identify corresponding competent authorities for different tutoring categories and set forth basic standards; (ii) non-academic tutoring institutions shall comply with requirements relating to premise, facilities, fire safety, environment protection and food safety; (iii) practitioners shall have corresponding capability or certificates for different tutoring categories, and tutoring institutions shall not solicit or recruit primary and secondary school teachers; (iv) non-academic online tutoring institutions shall obtain certificates issued by provincial government authorities; (v) class times shall not conflict with the teaching time of the local primary and secondary schools, and offline after-school trainings shall end no later than 8:30 p.m. and online live trainings shall end no later than 9:00 p.m.; and (vi) tuition fees collected by a tutoring institution shall not be collected in a lump sum for more than 60 course sessions, or for a course length of more than three months, or for more than 5,000 RMB, and tutoring institutions shall open a special bank account for the tuition fees and file the account information and other required information with government authorities.
On November 30, 2022, the Chinese Ministry of Education and relevant authorities published Opinions on Regulation of Non-Academic After-School Tutoring for Primary and Secondary School Students, which provide that, among others, (i) local governments shall identify corresponding competent authorities for different tutoring categories and set forth basic standards; (ii) non-academic tutoring institutions shall comply with requirements relating to premises, facilities, fire safety, environment protection and food safety; (iii) practitioners shall have corresponding capability or certificates for different tutoring categories, and tutoring institutions shall not solicit or recruit primary and secondary school teachers; (iv) non-academic online tutoring institutions shall obtain certificates issued by provincial government authorities; (v) class times shall not conflict with the teaching time of the local primary and secondary schools, and offline after-school trainings shall end no later than 8:30 p.m. and online live trainings shall end no later than 9:00 p.m.; and (vi) tuition fees collected by a tutoring institution shall not be collected in a lump sum for more than 60 course sessions, or for a course length of more than three months, or for more than 5,000 RMB, and tutoring institutions shall open a special bank account for the tuition fees and file the account information and other required information with government authorities.
In addition, we own an aggregate of approximately 56,000 square meters of space for our schools, learning centers and bookstores in Xi’an, Tianjin, Kunming, Wuhan, Guangzhou, Xiamen, Changsha, Hangzhou, Zhengzhou and Hefei. We lease all of our facilities for our schools, learning centers and bookstores in over 50 other cities throughout China.
In addition, we own an aggregate of approximately 99,000 square meters of space for our schools, learning centers and bookstores in Xi’an, Tianjin, Kunming, Wuhan, Guangzhou, Xiamen, Changsha, Hangzhou, Zhengzhou and Hefei. We lease all of our facilities for our schools, learning centers and bookstores in over 50 other cities throughout China.
We deliver online courses through our online learning platforms, including Koolearn.com, our comprehensive online education and other services platform. Powered by our OMO system, we have combined our offline network with online technologies and adopted different business models tailored to students in different locations to facilitate our operational efficiency.
We deliver online courses through our online learning platforms, including Koolearn.com, our comprehensive online education platform. Powered by our OMO system, we have combined our offline network with online technologies and adopted different business models tailored to students in different locations to facilitate our operational efficiency.
In addition, according to the Q&A posted on the website of Ministry of Culture and Tourism of the PRC (the “Q&A”), if the main content of the livestreaming activities features on sale of goods, such livestreaming activities do not fall within the scope of internet culture activities, no Internet Culture Operation License is required.
In addition, according to the Q&A posted on the website of Ministry of Culture and Tourism of the PRC, if the main content of the livestreaming activities features on sale of goods, such livestreaming activities do not fall within the scope of internet culture activities, no Internet Culture Operation License is required.
The EIT Law also provides that enterprises established outside of China whose “de facto management bodies” are located in China are considered “resident enterprises” and will generally be subject to the uniform 25% enterprise income tax rate on their global income.
The PRC Enterprise Income Tax Law also provides that enterprises established outside of China whose “de facto management bodies” are located in China are considered “resident enterprises” and will generally be subject to the uniform 25% enterprise income tax rate on their global income.
Furthermore, Oriental Selection (Beijing) Technology Co., Ltd., a subsidiary of Dongfang Optimization (Beijing) Technology Co., Ltd. executed a letter of acceptance dated January 4, 2023 whereby it assumed the same rights and obligations as Beijing Xuncheng’s subsidiary under the Exclusive Management Consultancy and Cooperation Agreement. Second Supplemental Agreement .
Furthermore, Oriental Selection (Beijing) Technology Co., Ltd., a subsidiary of Dongfang Optimization (Beijing) Technology Co., Ltd. executed a letter of acceptance dated January 4, 2023 whereby it assumed the same rights and obligations as Beijing Xuncheng’s subsidiary under the Exclusive Management Consultancy and Cooperation Agreement.
On September 18, 2021, the General Office of MOE, together with other government authorities, issued a circular requiring all online after-school tutoring institutions that have filed with the local education administration authorities providing tutoring services on academic subjects in compulsory education area to obtain the private school operation permit by the end of 2021, and all such online after-school tutoring institutions shall, before obtain such permit, suspend enrollment of students and charging fees.
On September 18, 2021, the General Office of Chinese Ministry of Education, together with other government authorities, issued a circular requiring all online after-school tutoring institutions that have filed with the local education administration authorities providing tutoring services on academic subjects in compulsory education area to obtain the private school operation permit by the end of 2021, and all such online after-school tutoring institutions shall, before obtain such permit, suspend enrollment of students and charging fees.
As of the date of this annual report, certain local government authorities have promulgated rules that require non-academic tutoring service providers in areas such as art, music, physics, among others, to obtain private school operation permit.
As of the date of this annual report, certain local government authorities have promulgated rules that require non-academic tutoring service providers in areas such as art, music, physics, among others, to obtain private school operation permits.
According to the Q&A posted on the website of Ministry of Culture and Tourism of the PRC (the “Q&A”), if the main content of the livestreaming activities features on sale of goods, such livestreaming activities do not fall within the scope of internet culture activities, no Internet Culture Operation License is required.
According to the Q&A posted on the website of Ministry of Culture and Tourism of the PRC, if the main content of the livestreaming activities features on sale of goods, such livestreaming activities do not fall within the scope of internet culture activities, no Internet Culture Operation License is required.
Non-Academic Tutoring We started to expand our non-academic tutoring courses in 2021, which focuses on cultivating students’ innovative and comprehensive abilities. Our courses have been well-received by students since launch and we have rolled out non-academic tutoring courses in around 60 cities in China.
Non-Academic Tutoring We started to expand our non-academic tutoring courses in 2021, which focus on cultivating students’ innovative and comprehensive abilities. Our courses have been well-received by students since launch and we have rolled out non-academic tutoring courses in around 60 cities in China.
Restrictions on Foreign Investment in Publishing In July 2005, the Ministry of Culture, the State Administration of Radio, Film and Television, the NPPA, the NDRC, and Ministry of Commerce jointly formulated the Several Opinions on Drawing Foreign Investment into the Cultural Sector, pursuant to which foreign investors are prohibited from engaging in business such as the publication of books, audio-visual products and electronic publications, and internet publishing.
Restrictions on Foreign Investment in Publishing In July 2005, the Ministry of Culture, the State Administration of Radio, Film and Television, the National Press and Publication Administration, the NDRC, and Ministry of Commerce jointly formulated the Several Opinions on Drawing Foreign Investment into the Cultural Sector, pursuant to which foreign investors are prohibited from engaging in business such as the publication of books, audio-visual products and electronic publications, and internet publishing.
Such notice also states that as of May 15, 2022, about 88% of the non-academic tutoring institutions nationwide have implemented third-party custodians or risk reserve funds to manage the risk of pre-paid fee.
Such notice also states that as of May 15, 2022, about 88% of the non-academic tutoring institutions nationwide have implemented third-party custodians or risk reserve funds to manage the risk of pre-paid fees.
Such requirements include, among other things, that after-school tutoring institutions (i) have a fixed training premise that conforms to specified safety criteria, with an average area per student of no less than three square meters during the applicable training period; (ii) comply with relevant fire safety, environmental protection, hygiene, food operation and other specified requirements; (iii) purchase personal safety insurance for students to reduce safety risks; and (iv) not hire teachers who are working concurrently in primary or secondary schools, and teachers tutoring in academic subjects such as English are required to have the corresponding teaching qualifications.
Such requirements include, among other things, that after-school tutoring institutions (i) have fixed training premises that conform to specified safety criteria, with an average area per student of no less than three square meters during the applicable training period; (ii) comply with relevant fire safety, environmental protection, hygiene, food operation and other specified requirements; (iii) purchase personal safety insurance for students to reduce safety risks; and (iv) not hire teachers who are working concurrently in primary or secondary schools, and teachers tutoring in academic subjects such as English are required to have the corresponding teaching qualifications.
If the working mechanism determines that there exists unjustified extra-territorial application of foreign legislation and other measures, MOFCOM may issue an injunction providing that the relevant foreign legislation and other measures shall not be accepted, executed, or observed. A citizen, legal person or other organization in China may apply for exemption from compliance with an injunction.
If the working mechanism determines that there exists unjustified extra-territorial application of foreign legislation and other measures, the Ministry of Commerce may issue an injunction providing that the relevant foreign legislation and other measures shall not be accepted, executed, or observed. A citizen, legal person or other organization in China may apply for exemption from compliance with an injunction.
Organizational Structure Except our e-commerce business and online education business that is operated by our majority-owned subsidiary, East Buy, and its subsidiaries and consolidated variable interest entities, substantially all of our operations are conducted in China through contractual arrangements between our wholly-owned subsidiaries in China, New Oriental China (the variable interest entity) and New Oriental China’s schools and subsidiaries and shareholder.
C. Organizational Structure Except our e-commerce business that is operated by our majority-owned subsidiary, East Buy, and its subsidiaries and consolidated variable interest entities, substantially all of our operations are conducted in China through contractual arrangements between our wholly-owned subsidiaries in China, New Oriental China (the variable interest entity) and New Oriental China’s schools and subsidiaries and shareholder.
On September 9, 2021, the General Office of MOE and the General Office of the Ministry of Human Resources and Social Welfare jointly issued the Administrative Measures for Practitioners of the After-School Tutoring Institutions (for Trial Implementation), which set out a series of requirements for the after-school tutoring institutions with respect to their employed teachers, research staff and teaching assistants.
On September 9, 2021, the General Office of Chinese Ministry of Education and the General Office of the Ministry of Human Resources and Social Welfare jointly issued the Administrative Measures for Practitioners of the After-School Tutoring Institutions (for Trial Implementation), which set out a series of requirements for the after-school tutoring institutions with respect to their employed teachers, research staff and teaching assistants.
Pursuant to the MOFCOM Order No. 4 of 2020, the relevant governmental authorities shall, according to the investigation results and by taking the following factors into comprehensive consideration, decide whether or not to include a foreign entity concerned in the list of unreliable entities, and make an announcement on such inclusion.
Pursuant to the Ministry of Commerce Order No. 4 of 2020, the relevant governmental authorities shall, according to the investigation results and by taking the following factors into comprehensive consideration, decide whether or not to include a foreign entity concerned in the list of unreliable entities, and make an announcement on such inclusion.
To date, however, no regulations have been promulgated by the relevant authorities in this regard. 75 Table of Contents On November 7, 2016, the Standing Committee of the National People’s Congress promulgated the Amended Private Education Law, which became effective on September 1, 2017. The 2016 Amended Private Education Law was last amended and became effective on December 29, 2018.
To date, however, no regulations have been promulgated by the relevant authorities in this regard. On November 7, 2016, the Standing Committee of the National People’s Congress promulgated the Amended Private Education Law, which became effective on September 1, 2017. The 2016 Amended Private Education Law was last amended and became effective on December 29, 2018.
The Education Law sets forth provisions relating to the fundamental education systems of the PRC, including a school education system comprising kindergarten education, primary education, secondary education and higher education, a system of nine-year compulsory education, a national education examination system, and a system of education certificates.
It sets forth provisions relating to the fundamental education systems of the PRC, including a school education system comprising kindergarten education, primary education, secondary education and higher education, a system of nine-year compulsory education, a national education examination system, and a system of education certificates.
The enterprises in which overseas investors invest through above investment activities shall be collectively referred to the invested enterprises. (2) The profits distributed to overseas investors fall under the dividends, bonus and other equity investment income formed from the actual distribution of the retained income already realized by resident enterprises within China to investors.
The enterprises in which overseas investors invest through above investment activities shall be collectively referred to the invested enterprises. 102 Table of Contents (2) The profits distributed to overseas investors fall under the dividends, bonus and other equity investment income formed from the actual distribution of the retained income already realized by resident enterprises within China to investors.
Private Label Products and Livestreaming E-commerce Business, and Online Education through East Buy Private Label Products and Livestreaming E-commerce Business Leveraging on the technology developed for our original live-broadcast classrooms and with our existing team of talents, East Buy established an e-commerce platform under the brand name East Buy ( 东方甄选 ) for the sale of agricultural and other products in fiscal year 2022.
Private Label Products and Livestreaming E-commerce Business through East Buy Leveraging the technology developed for our original live-broadcast classrooms and with our existing team of talents, East Buy established an e-commerce platform under the brand name East Buy ( 东方甄选 ) for the sale of agricultural and other products in fiscal year 2022.
Their speeches include direct program promotion speeches during which they directly explain the merits and advantages of our programs or general English learning methods, as well as inspirational speeches designed to motivate students to reach their full potential and strive for success. 73 Table of Contents Demo Courses and Advertisements .
Their speeches include direct program promotion speeches during which they directly explain the merits and advantages of our programs or general English learning methods, as well as inspirational speeches designed to motivate students to reach their full potential and strive for success. Demo Courses and Advertisements .
(3) Excluding Beijing Xuncheng and its subsidiaries, and consisting of various PRC companies operating our educational materials and distribution business, and overseas study consulting business in China. PRC laws and regulations restrict and impose conditions on foreign direct investment in companies involved in the provision of educational and value-added telecommunication services.
(3) Excluding Beijing Xuncheng and its subsidiaries, and consisting of various PRC companies operating our educational materials and distribution business, and overseas study consulting business in China. 105 Table of Contents PRC laws and regulations restrict and impose conditions on foreign direct investment in companies involved in the provision of educational and value-added telecommunication services.
After such rectification is completed, the education authorities will review the filings. 83 Table of Contents On March 30, 2021, the Basic Education Department of the MOE promulgated the Circular on Further Strengthening the Sleep Management of Primary and Secondary School Students, which restates that offline after-school trainings shall end no later than 8:30 p.m. and online live trainings shall end no later than 9:00 p.m., and provides that no homework shall be arranged in any form such as pre-class preparation, after-class consolidation, homework practice and WeChat group punching.
After such rectification is completed, the education authorities will review the filings. 80 Table of Contents On March 30, 2021, the Basic Education Department of the Chinese Ministry of Education promulgated the Circular on Further Strengthening the Sleep Management of Primary and Secondary School Students, which restates that offline after-school trainings shall end no later than 8:30 p.m. and online live trainings shall end no later than 9:00 p.m., and provides that no homework shall be arranged in any form such as pre-class preparation, after-class consolidation, homework practice and WeChat group punching.
According to State Council Circular 80, extracurricular training institutions are also required to disclose and file relevant information, including their training content, schedule, targeted students and school timetable to the relevant education authority, and their training classes may not end later than 8:30 pm each day.
According to State Council Circular 80, extracurricular training institutions are also required to disclose and file relevant information, including their training content, schedule, targeted students and school timetable to the relevant education authority, and their training classes may not end later than 8:30 p.m. each day.
Thus, dividends paid to us by our PRC subsidiaries through our Hong Kong wholly-owned subsidiaries may be subject to the 5% withholding tax if we and our Hong Kong subsidiaries are considered as “non-resident enterprises” under the EIT Law and our Hong Kong subsidiaries are considered as “beneficial owners” and entitled to treaty benefits under the DTA.
Thus, dividends paid to us by our PRC subsidiaries through our Hong Kong wholly-owned subsidiaries may be subject to the 5% withholding tax if we and our Hong Kong subsidiaries are considered as “non-resident enterprises” under the PRC Enterprise Income Tax Law and our Hong Kong subsidiaries are considered as “beneficial owners” and entitled to treaty benefits under the DTA.
On March 14, 2023, the General Office of MOE jointly with other four authorities issued the Administrative Measures for the Financial Management of After-School Tutoring Institutions, which provides that, among others, (1) tutoring pre-paid fees (including collected in cash) shall be deposited into such institution’s special accounts and shall be separated from its own funds.
On March 14, 2023, the General Office of Chinese Ministry of Education jointly with other four authorities issued the Administrative Measures for the Financial Management of After-School Tutoring Institutions, which provides that, among others, (1) tutoring pre-paid fees (including collected in cash) shall be deposited into such institution’s special accounts and shall be separated from its own funds.
Where an outbound investment project falls within the scope of administration by verification and approval or record-filing but its investor within the PRC fails to obtain a valid verification and approval document or notice of record-filing, departments in charge of foreign exchange administration and customs, should, pursuant to the law, not process its application, and no financial enterprises should, pursuant to the law, provide relevant fund settlement and financing services. 104 Table of Contents C.
Where an outbound investment project falls within the scope of administration by verification and approval or record-filing but its investor within the PRC fails to obtain a valid verification and approval document or notice of record-filing, departments in charge of foreign exchange administration and customs, should, pursuant to the law, not process its application, and no financial enterprises should, pursuant to the law, provide relevant fund settlement and financing services.
Thus, according to SAFE Circular 13, the registration of PRC residents under SAFE Circular 37 shall be conducted with local banks authorized by SAFE. Our beneficial owners immediately before our initial public offering who are PRC residents had registered with the local branch of SAFE prior to our initial public offering in 2006.
Thus, according to SAFE Circular 13, the registration of PRC residents under SAFE Circular 37 shall be conducted with local banks authorized by SAFE. 97 Table of Contents Our beneficial owners immediately before our initial public offering who are PRC residents had registered with the local branch of SAFE prior to our initial public offering in 2006.
“Online publishing services” refer to the provision of 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 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.
“Online publishing services” refer to the provision of 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 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 State Administration of Press Publication Radio Film and Television.
In May 2023, the seven limited partnerships and Linzhi Tencent Technology Co., Ltd., the former shareholders of Beijing Xuncheng, ceased to be the shareholders of Beijing Xuncheng by means of capital withdrawal. Beijing Xuncheng has become a wholly-owned subsidiary of New Oriental China since then.
In May 2023, the seven limited partnerships and Linzhi Tencent Technology Co., Ltd., the former shareholders of Beijing Xuncheng, ceased to be the shareholders of Beijing Xuncheng by means of capital withdrawal. Beijing Xuncheng has become a wholly-owned subsidiary of New Oriental China since then. Fourth Supplemental Agreement .
According to such SAT Circular 9, if the business activities carried out by an applicant do not constitute substantive business activities, then such applicant is likely not to be regarded as a beneficial owner. Our wholly-owned Hong Kong subsidiaries, Elite Concept Holdings Limited, Winner Park Limited and Smart Shine International Limited, own 100% of our PRC subsidiaries.
According to the State Taxation Administration Circular 9, if the business activities carried out by an applicant do not constitute substantive business activities, then such applicant is likely not to be regarded as a beneficial owner. Our wholly-owned Hong Kong subsidiaries, Elite Concept Holdings Limited, Winner Park Limited and Smart Shine International Limited, own 100% of our PRC subsidiaries.
Complying with the requirements of the M&A Rules to complete acquisitions of PRC companies by foreign investors could be time-consuming, and any required approval processes, including obtaining approval from the MOFCOM, may delay or inhibit the ability to complete such transactions.
Complying with the requirements of the M&A Rules to complete acquisitions of PRC companies by foreign investors could be time-consuming, and any required approval processes, including obtaining approval from the Ministry of Commerce, may delay or inhibit the ability to complete such transactions.
The State Council promulgated the implementation rules of the BIT Law in 2007, as last amended in 2019, and the Ministry of Science and Technology, the Ministry of Finance and the SAT promulgated other supplemental rules in 2008 which were amended in 2016, respectively, regarding new criteria for the granting of “high and new technology enterprises” status.
The State Council promulgated the implementation rules of the BIT Law in 2007, as last amended in 2019, and the Ministry of Science and Technology, the Ministry of Finance and the State Administration of Taxation promulgated other supplemental rules in 2008 which were amended in 2016, respectively, regarding new criteria for the granting of “high and new technology enterprises” status.
This agreement will remain in effect until Dexin Dongfang or its designated third parties have acquired all the equity interests in Beijing Xuncheng. Dexin Dongfang may unilaterally terminate this agreement through a 30-day prior written notice. Powers of Attorney .
This agreement will remain in effect until Dexin Dongfang or its designated third parties have acquired all the equity interests in Beijing Xuncheng. Dexin Dongfang may unilaterally terminate this agreement through a 30-day prior written notice. 108 Table of Contents Powers of Attorney .
Pursuant to the Circular on Tightening the Administration of Internet Live-Streaming Services jointly issued by the MIIT, the Ministry of Culture and Tourism, or the MOCT, and several other government agencies on August 1, 2018, livestreaming services providers are required to file with the local public security authority within 30 days after it commences the service online.
Pursuant to the Circular on Tightening the Administration of Internet Live-Streaming Services jointly issued by the Ministry of Industry and Information Technology, the Ministry of Culture and Tourism, or the MOCT, and several other government agencies on August 1, 2018, livestreaming services providers are required to file with the local public security authority within 30 days after it commences the service online.
In addition, the SAT issued a bulletin in August 2011, effective as of September 1, 2011, to provide more guidance on the implementation of the above circular. The bulletin clarified certain matters relating to resident status determination, post determination administration and competent tax authorities.
In addition, the State Administration of Taxation issued a bulletin in August 2011, effective as of September 1, 2011, to provide more guidance on the implementation of the above circular. The bulletin clarified certain matters relating to resident status determination, post determination administration and competent tax authorities.
In particular, our compliance with the Opinions on Further Alleviating the Burden of Homework and After-School Tutoring for Students in Compulsory Education and the implementation measures issued thereunder by the relevant PRC government authorities has had, and could have further, material adverse effect on us.” Regulations on Kindergarten On September 11, 1989, the MOE issued the Kindergarten Management Regulations.
In particular, our compliance with the Opinions on Further Alleviating the Burden of Homework and After-School Tutoring for Students in Compulsory Education and the implementation measures issued thereunder by the relevant PRC government authorities has had, and could have further, material adverse effect on us.” Regulations on Kindergartens On September 11, 1989, the Chinese Ministry of Education issued the Kindergarten Management Regulations.
The Overseas Listing Archives Rules provide, among others, that before providing or disclosing any document or material which involve state secrets or state agencies’ work secrets, domestic companies shall apply to the competent government authorities for approval and file with the secrecy administration authorities for record. 100 Table of Contents Regulations on Taxation PRC Enterprise Income Tax .
The Overseas Listing Archives Rules provide, among others, that before providing or disclosing any document or material which involve state secrets or state agencies’ work secrets, domestic companies shall apply to the competent government authorities for approval and file with the secrecy administration authorities for record. Regulations on Taxation PRC Enterprise Income Tax.
On November 8, 2021, the General Office of MOE promulgated the Identification Guidelines for Classification of After School Training Programs for Compulsory Education, which stipulates that the identification of academic after school training shall consider factors including training purpose, training content, training methods, valuation methods and others.
On November 8, 2021, the General Office of Chinese Ministry of Education promulgated the Identification Guidelines for Classification of After School Training Programs for Compulsory Education, which stipulates that the identification of academic after school training shall consider factors including training purpose, training content, training methods, valuation methods and others.
In addition, Century Friendship and its shareholders undertook not to participate in, invest in, own or manage any businesses competing with that of Beijing Xuncheng and its subsidiaries as long as they continue to hold equity interest in Beijing Xuncheng. 110 Table of Contents Supplemental Agreement .
In addition, Century Friendship and its shareholders undertook not to participate in, invest in, own or manage any businesses competing with that of Beijing Xuncheng and its subsidiaries as long as they continue to hold equity interest in Beijing Xuncheng. Supplemental Agreement .
On September 7, 2021, the MOE published on its official website that the MOE, together with two other government authorities, issued a circular requiring all Academic AST Institutions to complete registration as non-profit by the end of 2021, and all Academic AST Institutions shall, before completing such registration, suspend enrollment of students and charging fees.
On September 7, 2021, the Chinese Ministry of Education published on its official website that the Chinese Ministry of Education, together with two other government authorities, issued a circular requiring all Academic AST Institutions to complete registration as non-profit by the end of 2021, and all Academic AST Institutions shall, before completing such registration, suspend enrollment of students and charging fees.
Furthermore, on November 14, 2021, the CAC published the Administrative Regulations on Internet Data Security (Draft for Comments), or the Draft Data Security Regulations, which provides that data processors refer to individuals or organizations that, during their data processing activities such as data collection, storage, utilization, transmission, publication and deletion, have autonomy over the purpose and the manner of data processing.
Furthermore, on November 14, 2021, the Cyberspace Administration of China published the Administrative Regulations on Internet Data Security (Draft for Comments), or the Draft Data Security Regulations, which provides that data processors refer to individuals or organizations that, during their data processing activities such as data collection, storage, utilization, transmission, publication and deletion, have autonomy over the purpose and the manner of data processing.
As a result, we conduct substantially all of our business in China through contractual arrangements between our wholly-owned subsidiaries in China, and the VIEs and their shareholders. In the fiscal years ended May 31, 2021, 2022 and 2023, the consolidated affiliated entities contributed in aggregate 99.9%, 99.6% and 99.5% of our total net revenues, respectively.
As a result, we conduct substantially all of our business in China through contractual arrangements between our wholly-owned subsidiaries in China, and the VIEs and their shareholders. In the fiscal years ended May 31, 2022, 2023 and 2024, the consolidated affiliated entities contributed in aggregate 99.6%, 99.5% and 99.2% of our total net revenues, respectively.
Regulations on Private Education Education Law of the PRC In March 1995, the National People’s Congress enacted the Education Law of the PRC, or the Education Law, which was later amended on August 27, 2009.
Regulations on Private Education Education Law of the PRC In March 1995, the National People’s Congress enacted the Education Law of the PRC, which was later amended in August, 2009.
Relevant government authorities shall enhance the supervision on the agreements entered into between non-profit private schools and its related party and shall review such transaction on an annual basis; • online education activities using internet technology are encouraged by the regulatory authorities and shall comply with laws and regulations related to internet management.
Relevant government authorities shall enhance the supervision on the agreements entered into between non-profit private schools and its related party and shall review such transaction on an annual basis; 73 Table of Contents • online education activities using internet technology are encouraged by the regulatory authorities and shall comply with laws and regulations related to internet management.
Contractual arrangements including equity pledge agreements, option agreement and proxy agreement, power of attorney, master exclusive service agreement and related service agreements. See “—C. Organizational Structure—Contractual Arrangements with New Oriental China, Its Schools and Subsidiaries and Its Shareholder.” Contractual arrangements including equity pledge agreements, option agreement, power of attorney, exclusive management consultancy and cooperation agreement. See “—C.
Contractual arrangements including equity pledge agreements, option agreement and proxy agreement, power of attorney, master exclusive service agreement and related service agreements. See “—Contractual Arrangements with New Oriental China, Its Schools and Subsidiaries and Its Shareholder.” Contractual arrangements including equity pledge agreements, option agreement, power of attorney, exclusive management consultancy and cooperation agreement.
For learning and education App, the basic functional services are “online tutoring, online classes, etc.” and the necessary personal information is mobile phone numbers of registered users. Further, the SAMR promulgated the Measures for the Supervision and Administration of Online Transactions, which became effective from May 1, 2021.
For learning and education App, the basic functional services are “online tutoring, online classes, etc.” and the necessary personal information is mobile phone numbers of registered users. Further, the State Administration for Market Regulation promulgated the Measures for the Supervision and Administration of Online Transactions, which became effective from May 1, 2021.
In addition, in September 2018, SAT and other authorities jointly promulgated Notice on Expanding Application Scope of the Policy for Temporary Exemption of Withholding Income Tax on Direct Investment by Overseas Investors with Distributed Profits, or Circular 102, which became effective retroactively in January 2018.
In addition, in September 2018, the State Taxation Administration and other authorities jointly promulgated Notice on Expanding Application Scope of the Policy for Temporary Exemption of Withholding Income Tax on Direct Investment by Overseas Investors with Distributed Profits, or Circular 102, which became effective retroactively in January 2018.
China is a signatory to the main international conventions on intellectual property rights and became a member of the Agreement on Trade Related Aspects of Intellectual Property Rights upon its accession to the World Trade Organization in 2001. Copyright .
China is a signatory to the main international conventions on intellectual property rights and became a member of the Agreement on Trade Related Aspects of Intellectual Property Rights upon its accession to the World Trade Organization in 2001. 95 Table of Contents Copyright .
Throughout our operating history, we have continually fine-tuned our teacher-training programs to strike a balance between standardized teaching to promote efficiency and creativity to foster innovation and inspiration. 72 Table of Contents Utilizing our data insights from our OMO system, we ensure consistency in teaching quality across our courses.
Throughout our operating history, we have continually fine-tuned our teacher-training programs to strike a balance between standardized teaching to promote efficiency and creativity to foster innovation and inspiration. Utilizing our data insights from our OMO system, we ensure consistency in teaching quality across our courses.
Sino-foreign cooperation in operating schools is specifically governed by (i) the Regulation on Operating Sino-foreign Cooperative Schools of the PRC, which was promulgated by the State Council in March 2003 and last amended in March 2019 respectively, and (ii) the Implementing Measures for the Regulations on Operating Sino-foreign Cooperative Schools of the PRC, which was issued by the MOE in June 2004.
Sino-foreign cooperation in operating schools is specifically governed by (i) the Regulation on Operating Sino-foreign Cooperative Schools of the PRC, which was promulgated by the State Council in March 2003 and last amended in March 2019 respectively, and (ii) the Implementing Measures for the Regulations on Operating Sino-foreign Cooperative Schools of the PRC, which was issued by the Chinese Ministry of Education in June 2004.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeFor the Years Ended May 31, (in thousands of US$) 2021 2022 2023 Net revenues of the reportable segments: Educational services and test preparation courses 3,667,270 2,535,318 1,825,212 Private label products and livestreaming e-commerce and other services 210,591 136,705 647,161 Overseas study consulting services 278,594 325,901 354,764 Total net revenues of the reportable segments 4,156,455 2,997,924 2,827,137 Total net revenues of our company 4,276,539 3,105,246 2,997,760 Operating cost and expenses of the reportable segments: Cost of revenues: Educational services and test preparation courses (1,680,779 ) (1,442,156 ) (773,989 ) Private label products and livestreaming e-commerce and other services (145,428 ) (68,732 ) (364,645 ) Overseas study consulting services (127,841 ) (165,673 ) (179,284 ) Selling and marketing: Educational services and test preparation courses (326,708 ) (273,344 ) (217,915 ) Private label products and livestreaming e-commerce and other services (175,092 ) (79,428 ) (89,302 ) Overseas study consulting services (61,259 ) (72,847 ) (80,528 ) General and administrative: Educational services and test preparation courses (955,211 ) (1,308,742 ) (503,345 ) Private label products and livestreaming e-commerce and other services (124,897 ) (72,361 ) (50,658 ) Overseas study consulting services (60,580 ) (61,258 ) (61,861 ) Total operating cost and expenses of the reportable segments (3,657,795 ) (3,544,541 ) (2,321,527 ) Total operating cost and expenses of our company (4,159,273 ) (4,087,759 ) (2,807,714 ) Fiscal Year Ended May 31, 2023 Compared to Fiscal Year Ended May 31, 2022 Net Revenues of Reportable Segments Net Revenues of Educational Services and Test Preparation Courses Net revenues from our educational services and test preparation courses decreased by 28.0% from US$2,535.3 million for the fiscal year ended May 31, 2022 to US$1,825.2 million for the fiscal year ended May 31, 2023, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2023 Compared to Fiscal Year Ended May 31, 2022—Net Revenues—Net Service Revenues.” Net Revenues of Private Label Products and Livestreaming E-commerce and Other Services Net revenues from private label products and livestreaming e-commerce and other services increased by 373.4% from US$136.7 million for the fiscal year ended May 31, 2022 to US$647.2 million for the fiscal year ended May 31, 2023, significant increase in the sales of East Buy private label products through our livestreaming e-commerce platform in the fiscal year ended May 31, 2023 as we expanded the product categories of private label products.
Biggest changeFor the Years Ended May 31, (in thousands of US$) 2022 2023 2024 Net revenues of the reportable segments: Educational services and test preparation courses 2,669,020 1,914,865 2,716,174 Private label products and livestreaming e-commerce 3,003 557,508 900,614 Overseas study consulting services 325,901 354,764 439,744 Total net revenues of the reportable segments 2,997,924 2,827,137 4,056,532 Total net revenues of our company 3,105,246 2,997,760 4,313,586 Operating cost and expenses of the reportable segments: Cost of revenues: Educational services and test preparation courses (1,508,412 ) (793,423 ) (1,027,889 ) Private label products and livestreaming e-commerce (2,476 ) (345,211 ) (677,270 ) Overseas study consulting services (165,673 ) (179,284 ) (214,602 ) Selling and marketing: Educational services and test preparation courses (346,508 ) (261,606 ) (348,121 ) Private label products and livestreaming e-commerce (6,264 ) (45,611 ) (124,975 ) Overseas study consulting services (72,847 ) (80,528 ) (92,865 ) General and administrative: Educational services and test preparation courses (1,362,285 ) (519,765 ) (755,074 ) Private label products and livestreaming e-commerce (18,818 ) (34,238 ) (77,626 ) Overseas study consulting services (61,258 ) (61,861 ) (57,204 ) Total operating cost and expenses of the reportable segments (3,544,541 ) (2,321,527 ) (3,375,626 ) Total operating cost and expenses of our company (4,087,759 ) (2,807,714 ) (3,963,161 ) 120 Table of Contents Fiscal Year Ended May 31, 2024 Compared to Fiscal Year Ended May 31, 2023 Net Revenues of Reportable Segments Net Revenues of Educational Services and Test Preparation Courses Net revenues from our educational services and test preparation courses increased by 41.8% from US$1,914.9 million for the fiscal year ended May 31, 2023 to US$2,716.2 million for the fiscal year ended May 31, 2024, primarily due to the increase in student enrollment in the programs and courses we offered.
For the fiscal year ended May 31, 2023, we identified four operating segments, including (i) educational services and test preparation courses, (ii) private label products and livestreaming e-commerce and other services, which was formerly named as “online education and other services,” (iii) overseas study consulting services, and (iv) educational materials and distribution.
For the fiscal year ended May 31, 2023, we identified four operating segments, including (i) educational services and test preparation courses, (ii) private label products and livestreaming e-commerce, which was formerly named as “online education and other services,” (iii) overseas study consulting services, and (iv) educational materials and distribution.
Operating Cost and Expenses of Overseas Study Consulting Services • Cost of Revenues .
Operating Cost and Expenses of Overseas Study Consulting Services • Cost of Revenues .
In July 2020, we issued unsecured senior notes for a principal amount of US$300 million which were listed in the Stock Exchange of Hong Kong Limited. The notes bear fixed interest rate at 2.125% with interest payable semiannually in arrears on January 2 and July 2 of each calendar year, commencing on January 2, 2021.
In July 2020, we issued unsecured senior notes for a principal amount of US$300 million which were listed in the Hong Kong Stock Exchange. The notes bear fixed interest rate at 2.125% with interest payable semiannually in arrears on January 2 and July 2 of each calendar year, commencing on January 2, 2021.
Critical Accounting Estimates We prepare our financial statements in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect reported amounts of assets, liabilities, revenue, costs, and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
E. Critical Accounting Estimates We prepare our financial statements in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect reported amounts of assets, liabilities, revenue, costs, and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
We have developed our computerized assessment testing system which tests students’ capabilities and presents summary reports on students’ performance in class and within their student group. Interactive courseware . We have developed digital interactive courseware which standardizes course materials and provides more interaction between teachers and students. Realskill .
Proprietary computerized assessment testing system . We have developed our computerized assessment testing system which tests students’ capabilities and presents summary reports on students’ performance in class and within their student group. Interactive courseware . We have developed digital interactive courseware which standardizes course materials and provides more interaction between teachers and students. Realskill .
You should read the following descriptions of critical accounting policies, judgments and estimates in conjunction with our consolidated financial statements and other disclosures included with this annual report. 133 Table of Contents Fair value measurement of level 3 available-for-sale investments Available-for-sale investments are reported at fair value, with unrealized gains and losses recorded in accumulated other comprehensive income as a component of shareholders’ equity.
You should read the following descriptions of critical accounting policies, judgments and estimates in conjunction with our consolidated financial statements and other disclosures included with this annual report. 130 Table of Contents Fair value measurement of level 3 available-for-sale investments Available-for-sale investments are reported at fair value, with unrealized gains and losses recorded in accumulated other comprehensive income as a component of shareholders’ equity.
As of May 31, 2023, we had 28 main works of art copyrights and 45 main software copyrights in China relating to various aspects of our operations, and 16 main trademark registrations in China, of which “ ,” “ ,” and “ ” have been recognized as “well-known trademarks” in civil action adjudicated and/or administrative determination in China.
As of May 31, 2024, we had 28 main works of art copyrights and 45 main software copyrights in China relating to various aspects of our operations, and 16 main trademark registrations in China, of which “ ,” “ ,” and “ ” have been recognized as “well-known trademarks” in civil action adjudicated and/or administrative determination in China.
Selling and marketing expenses for overseas study consulting services increased by 10.5% from US$72.8 million for the fiscal year ended May 31, 2022 to US$80.5 million for the fiscal year ended May 31, 2023, primarily due to an increase in staff cost. • General and Administrative Expenses.
Selling and marketing expenses for overseas study consulting services increased by 10.5% from US$72.8 million for the fiscal year ended May 31, 2022 to US$80.5 million for the fiscal year ended May 31, 2023, primarily due to an increase in staff costs. • General and Administrative Expenses .
Among our schools in four major cities from which we derived a significant portion of our revenues in the fiscal year ended May 31, 2023, three schools are subject to the standard 25% enterprise income tax rate and one school was not required by the governing tax bureau to pay any EIT from its establishment through May 31, 2023.
Among our schools in four major cities from which we derived a significant portion of our revenues in the fiscal year ended May 31, 2024, three schools are subject to the standard 25% enterprise income tax rate and one school was not required by the governing tax bureau to pay any enterprise income tax from its establishment through May 31, 2024.
Results of Operations” for a discussion of known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on our net revenues, income from operations, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial condition. E.
Operating Results” for a discussion of known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on our net revenues, income from operations, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial condition.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information—D. Risk Factors” or in other parts of this annual report on Form 20-F. 112 Table of Contents A.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information—D. Risk Factors” or in other parts of this annual report on Form 20-F. A.
For non-vested equity shares granted to employees and directors, we record share-based compensation expenses based on the quoted market price of our ADSs on the grant date and amortize the expenses over the vesting periods of the non-vested equity shares. 116 Table of Contents Taxation Cayman Islands We are incorporated in the Cayman Islands.
For non-vested equity shares granted to employees and directors, we record share-based compensation expenses based on the quoted market price of our ADSs on the grant date and amortize the expenses over the vesting periods of the non-vested equity shares. Taxation Cayman Islands We are incorporated in the Cayman Islands.
We employed approximately 26,300 and 26,600 teachers as of May 31, 2022 and 2023, respectively. • Cost of Revenues . Our cost of revenues decreased by 19.7% from US$1,754.3 million in the fiscal year ended May 31, 2022 to US$ 1,409.4 million in the fiscal year ended May 31, 2023.
We employed approximately 26,300 and 26,600 teachers as of May 31, 2022 and 2023, respectively. 118 Table of Contents • Cost of Revenues . Our cost of revenues decreased by 19.7% from US$1,754.3 million in the fiscal year ended May 31, 2022 to US$1,409.4 million in the fiscal year ended May 31, 2023.
Cost of overseas study consulting services primarily consists of application cost and staff costs. Cost of revenues for our private label products and livestreaming e-commerce and other services primarily consists of labor cost and procurement cost of goods.
Cost of revenues for our private label products and livestreaming e-commerce business primarily consists of labor cost and procurement cost of goods. Cost of overseas study consulting services primarily consists of application cost and staff costs.
We believe that we will be able to fund our capital needs in the foreseeable future through cash generated from our operating activities. Our operating lease commitments consist of the commitments under the lease agreements for our schools, learning centers, office premises and other facilities.
We believe that we will be able to fund our capital needs in the foreseeable future through cash generated from our operating activities. 125 Table of Contents Our operating lease commitments consist of the commitments under the lease agreements for our schools, learning centers, office premises and other facilities.
Material cash requirements Our material cash requirements as of May 31, 2023 and any subsequent interim period primarily include our capital expenditures, operating lease commitments, long-term debt obligations and funds used for share repurchase. The expansion of our existing program, service and product offerings to new areas and launch of new business initiatives have required investment.
Material cash requirements Our material cash requirements as of May 31, 2024 and any subsequent interim period primarily include our capital expenditures, operating lease commitments, long-term debt obligations and funds used for share repurchase and dividend payment. The expansion of our existing program, service and product offerings to new areas and launch of new business initiatives have required investment.
Our net cash used in operating activities in the fiscal year ended May 31, 2023 reflected net income of US$235.4 million, as adjusted by the reconciliation of certain non-cash items, including US$117.0 million in depreciation and US$89.8 million in share-based compensation expense.
Net cash provided by operating activities amounted to US$971.0 million in the fiscal year ended May 31, 2023. Our net cash used in operating activities in the fiscal year ended May 31, 2023 reflected net income of US$235.4 million, as adjusted by the reconciliation of certain non-cash items, including US$117.0 million in depreciation and US$89.8 million in share-based compensation expense.
We currently derive revenues from the following sources: • net service revenues, which accounted for 98.9%, 98.2% and 84.9% of our total net revenues in the fiscal years ended May 31, 2021, 2022 and 2023, respectively; and • net product revenues, which accounted for 1.1%, 1.8% and 15.1% of our total net revenues in the fiscal years ended May 31, 2021, 2022 and 2023, respectively.
We currently derive revenues from the following sources: • net service revenues, which accounted for 98.2%, 84.9% and 81.2% of our total net revenues in the fiscal years ended May 31, 2022, 2023 and 2024, respectively; and • net product revenues, which accounted for 1.8%, 15.1% and 18.8% of our total net revenues in the fiscal years ended May 31, 2022, 2023 and 2024, respectively.
Expenses Our selling and marketing expenses primarily consist of human resources expenses and other expenses relating to advertising, seminars, marketing and promotional trips and other community activities for brand promotion purpose. 115 Table of Contents General and Administrative .
Expenses Our selling and marketing expenses primarily consist of human resources expenses and other expenses relating to advertising, seminars, marketing and promotional trips and other community activities for brand promotion purpose. General and Administrative .
We believe our strong technology capabilities enable us to deliver a superior learning experience and improve our operational efficiency. We employ experienced research and development personnel to build, maintain and upgrade our technologies and systems. We had approximately 5,100, 3,000 and 2,900 research and development personnel as of May 31, 2021, 2022 and 2023, respectively.
We believe our strong technology capabilities enable us to deliver a superior learning experience and improve our operational efficiency. We employ experienced research and development personnel to build, maintain and upgrade our technologies and systems. We had approximately 3,000, 2,900 and 3,200 research and development personnel as of May 31, 2022, 2023 and 2024, respectively.
Other than as discussed above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of May 31, 2023. 128 Table of Contents Holding Company Structure Overview New Oriental is a holding company with no material operations of its own.
Other than as discussed above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of May 31, 2024. Holding Company Structure Overview New Oriental is a holding company with no material operations of its own.
Net revenues from overseas study consulting services accounted for 6.5%, 10.5% and 11.8%, respectively, of our total net revenues in the fiscal years ended May 31, 2021, 2022 and 2023.
Net revenues from overseas study consulting services accounted for 10.5%, 11.8% and 10.2%, respectively, of our total net revenues in the fiscal years ended May 31, 2022, 2023 and 2024.
As of May 31, 2023, the payment due within one year and thereafter for our operating lease commitments amounted to US$480.8 million. Our long-term debt obligations consist of the principal amount and cash interests in connection with unsecured senior notes issued in July 2020.
As of May 31, 2024, the payment due within one year and thereafter for our operating lease commitments amounted to US$707.3 million. Our long-term debt obligations consist of the principal amount and cash interests in connection with unsecured senior notes issued in July 2020.
General and administrative expenses for our educational services and test preparation courses decreased by 61.5% from US$1,308.7 million for the fiscal year ended May 31, 2022 to US$503.3 million for the fiscal year ended May 31, 2023, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2023 Compared to Fiscal Year Ended May 31, 2022—Operating Costs and Expenses—General and Administrative Expenses.” Operating Cost and Expenses of Private Label Products and Livestreaming E-commerce and Other Services • Cost of Revenues .
General and administrative expenses for our educational services and test preparation courses decreased by 61.8% from US$1,362.3 million for the fiscal year ended May 31, 2022 to US$519.8 million for the fiscal year ended May 31, 2023, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2023 Compared to Fiscal Year Ended May 31, 2022—Operating Costs and Expenses—General and Administrative Expenses.” Operating Cost and Expenses of Private Label Products and Livestreaming E-commerce • Cost of Revenues .
Our capital expenditures were US$429.2 million, US$150.7 million and US$143.0 million in the fiscal years ended May 31, 2021, 2022 and 2023, respectively. Our capital expenditures are incurred primarily in connection with facility acquisitions, leasehold improvements and investments in equipment, technology and operating systems.
Our capital expenditures were US$150.7 million, US$143.0 million and US$283.4 million in the fiscal years ended May 31, 2022, 2023 and 2024, respectively. Our capital expenditures are incurred primarily in connection with facility acquisitions, leasehold improvements and investments in equipment, technology and operating systems.
As a result of the foregoing, our net income for the fiscal year ended May 31, 2023 was US$235.4 million, compared to net loss of US$1,220.3 million for the fiscal year ended May 31, 2022. 120 Table of Contents Fiscal Year Ended May 31, 2022 Compared to Fiscal Year Ended May 31, 2021 Net Revenues .
As a result of the foregoing, our net income for the fiscal year ended May 31, 2023 was US$235.4 million, compared to net loss of US$1,220.3 million for the fiscal year ended May 31, 2022.
The following table sets forth the allocation of our share-based compensation expenses (including East Buy’s share-based compensation expenses), both in absolute amount and as a percentage of total share-based compensation expenses, among our employees based on the nature of work which they were assigned to perform.
The following table sets forth the allocation of our share-based compensation expenses (including East Buy’s share-based compensation expenses), both in absolute amount and as a percentage of total share-based compensation expenses, among our employees based on the nature of work which they were assigned to perform. See “Item 6. Directors, Senior Management and Employees—B.
As of May 31, 2023, we had US$1,663.0 million and US$142.4 million in cash and cash equivalents and restricted cash, respectively. Our cash and cash equivalents consist of cash on hand and liquid investments that are unrestricted as to withdrawal or use, have maturities of three months or less and are placed with banks and other financial institutions.
As of May 31, 2024, we had US$1,389.4 million and US$199.7 million in cash and cash equivalents and restricted cash, respectively. Our cash and cash equivalents consist of cash on hand and liquid investments that are unrestricted as to withdrawal or use, have maturities of three months or less and are placed with banks and other financial institutions.
On July 26, 2022, our board of directors authorized a share repurchase program, under which we may repurchase up to US$400 million of the Company’s ADSs or common shares during the period from July 28, 2022 through May 31, 2023. Our board of directors further authorized to extend such share repurchase program by twelve months through May 31, 2024.
On July 26, 2022, our board of directors authorized a share repurchase program, under which we may repurchase up to US$400 million of the Company’s ADSs or common shares during the period from July 28, 2022 through May 31, 2023.
As of May 31, 2021, 2022 and 2023, the total amount of service fees payable to our PRC subsidiaries from the variable interest entities under the service agreements was US$548.2 million, US$580.8 million US$61.8 million, respectively.
As of May 31, 2022, 2023 and 2024, the total amount of service fees payable to our PRC subsidiaries from the variable interest entities under the service agreements was US$580.8 million, US$61.8 million and US$309.1 million, respectively.
We conduct substantially all of our business in China through contractual arrangements with the variable interest entities, and their schools and subsidiaries and shareholders. See “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with New Oriental China, Its Schools and Subsidiaries and Its Shareholder” and “Item 4. Information on the Company—C.
We conduct substantially all of our business in China through contractual arrangements with the variable interest entities, and their schools and subsidiaries and shareholders. See “Item 4. Information on the Company—C.
Additional factors affecting operating cash flow included an increase in the deferred revenue in the amount of US$420.3 million due to the increased amount of course fees received during the period, and an increase in the accrued expenses and other current liabilities account of US$122.1 million, primarily due to an increase in accrued employee salary expenses and welfare benefits.
Additional factors affecting operating cash flow included an increase in the deferred revenue in the amount of US$468.2 million due to the increased amount of course fees received during the period, and an increase in the accrued expenses and other current liabilities account of US$160.0 million, primarily due to an increase in accrued employee salary expenses and welfare benefits.
Our operations not conducted through contractual arrangements with the variable interest entities primarily consist of the leasing of our commercial property. As of May 31, 2022 and 2023, the consolidated affiliated entities accounted for an aggregate of 51.9% and 56.1%, respectively, of our total assets, and 95.4% and 95.2%, respectively, of our total liabilities.
Our operations not conducted through contractual arrangements with the variable interest entities primarily consist of the leasing of our commercial property. As of May 31, 2023 and 2024, the consolidated affiliated entities accounted for an aggregate of 56.1% and 62.2%, respectively, of our total assets, and 95.2% and 96.7%, respectively, of our total liabilities.
Operating Cost and Expenses Our operating cost and expenses consist of cost of revenues, selling and marketing expenses and general and administrative expenses. The following table sets forth the components of our operating cost and expenses as a percentage of total net revenues for the periods indicated.
The following table sets forth the components of our operating cost and expenses as a percentage of total net revenues for the periods indicated.
Cost of revenues for our educational services and test preparation courses decreased by 46.3% from US$1,442.2 million for the fiscal year ended May 31, 2022 to US$774.0 million for the fiscal year ended May 31, 2023, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2023 Compared to Fiscal Year Ended May 31, 2022—Operating Costs and Expenses—Cost of Revenues.” • Selling and Marketing Expenses .
Cost of revenues for our educational services and test preparation courses decreased by 47.4% from US$1,508.4 million for the fiscal year ended May 31, 2022 to US$793.4 million for the fiscal year ended May 31, 2023, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2023 Compared to Fiscal Year Ended May 31, 2022—Operating Costs and Expenses—Cost of Revenues.” • Selling and Marketing Expenses .
Net cash used in investing activities amounted to US$37.4 million in the fiscal year ended May 31, 2023, compared to net cash provided by investing activities of US$1,168.5 million in the fiscal year ended May 31, 2022 and net cash used in investing activities of US$2,177.6 million in the fiscal year ended May 31, 2021.
Net cash used in investing activities amounted to US$1,153.9 million in the fiscal year ended May 31, 2024, compared to net cash used in investing activities amounted to US$37.4 million in the fiscal year ended May 31, 2023 and net cash provided by investing activities of US$1,168.5 million in the fiscal year ended May 31, 2022.
We regularly back up our database on a server hosted at an Internet data center to minimize the impact of data loss due to system failures.
We regularly back up our database on a server hosted at an Internet data center to minimize the impact of data loss due to system failures. We do not capitalize any related costs.
We do not capitalize any related costs. 131 Table of Contents Application of 5G We have partnered with hardware service providers and telecom operators to provide remote education services leveraging 5G technologies to further differentiate us from smaller-scale peers and at the same time reduce reliance on local teachers.
Application of 5G We have partnered with hardware service providers and telecom operators to provide remote education services leveraging 5G technologies to further differentiate us from smaller-scale peers and at the same time reduce reliance on local teachers.
As of May 31, 2023, the net assets of our PRC subsidiaries and variable interest entities and their schools and subsidiaries which were restricted due to statutory reserve requirements and other applicable laws and regulations, and thus not available for distribution, were in aggregate US$935.0 million, and the net assets of our PRC subsidiaries and variable interest entities and their schools and subsidiaries which were unrestricted and thus available for distribution were in aggregate US$1,549.3 million.
As of May 31, 2024, the net assets of our PRC subsidiaries and variable interest entities and their schools and subsidiaries which were restricted due to statutory reserve requirements and other applicable laws and regulations, and thus not available for distribution, were in aggregate US$956.1 million, and the net assets of our PRC subsidiaries and variable interest entities and their schools and subsidiaries which were unrestricted and thus available for distribution were in aggregate US$2,374.6 million.
Organizational Structure—Contractual Arrangements with Beijing Xuncheng, Its Subsidiaries and Shareholders” for a summary of these contractual arrangements. In the fiscal years ended May 31, 2021, 2022 and 2023, the consolidated affiliated entities contributed in aggregate 99.9%, 99.6% and 99.5%, respectively, of our total net revenues.
Organizational Structure—Contractual Arrangements with New Oriental China, Its Schools and Subsidiaries and Its Shareholder” and “—Contractual Arrangements with Beijing Xuncheng, Its Subsidiaries and Shareholders” for a summary of these contractual arrangements. In the fiscal years ended May 31, 2022, 2023 and 2024, the consolidated affiliated entities contributed in aggregate 99.6%, 99.5% and 99.2%, respectively, of our total net revenues.
Net Revenues of Overseas Study Consulting Services Net revenues from overseas study consulting services increased by 17.0% from US$278.6 million for the fiscal year ended May 31, 2021 to US$325.9 million for the fiscal year ended May 31, 2022, primarily due to the increased number of students who planned to study overseas.
Net Revenues of Overseas Study Consulting Services Net revenues from overseas study consulting services increased by 8.9% from US$325.9 million for the fiscal year ended May 31, 2022 to US$354.8 million for the fiscal year ended May 31, 2023, primarily due to the increased number of students who planned to study overseas.
We have built strong data analytics capabilities using algorithms, models and data analytics tools. Our OMO system leverages big data analysis to enhance our operational efficiency, including understanding students’ learning needs and generating customized teaching content and services for each student, as well as allowing teachers to prepare lessons through a standardized and structured process.
Our OMO system leverages big data analysis to enhance our operational efficiency, including understanding students’ learning needs and generating customized teaching content and services for each student, as well as allowing teachers to prepare lessons through a standardized and structured process.
For the Years Ended May 31, 2021 2022 2023 (in thousands, except percentages) US$ % US$ % US$ % Allocation of Share-based Compensation Expense: Cost of revenues 6,698 9.7 (131 ) (0.1 ) 2,749 3.1 Selling and marketing 6,922 10.1 (2,437 ) (1.8 ) 5,750 6.4 General and administrative 55,260 80.2 135,536 101.9 81,289 90.5 Total 68,880 100.0 132,968 100.0 89,788 100.0 For options granted to our employees and directors, we record share-based compensation expenses based on the fair value of our common shares underlying options as of the date of option grant and amortize the expenses over the vesting periods of the options.
For the Years Ended May 31, 2022 2023 2024 (in thousands, except percentages) US$ % US$ % US$ % Allocation of Share-based Compensation Expense: Cost of revenues (131 ) (0.1 ) 2,749 3.1 19,966 16.3 Selling and marketing (2,437 ) (1.8 ) 5,750 6.4 26,053 21.3 General and administrative 135,536 101.9 81,289 90.5 76,440 62.4 Total 132,968 100.0 89,788 100.0 122,459 100.0 For options granted to our employees and directors, we record share-based compensation expenses based on the fair value of our common shares underlying options as of the date of option grant and amortize the expenses over the vesting periods of the options.
Information on the Company—B. Business Overview—Regulation—Regulations on Taxation.” and “Item 3. Key Information—D.
For additional information on PRC regulations on taxation, see “Item 4. Information on the Company—B. Business Overview—Regulation—Regulations on Taxation.” and “Item 3. Key Information—D.
Cost of revenues for private label products and livestreaming e-commerce and other services increased by 430.5% from US$68.7 million for the fiscal year ended May 31, 2022 to US$364.6 million for the fiscal year ended May 31, 2023, primarily due to an increase in labor cost and procurement cost of goods. • Selling and Marketing Expenses .
Cost of revenues for private label products and livestreaming e-commerce increased by 13,842.3% from US$2.5 million for the fiscal year ended May 31, 2022 to US$345.2 million for the fiscal year ended May 31, 2023, primarily due to an increase in labor cost and procurement cost of goods. • Selling and Marketing Expenses .
Selling and marketing expenses for our educational services and test preparation courses decreased by 20.3% from US$273.3 million for the fiscal year ended May 31, 2022 to US$217.9 million for the fiscal year ended May 31, 2023, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2023 Compared to Fiscal Year Ended May 31, 2022— Operating Costs and Expenses—Selling and Marketing Expenses.” • General and Administrative Expenses .
Selling and marketing expenses for our educational services and test preparation courses decreased by 24.5% from US$346.5 million for the fiscal year ended May 31, 2022 to US$261.6 million for the fiscal year ended May 31, 2023, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2023 Compared to Fiscal Year Ended May 31, 2022—Operating Costs and Expenses—Selling and Marketing Expenses.” 122 Table of Contents • General and Administrative Expenses .
General and administrative expenses for overseas study consulting services increased by 1.1% from US$60.6 million for the fiscal year ended May 31, 2021 to US$61.3 million for the fiscal year ended May 31, 2022. B. Liquidity and Capital Resources Our principal source of liquidity has been cash generated from operating activities.
General and administrative expenses for overseas study consulting services increased by 1.0% from US$61.3 million for the fiscal year ended May 31, 2022 to US$61.9 million for the fiscal year ended May 31, 2023, primarily due to an increase in staff costs. B. Liquidity and Capital Resources Our principal source of liquidity has been cash generated from operating activities.
Selling and marketing expenses for private label products and livestreaming e-commerce and other services increased by 12.4% from US$79.4 million for the fiscal year ended May 31, 2022 to US$89.3 million for the fiscal year ended May 31, 2023, primarily due to an increase in staff cost. • General and Administrative Expenses.
Selling and marketing expenses for private label products and livestreaming e-commerce increased by 628.1% from US$6.3 million for the fiscal year ended May 31, 2022 to US$45.6 million for the fiscal year ended May 31, 2023, primarily due to an increase in staff costs. • General and Administrative Expenses .
General and administrative expenses for each of our reportable segments primarily consist of compensation and benefits of administrative staff of our reportable segments, compensation and benefits, rental and utilities payments relating to office and administrative functions of our reportable segments, depreciation and amortization of property and equipment used in the general and administrative activities of our reportable segments and, to a lesser extent, costs to develop our curriculum. 122 Table of Contents The following table lists our net revenues and operating cost and expenses by reportable segment for the periods indicated.
General and administrative expenses for each of our reportable segments primarily consist of compensation and benefits of administrative staff of our reportable segments, compensation and benefits, rental and utilities payments relating to office and administrative functions of our reportable segments, depreciation and amortization of property and equipment used in the general and administrative activities of our reportable segments and, to a lesser extent, costs to develop our curriculum.
General and administrative expenses for our educational services and test preparation courses increased by 37.0% from US$955.2 million for the fiscal year ended May 31, 2021 to US$1,308.7 million for the fiscal year ended May 31, 2022, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2022 Compared to Fiscal Year Ended May 31, 2021—Operating Costs and Expenses—General and Administrative Expenses.” Operating Cost and Expenses of Private Label Products and Livestreaming E-commerce and Other Services • Cost of Revenues .
General and administrative expenses for our educational services and test preparation courses increased by 45.3% from US$519.8 million for the fiscal year ended May 31, 2023 to US$755.1 million for the fiscal year ended May 31, 2024, primarily due to the factors discussed in “—Results of Operations—Fiscal Year Ended May 31, 2024 Compared to Fiscal Year Ended May 31, 2023—Operating Costs and Expenses—General and Administrative Expenses.” Operating Cost and Expenses of Private Label Products and Livestreaming E-commerce • Cost of Revenues .
Net revenues from private label products and livestreaming e-commerce and other services accounted for 4.9%, 4.4% and 21.6%, respectively, of our total net revenues in the fiscal years ended May 31, 2021, 2022 and 2023.
Net revenues from private label products and livestreaming e-commerce accounted for 0.1%, 18.6% and 20.9%, respectively, of our total net revenues in the fiscal years ended May 31, 2022, 2023 and 2024.
Risk Factors—Risks Related to Our Corporate Structure—We may rely on dividends and other distributions on equity paid by our wholly-owned subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our subsidiaries or New Oriental China and its schools and subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business” for more information.
Risk Factors—Risks Related to Our Corporate Structure—We may rely on dividends and other distributions on equity paid by our wholly-owned subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our subsidiaries or New Oriental China and its schools and subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business” for more information. 127 Table of Contents Furthermore, cash transfers from our PRC subsidiaries to our Hong Kong-incorporated intermediate holding companies are subject to PRC government control of currency conversion.
Our operating segment, educational materials and distribution, individually did not exceed the 10% quantitative threshold during the fiscal year ended May 31, 2023, and as a result, was aggregated in others.
Our operating segment, educational materials and distribution, individually did not exceed the 10% quantitative threshold during the fiscal year ended May 31, 2024, and as a result, was aggregated in others. Prior period segment information has been restated to conform to the fiscal year 2024 presentation.
Revenues from educational services and test preparation courses accounted for 85.8%, 81.6% and 60.9%, respectively, of our total net revenues in the fiscal years ended May 31, 2021, 2022 and 2023.
Revenues from educational services and test preparation courses accounted for 86.0%, 63.9% and 63.0%, respectively, of our total net revenues in the fiscal years ended May 31, 2022, 2023 and 2024.
Net revenues from our educational services and test preparation courses accounted for 85.8%, 81.6% and 60.9%, respectively, of our total net revenues in the fiscal years ended May 31, 2021, 2022 and 2023.
Net revenues from our educational services and test preparation courses accounted for 86.0%, 63.9% and 63.0%, respectively, of our total net revenues in the fiscal years ended May 31, 2022, 2023 and 2024.
As we believe successful content development is important to the success of our business, we intend to continuously enhance the quality and breadth of our education content offerings and distribute more books and other educational materials through our own bookstores, as well as third-party distributors.
As we believe successful content development is important to the success of our business, we intend to continually enhance the quality and breadth of our education content offerings and distribute more books and other educational materials through our own bookstores, as well as third-party distributors. 113 Table of Contents Operating Cost and Expenses Our operating cost and expenses consist of cost of revenues, selling and marketing expenses and general and administrative expenses.
We have adopted guidelines, procedures and safeguards designed to educate our employees and contractors regarding the importance of respecting the intellectual property rights of third parties, and detect and prevent any conduct or activities by our employees or contractors that infringe or have the potential to infringe upon such third-party rights.
In addition, we have registered other domain names, including dogwood.com.cn, blingabc.com and ileci.com. 129 Table of Contents We have adopted guidelines, procedures and safeguards designed to educate our employees and contractors regarding the importance of respecting the intellectual property rights of third parties, and detect and prevent any conduct or activities by our employees or contractors that infringe or have the potential to infringe upon such third-party rights.
(2) -Basic 0.20 (0.70 ) 0.11 -Diluted 0.20 (0.70 ) 0.10 Weighted average shares used in calculating basic net income/(loss) per common share 1,645,463,440 1,696,419,232 1,678,264,547 Weighted average shares used in calculating diluted net income/(loss) per common share 1,651,982,384 1,696,419,232 1,685,631,987 (1) Share-based compensation expenses are included in our operating cost and expenses as follows: For the Years Ended May 31, (in thousands of US$) 2021 2022 2023 Cost of revenues 6,698 (131 ) 2,749 Selling and marketing 6,922 (2,437 ) 5,750 General and administrative 55,260 135,536 81,289 Total 68,880 132,968 89,788 (2) Each ADS represents ten common shares.
(2) -Basic (0.70 ) 0.11 0.19 -Diluted (0.70 ) 0.10 0.18 Weighted average shares used in calculating basic net income/(loss) per common share 1,696,419,232 1,678,264,547 1,653,597,432 Weighted average shares used in calculating diluted net income/(loss) per common share 1,696,419,232 1,685,631,987 1,669,499,952 (1) Share-based compensation expenses are included in our operating cost and expenses as follows: For the Years Ended May 31, (in thousands of US$) 2022 2023 2024 Cost of revenues (131 ) 2,749 19,967 Selling and marketing (2,437 ) 5,750 26,052 General and administrative 135,536 81,289 76,439 Total 132,968 89,788 122,458 (2) Each ADS represents ten common shares.
Financing Activities Net cash used in financing activities amounted to US$246.9 million in the fiscal year ended May 31, 2023, compared to net cash used in financing activities amounted to US$230.9 million in the fiscal year ended May 31, 2022 and net cash provided by financing activities amounted to US$1,654.1 million in the fiscal year ended May 31, 2021. 127 Table of Contents Net cash used in financing activities in the fiscal year ended May 31, 2023 was primarily attributable to the funds used for share repurchase in the amount of US$191.6 million and the unsecured senior notes repurchase in the amount of US$48.8 million.
Net cash used in financing activities in the fiscal year ended May 31, 2023 was primarily attributable to the funds used for share repurchase in the amount of US$191.6 million and the unsecured senior notes repurchase in the amount of US$48.8 million.
Since 2014, we have developed our self-adaptive learning system which dynamically adjusts the course content based on students’ in-class performance and progress to help them to better grasp key knowledge points. Proprietary computerized assessment testing system .
We have developed a series of AI-driven learning systems and learning tools to improve teaching and learning efficiency, including: Proprietary self-adaptive learning system . Since 2014, we have developed our self-adaptive learning system which dynamically adjusts the course content based on students’ in-class performance and progress to help them to better grasp key knowledge points.
Under the current law of the Cayman Islands, we are not subject to income or capital gains tax. In addition, dividend payments are not subject to withholding tax in the Cayman Islands.
Under the current law of the Cayman Islands, we are not subject to income or capital gains tax. Our majority-owned subsidiary, East Buy, is incorporated in the Cayman Islands. The dividend payments of East Buy are not subject to withholding tax in the Cayman Islands.
Since our financial reporting process inherently relies on the use of estimates and assumptions, actual results may differ from these estimates under different assumptions or conditions. 132 Table of Contents An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that could reasonably have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements.
An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that could reasonably have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements.
The following table sets forth a summary of our cash flows for the periods indicated: For the Years Ended May 31, (in thousands of US$) 2021 2022 2023 Net cash provided by/(used in) operating activities 1,130,085 (1,280,453 ) 971,008 Net cash (used in)/provided by investing activities (2,177,639 ) 1,168,532 (37,411 ) Net cash provided by/(used in) financing activities 1,654,084 (230,858 ) (246,867 ) Effect of foreign exchange rate changes 106,173 (94,821 ) (75,830 ) Net change in cash and cash equivalents 712,703 (437,600 ) 610,900 Cash and cash equivalents and restricted cash at beginning of the period 919,424 1,632,127 1,194,527 Cash and cash equivalents and restricted cash at end of the period 1,632,127 1,194,527 1,805,427 126 Table of Contents Operating Activities Net cash provided by operating activities amounted to US$971.0 million in the fiscal year ended May 31, 2023.
The following table sets forth a summary of our cash flows for the periods indicated: For the Years Ended May 31, (in thousands of US$) 2022 2023 2024 Net cash provided by/(used in) operating activities (1,280,453 ) 971,008 1,122,643 Net cash (used in)/provided by investing activities 1,168,532 (37,411 ) (1,153,922 ) Net cash provided by/(used in) financing activities (230,858 ) (246,867 ) (160,438 ) Effect of foreign exchange rate changes (94,821 ) (75,830 ) (24,606 ) Net change in cash and cash equivalents (437,600 ) 610,900 (216,323 ) Cash and cash equivalents and restricted cash at beginning of the period 1,623,127 1,194,527 1,805,427 Cash and cash equivalents and restricted cash at end of the period 1,194,527 1,805,427 1,589,104 Operating Activities Net cash provided by operating activities amounted to US$1,122.6 million in the fiscal year ended May 31, 2024.
If we cannot achieve these improvements, our financial condition and results of operations may be materially adversely affected. 113 Table of Contents The results of operations of our livestreaming e-commerce business are more directly affected by certain company specific factors, including: our ability to attract and engage consumers and increase GMV on East Buy; our ability to develop high-quality and cost-effective private label products; our ability to enhance supply chain management capabilities, among others.
The results of operations of our livestreaming e-commerce business are more directly affected by certain company specific factors, including: our ability to attract and engage consumers and increase GMV on East Buy; our ability to develop high-quality and cost-effective private label products; our ability to enhance supply chain management capabilities, among others. Selected Statements of Operations Items Net Revenues .
Cost of revenues for overseas study consulting services increased by 29.6% from US$127.8 million for the fiscal year ended May 31, 2021 to US$165.7 million for the fiscal year ended May 31, 2022, primarily due to an increase in consulting application costs. 125 Table of Contents • Selling and Marketing Expenses .
Cost of revenues for overseas study consulting services increased by 19.7% from US$179.3 million for the fiscal year ended May 31, 2023 to US$214.6 million for the fiscal year ended May 31, 2024, primarily due to an increase in consulting application costs. • Selling and Marketing Expenses .
General and administrative expenses for overseas study consulting services increased by 1.0% from US$61.3 million for the fiscal year ended May 31, 2022 to US$61.9 million for the fiscal year ended May 31, 2023, primarily due to an increase in staff cost.
Selling and marketing expenses for overseas study consulting services increased by 15.3% from US$80.5 million for the fiscal year ended May 31, 2023 to US$92.9 million for the fiscal year ended May 31, 2024, primarily due to an increase in staff costs and marketing and promotional expenses. • General and Administrative Expenses .
Our PRC subsidiaries are permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. 129 Table of Contents Pursuant to contractual arrangements that our wholly-owned subsidiaries in China have with the variable interest entities, the earnings and cash of variable interest entities and their schools and subsidiaries are used to pay service fees in RMB to our PRC subsidiaries in the manner and amount set forth in these agreements.
Pursuant to contractual arrangements that our wholly-owned subsidiaries in China have with the variable interest entities, the earnings and cash of variable interest entities and their schools and subsidiaries are used to pay service fees in RMB to our PRC subsidiaries in the manner and amount set forth in these agreements.
Our general and administrative expenses increased by 25.3% from US$1,489.8 million in the fiscal year ended May 31, 2021 to US$1,866.6 million in the fiscal year ended May 31, 2022.
Our general and administrative expenses increased by 31.3% from US$953.6 million in the fiscal year ended May 31, 2023 to US$1,251.6 million in the fiscal year ended May 31, 2024.
As of May 31, 2023, we repurchased an aggregate principal amount of US$285.3 million of the notes with a total cash consideration of US$270.8 million, the principal amount of the unsecured senior notes was US$14.7 million.
As of May 31, 2024, we repurchased an aggregate principal amount of US$285.6 million of the notes with a total cash consideration of US$271.0 million, and the outstanding principal amount of the unsecured senior notes was US$14.4 million.
We track the number of teachers, schools and learning centers as a key indicator for our operating cost and expenses and manage our expenditures and budget accordingly. Our total numbers of schools and learning centers were 107 and 637, respectively, as of May 31, 2022, compared to 122 and 1,547, respectively, as of May 31, 2021.
We track the number of teachers, schools and learning centers as a key indicator for our operating cost and expenses and manage our expenditures and budget on educational businesses accordingly. Our total numbers of schools and learning centers were 81 and 944, respectively, as of May 31, 2024, compared to 85 and 663, respectively, as of May 31, 2023.
Risk Factors—Risks Related to Doing Business in China—We may be treated as a resident enterprise for PRC tax purposes under the EIT Law, which may subject us to PRC income tax for our global income and withholding for any dividends we pay to our non-PRC shareholders and ADS holders.” Recent Acquisitions During the year ended May 31, 2023, we made several business acquisitions.
Risk Factors—Risks Related to Doing Business in China—We may be treated as a resident enterprise for PRC tax purposes under the PRC Enterprise Income Tax Law, which may subject us to PRC income tax for our global income and withholding for any dividends we pay to our non-PRC shareholders and ADS holders.” Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods indicated.
For the Years Ended May 31, 2021 2022 2023 (in thousands, except percentages) US$ % US$ % US$ % Net revenues 4,276,539 100.0 3,105,246 100.0 2,997,760 100.0 Operating cost and expenses: Cost of revenues (2,036,875 ) (47.6 ) (1,754,291 ) (56.5 ) (1,409,438 ) (47.0 ) Selling and marketing (600,778 ) (14.0 ) (466,895 ) (15.0 ) (444,693 ) (14.8 ) General and administrative (1,489,826 ) (34.8 ) (1,866,573 ) (60.1 ) (953,583 ) (31.8 ) Impairment loss on intangible assets and goodwill (31,794 ) (0.7 ) — — — — Total operating cost and expenses (4,159,273 ) (97.3 ) (4,087,759 ) (131.6 ) (2,807,714 ) (93.6 ) Cost of Revenues .
For the Years Ended May 31, 2022 2023 2024 (in thousands, except percentages) US$ % US$ % US$ % Net revenues 3,105,246 100.0 2,997,760 100.0 4,313,586 100.0 Operating cost and expenses: Cost of revenues (1,754,291 ) (56.5 ) (1,409,438 ) (47.0 ) (2,050,960 ) (47.5 ) Selling and marketing (466,895 ) (15.0 ) (444,693 ) (14.8 ) (660,586 ) (15.3 ) General and administrative (1,866,573 ) (60.1 ) (953,583 ) (31.8 ) (1,251,615 ) (29.0 ) Total operating cost and expenses (4,087,759 ) (131.6 ) (2,807,714 ) (93.6 ) (3,963,161 ) (91.8 ) Cost of Revenues .
The operating results in any period are not necessarily indicative of the results that may be expected for any future period. 118 Table of Contents For the Years Ended May 31, (in thousands of US$ except share and per share data) 2021 2022 2023 Net revenues: Net service revenues 4,230,638 3,050,022 2,544,729 Net product revenues 45,901 55,224 453,031 Total net revenues 4,276,539 3,105,246 2,997,760 Operating cost and expenses: (1) Cost of revenues (2,036,875 ) (1,754,291 ) (1,409,438 ) Selling and marketing (600,778 ) (466,895 ) (444,693 ) General and administrative (1,489,826 ) (1,866,573 ) (953,583 ) Impairment loss on intangible assets and goodwill (31,794 ) — — Total operating cost and expenses (4,159,273 ) (4,087,759 ) (2,807,714 ) Operating income/(loss) 117,266 (982,513 ) 190,046 Interest income 141,511 123,542 114,453 Interest expense (6,747 ) (4,050 ) (707 ) Realized gain from long-term investments 3,535 22,004 767 Impairment loss from long-term investments (40,207 ) (129,350 ) (8,056 ) Loss from fair value change of long-term investments (3,824 ) (14,933 ) (860 ) Loss from deconsolidation of subsidiaries — (79,609 ) — Miscellaneous income, net 103,443 32,411 12,888 Provision for income taxes: Current (127,313 ) (44,378 ) (97,594 ) Deferred 43,725 (91,934 ) 31,528 Provision for income taxes (83,588 ) (136,312 ) (66,066 ) Loss from equity method investments (1,368 ) (51,466 ) (7,102 ) Net income/(loss) 230,021 (1,220,276 ) 235,363 Less: Net (loss)/income attributable to non-controlling interests (104,393 ) (32,555 ) 58,022 Net income/(loss) attributable to New Oriental Education & Technology Group Inc.’s shareholders 334,414 (1,187,721 ) 177,341 Net income/(loss) per common share attributable to shareholders of New Oriental Education & Technology Group Inc.
For the Years Ended May 31, (in thousands of US$ except share and per share data) 2022 2023 2024 Net revenues: Net service revenues 3,050,022 2,544,729 3,500,998 Net product revenues 55,224 453,031 812,588 Total net revenues 3,105,246 2,997,760 4,313,586 Operating cost and expenses: (1) Cost of revenues (1,754,291 ) (1,409,438 ) (2,050,960 ) Selling and marketing (466,895 ) (444,693 ) (660,586 ) General and administrative (1,866,573 ) (953,583 ) (1,251,615 ) Total operating cost and expenses (4,087,759 ) (2,807,714 ) (3,963,161 ) Operating income/(loss) (982,513 ) 190,046 350,425 Interest income 123,542 114,453 153,589 116 Table of Contents For the Years Ended May 31, (in thousands of US$ except share and per share data) 2022 2023 2024 Interest expense (4,050 ) (707 ) (298 ) Realized gain from long-term investments 22,004 767 185 Impairment loss from long-term investments (129,350 ) (8,056 ) (30,007 ) (Loss)/gain from fair value change of investments (14,933 ) (860 ) 19,025 Loss from deconsolidation of subsidiaries (79,609 ) — — Miscellaneous income, net 32,411 12,888 922 Provision for income taxes: Current (44,378 ) (97,594 ) (130,927 ) Deferred (91,934 ) 31,528 21,237 Provision for income taxes (136,312 ) (66,066 ) (109,690 ) Loss from equity method investments (51,466 ) (7,102 ) (58,933 ) Net income/(loss) (1,220,276 ) 235,363 325,218 Less: Net (loss)/income attributable to non-controlling interests (32,555 ) 58,022 15,627 Net income/(loss) attributable to New Oriental Education & Technology Group Inc.’s shareholders (1,187,721 ) 177,341 309,591 Net income/(loss) per common share attributable to shareholders of New Oriental Education & Technology Group Inc.
General and administrative expenses for private label products and livestreaming e-commerce and other services decreased by 42.1% from US$124.9 million for the fiscal year ended May 31, 2021 to US$72.4 million for the fiscal year ended May 31, 2022, primarily due to a decrease in share-based compensation expenses and staff costs.
General and administrative expenses for private label products and livestreaming e-commerce increased by 81.9% from US$18.8 million for the fiscal year ended May 31, 2022 to US$34.2 million for the fiscal year ended May 31, 2023, primarily due to an increase in staff costs and share-based compensation expenses.
Based on our rich database, teaching materials can be generated automatically and tailored to the needs of the specific classes. 130 Table of Contents Big data analytics technology Throughout our long operating history, we have accumulated a large student data base, including complex students’ learning behavior and performance data, and extensive data on teaching techniques, materials, and resources, while maintaining a high standard of data protection and privacy.
Big data analytics technology Throughout our long operating history, we have accumulated a large student data base, including complex students’ learning behavior and performance data, and extensive data on teaching techniques, materials, and resources, while maintaining a high standard of data protection and privacy. We have built strong data analytics capabilities using algorithms, models and data analytics tools.
In the fiscal years ended May 31, 2021, 2022 and 2023, we generated total net revenues of US$4,276.5 million, US$3,105.2 million, and US$2,997.8 million respectively. Our revenues are net of PRC business taxes and related surcharges as well as refunds.
In the fiscal years ended May 31, 2022, 2023 and 2024, we generated total net revenues of US$3,105.2 million, US$2,997.8 million and US$4,313.6 million, respectively.
Net cash provided by operating activities amounted to US$1,130.1 million in the fiscal year ended May 31, 2021. Our net cash provided by operating activities in the fiscal year ended May 31, 2021 reflected net income of US$230.0 million, as adjusted by the reconciliation of certain non-cash items, including US$225.7 million in depreciation and US$68.9 million in share-based compensation expense.
Our net cash used in operating activities in the fiscal year ended May 31, 2024 reflected net income of US$325.2 million, as adjusted by the reconciliation of certain non-cash items, including US$100.6 million in depreciation and US$122.5 million in share-based compensation expense.
We will continue to make cash commitments, including capital expenditures, to support the growth of our business. We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We do not have retained or contingent interests in assets transferred.
We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We do not have retained or contingent interests in assets transferred. We have not entered into contractual arrangements that support the credit, liquidity or market risk for transferred assets.
Such cessation had a substantial adverse impact on our financial performance for the fiscal year ended May 31, 2022. Net Product Revenues. Our net product revenues consist of revenues from the sale of East Buy private label products and the books and other educational materials developed or licensed by us.
Our net product revenues consist of revenues from the sale of East Buy private label products and the books and other educational materials developed or licensed by us.

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Biggest changeHsieh * † 05/14/2021 06/30/2024 * † 09/09/2022 06/30/2024 * † 09/09/2022 06/30/2025 Robin Yanhong Li * † 05/14/2021 06/30/2024 * † 09/09/2022 06/30/2024 * † 09/09/2022 06/30/2025 Denny Ting Bun Lee * † 05/14/2021 06/30/2024 * † 09/09/2022 06/30/2024 * † 09/09/2022 06/30/2025 John Zhuang Yang * † 05/14/2021 06/30/2024 * † 09/09/2022 06/30/2024 * † 09/09/2022 06/30/2025 * Less than 1% of our total outstanding voting securities. † Non-vested equity share awards. 138 Table of Contents East Buy Share Option Schemes On July 13, 2018, the board of directors of East Buy approved an employee’s share option plan, or the East Buy Pre-IPO Share Option Scheme, under which East Buy is authorized to issue up to 47,836,985 shares in East Buy pursuant to awards granted to any director, employee, contractor or affiliate of East Buy (including nominees and/or trustees of any employee benefit trusts established for them).
Biggest changeEast Buy Share Option Schemes On July 13, 2018, the board of directors of East Buy approved an employee’s share option plan, or the East Buy Pre-IPO Share Option Scheme, under which East Buy is authorized to issue up to 47,836,985 shares in East Buy pursuant to awards granted to any director, employee, contractor or affiliate of East Buy (including nominees and/or trustees of any employee benefit trusts established for them).
Each executive officer has agreed to hold, both during and after the termination or expiry of his or her employment agreement, in strict confidence and not to use, except as required in the performance of his or her duties in connection with the employment, any of our confidential information or trade secrets, any confidential information or trade secrets of our clients or prospective clients, or the confidential or proprietary information of any third party received by us and for which we have confidential obligations.
Each executive officer has agreed to hold, both during and after the termination or expiry of his employment agreement, in strict confidence and not to use, except as required in the performance of his duties in connection with the employment, any of our confidential information or trade secrets, any confidential information or trade secrets of our clients or prospective clients, or the confidential or proprietary information of any third party received by us and for which we have confidential obligations.
An executive officer may terminate his employment with us at any time with a one-month prior notice if there is a material reduction in his or her authority, duties and responsibilities or if there is a material reduction in his or her annual salary before the next annual salary review.
An executive officer may terminate his employment with us at any time with a one-month prior notice if there is a material reduction in his authority, duties and responsibilities or if there is a material reduction in his annual salary before the next annual salary review.
In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment and one year following the termination or expiry of such employment agreement.
In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his employment and one year following the termination or expiry of such employment agreement.
An executive officer may also resign prior to the expiry of the term of his or her employment agreement if our board approves his or her resignation or agrees to an alternative arrangement with such executive officer.
An executive officer may also resign prior to the expiry of the term of his employment agreement if our board approves his resignation or agrees to an alternative arrangement with such executive officer.
The nominating and corporate governance committee is responsible for, among other things: 140 Table of Contents • selecting and recommending to the board nominees for election or re-election to the board, or for appointment to fill any vacancy; • reviewing annually with the board the current composition of the board with regards to characteristics such as independence, age, skills, experience and availability of service to us; • advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken; and • monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
The nominating and corporate governance committee is responsible for, among other things: • selecting and recommending to the board nominees for election or re-election to the board, or for appointment to fill any vacancy; • reviewing annually with the board the current composition of the board with regards to characteristics such as independence, age, skills, experience and availability of service to us; • advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken; and • monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
In the fiscal year ended May 31, 2023, the nominating and corporate governance committee passed resolutions by unanimous written consent once. Duties of Directors Under Cayman Islands law, our directors have a duty of loyalty to act honestly in good faith with a view to our best interests.
In the fiscal year ended May 31, 2024, the nominating and corporate governance committee passed resolutions by unanimous written consent once. Duties of Directors Under Cayman Islands law, our directors have a duty of loyalty to act honestly in good faith with a view to our best interests.
On January 30, 2019, the board of directors of East Buy approved an employee’s share option plan, or the East Buy Post-IPO Share Option Scheme, under which East Buy is authorized to issue up to 91,395,910 shares in East Buy pursuant to awards granted to, among others, directors, employees of East Buy or its affiliate.
On January 30, 2019, the board of directors of East Buy approved an employee’s share option plan, or the East Buy Post-IPO Share Option Scheme, under which East Buy was authorized to issue up to 91,395,910 shares in East Buy pursuant to awards granted to, among others, directors, employees of East Buy or its affiliate.
Michael Minhong Yu, together with his family, holds beneficial interest in Tigerstep Development Limited. The business address of Mr. Yu is No. 6 Hai Dian Zhong Street, Haidian District, Beijing 100080, People’s Republic of China.
Michael Minhong Yu, together with his family, holds beneficial interest in Tigerstep Developments Limited. The business address of Mr. Yu is No. 6 Hai Dian Zhong Street, Haidian District, Beijing 100080, People’s Republic of China.
Yu received his bachelor’s degree in English from Peking University. 134 Table of Contents Mr. Chenggang Zhou has served as our director since November 2010 and chief executive officer since September 2016. Mr.
Yu received his bachelor’s degree in English from Peking University. 131 Table of Contents Mr. Chenggang Zhou has served as our director since November 2010 and chief executive officer since September 2016. Mr.
The compensation committee is responsible for, among other things: • reviewing and approving the total compensation package for our chief executive officer; • reviewing and recommending to the board with respect to the compensation of our directors; and • reviewing periodically and approving any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, and employee pension and welfare benefit plans.
The compensation committee is responsible for, among other things: • reviewing and approving the total compensation package for our chief executive officer; 135 Table of Contents • reviewing and recommending to the board with respect to the compensation of our directors; and • reviewing periodically and approving any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, and employee pension and welfare benefit plans.
Denny Ting Bun Lee has served as our independent director since September 2006. Mr. Lee currently also serves as the chairman of the audit committees and independent non-executive director on the boards of NIO Inc. (NYSE: NIO; HKEX: 9866; SGX: NIO) and Jianpu Technology Inc. (NYSE: JT). From April 2002 to June 2022, Mr.
Denny Ting Bun Lee has served as our independent director since September 2006. Mr. Lee currently also serves as the chairman of the audit committees and independent non-executive director on the boards of NIO Inc. (NYSE: NIO; HKEX: 9866; SGX: NIO) and Jianpu Technology Inc. (OTCQB: AIJTY). From April 2002 to June 2022, Mr.
In the fiscal year ended May 31, 2023, the compensation committee passed resolutions by unanimous written consent once, and also approved certain other matters together with the rest of the board members once. Nominating and Corporate Governance Committee • Our nominating and corporate governance committee consists of Dr. John Zhuang Yang, Mr. Robin Yanhong Li and Mr.
In the fiscal year ended May 31, 2024, the compensation committee passed resolutions by unanimous written consent twice, and also approved certain other matters together with the rest of the board members once. Nominating and Corporate Governance Committee • Our nominating and corporate governance committee consists of Dr. John Zhuang Yang, Mr. Robin Yanhong Li and Mr.
(4) Includes (i) common shares and (ii) non-vested equity shares that will vest within 60 days after September 15, 2023 held by all of our directors and senior executive officers as a group. (5) Tigerstep Developments Limited, a company incorporated in the British Virgin Islands, is wholly owned by Mr. Michael Minhong Yu.
(4) Includes (i) common shares and (ii) non-vested equity shares that will vest within 60 days after September 16, 2024 held by all of our directors and senior executive officers as a group. (5) Tigerstep Developments Limited, a company incorporated in the British Virgin Islands, is wholly owned by Mr. Michael Minhong Yu.
A director will be removed from office automatically if, among other things, the director (1) becomes bankrupt or makes any arrangement or composition with his creditors; or (2) is found by our company to be or becomes of unsound mind. D.
A director will be removed from office automatically if, among other things, the director (1) becomes bankrupt or makes any arrangement or composition with his creditors; or (2) is found by our company to be or becomes of unsound mind. 136 Table of Contents D.
The remaining terms of the 2016 plan are substantially identical to the terms of the 2006 plan described above. The following table summarizes, as of September 15, 2023, the outstanding non-vested equity shares granted under our 2016 plan to our directors and executive officers (taking into account the one-for-ten share split that took effect on March 10, 2021).
The remaining terms of the 2016 plan are substantially identical to the terms of the 2006 plan described above. The following table summarizes, as of September 16, 2024, the outstanding non-vested equity shares granted under our 2016 plan to our directors and executive officers (taking into account the one-for-ten share split that took effect on March 10, 2021).
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. Directors and Senior Management The following table sets forth information regarding our executive officers and directors as of the date of this annual report. Name Age Position/Title Michael Minhong Yu 60 Executive Chairman Chenggang Zhou 61 Director and Chief Executive Officer Zhihui Yang 49 Executive President and Chief Financial Officer Louis T.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. Directors and Senior Management The following table sets forth information regarding our executive officers and directors as of the date of this annual report. Name Age Position/Title Michael Minhong Yu 61 Executive Chairman Chenggang Zhou 62 Director and Chief Executive Officer Zhihui Yang 50 Executive President and Chief Financial Officer Louis T.
The number of beneficial owners of our ADSs in the United States is much larger than the one record holder of our common shares in the United States. F. Disclosure of Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable. 142 Table of Contents
The number of beneficial owners of our ADSs in the United States is much larger than the one record holder of our common shares in the United States. F. Disclosure of Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable.
All of the members of our audit committee satisfy the “independence” requirements of Section 303A of the NYSE Listed Company Manual and Rule 10A-3 under the Exchange Act. 139 Table of Contents Our board of directors has determined that Mr.
All of the members of our audit committee satisfy the “independence” requirements of Section 303A of the NYSE Listed Company Manual and Rule 10A-3 under the Exchange Act. Our board of directors has determined that Mr.
In the fiscal year ended May 31, 2023, our board held meetings or passed resolutions by unanimous written consent ten times. Committees of the Board of Directors We have established three fully independent committees under the board of directors: the audit committee, the compensation committee and the nominating and corporate governance committee.
In the fiscal year ended May 31, 2024, our board held meetings or passed resolutions by unanimous written consent eighteen times. Committees of the Board of Directors We have established three fully independent committees under the board of directors: the audit committee, the compensation committee and the nominating and corporate governance committee.
In addition, we made contributions to the pension insurance, medical insurance, housing fund, unemployment and other benefits for the benefits of our executive officers and non-executive directors in the aggregate amount of US$82.7 thousand. See “—Share Incentives” below for more information.
In addition, we made contributions to the pension insurance, medical insurance, housing fund, unemployment and other benefits for the benefits of our executive officers and non-executive directors in the aggregate amount of US$47.2 thousand. See “—Share Incentives” below for more information.
Name Common Shares Underlying Outstanding NES Exercise Price (US$/ Share) Date of Grant Date of Vest Michael Minhong Yu * † 05/14/2021 06/30/2024 * † 09/09/2022 06/30/2024 * † 09/09/2022 06/30/2025 Chenggang Zhou * † 05/14/2021 06/30/2024 * † 09/09/2022 06/30/2024 * † 09/09/2022 06/30/2025 Zhihui Yang * † 05/14/2021 06/30/2024 * † 09/09/2022 06/30/2024 * † 09/09/2022 06/30/2025 Louis T.
Name Common Shares Underlying Outstanding NES Exercise Price (US$/ Share) Date of Grant Date of Vest Michael Minhong Yu * † 09/09/2022 06/30/2025 Chenggang Zhou * † 09/09/2022 06/30/2025 Zhihui Yang * † 09/09/2022 06/30/2025 Louis T.
In the fiscal year ended May 31, 2023, the audit committee held meetings or passed resolutions by unanimous written consent twice, and also approved certain other matters together with the rest of the board members three times, including the audit committee’s approval of two quarterly earnings releases, semi-annual result and annual result.
In the fiscal year ended May 31, 2024, the audit committee held meetings or passed resolutions by unanimous written consent six times, and also approved certain other matters together with the rest of the board members four times, including the audit committee’s approval of two quarterly earnings releases, semi-annual result and annual result.
Share Ownership The following table sets forth information with respect to the beneficial ownership of our common shares by: • each of our directors and executive officers; and • each person known to us who owns beneficially more than 5% of our common shares. 141 Table of Contents Except as specifically noted, the beneficial ownership is as of September 15, 2023.
Share Ownership The following table sets forth information with respect to the beneficial ownership of our common shares by: • each of our directors and executive officers; and • each person known to us who owns beneficially more than 5% of our common shares. Except as specifically noted, the beneficial ownership is as of September 16, 2024.
Hsieh 58 Director Robin Yanhong Li 54 Independent Director Denny Ting Bun Lee 55 Independent Director John Zhuang Yang 68 Independent Director Mr. Michael Minhong Yu is the founder of our company and has served as the chairman of our board of directors since August 2001. He was also our chief executive officer from 2001 to September 2016. Mr.
Hsieh 59 Director Robin Yanhong Li 55 Independent Director Denny Ting Bun Lee 56 Independent Director John Zhuang Yang 69 Independent Director Mr. Michael Minhong Yu is the founder of our company and has served as the chairman of our board of directors since August 2001. He was our chief executive officer from 2001 to September 2016. Mr.
B. Compensation of Directors and Executive Officers For the fiscal year ended May 31, 2023, we paid an aggregate of approximately US$4.9 million in cash to our executive officers and non-executive directors as a group.
B. Compensation of Directors and Executive Officers For the fiscal year ended May 31, 2024, we paid an aggregate of approximately US$1.5 million in cash to our executive officers and non-executive directors as a group.
(2) For each person and group included in this table, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of (i) 1,655,124,293, being the number of common shares outstanding as of September 15, 2023 and (ii) the number of non-vested equity shares held by such person or group that will vest within 60 days after September 15, 2023.
(2) For each person and group included in this table, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of (i) 1,635,288,333, being the number of common shares outstanding as of September 16, 2024 and (ii) the number of non-vested equity shares held by such person or group that will vest within 60 days after September 16, 2024.
As of May 31, 2023, options to obtain an aggregate of 27,084,385 shares in East Buy remained outstanding under the East Buy Pre-IPO Share Option Scheme. No options were forfeited and no shares were cancelled in the fiscal year ended May 31, 2023.
As of May 31, 2024, options to obtain an aggregate of 25,940,885 shares in East Buy remained outstanding under the East Buy Pre-IPO Share Option Scheme. No options were forfeited and no shares were cancelled in the fiscal year ended May 31, 2024.
As required by regulations in China, we participate in various employee social security plans that are organized by municipal and provincial governments for our PRC-based full-time employees, including pension, unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance and housing insurance.
Our contract teachers generally enter into exclusive service agreements with us. As required by regulations in China, we participate in various employee social security plans that are organized by municipal and provincial governments for our PRC-based full-time employees, including pension, unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance and housing insurance.
Shares Beneficially Owned Number (1) % (2) Directors and Executive Officers: Michael Minhong Yu (3) 202,072,160 12.2 Chenggang Zhou * * Zhihui Yang * * Louis T.
Shares Beneficially Owned Number (1) % (2) Directors and Executive Officers: Michael Minhong Yu (3) 199,352,640 12.2 Chenggang Zhou * * Zhihui Yang * * Louis T.
As of May 31, 2023, an aggregate of 30,271,273 non-vested equity shares remain outstanding under the 2016 Share Incentive Plan, excluding non-vested equity shares that were forfeited or cancelled after the relevant grant date. The following paragraphs describe the principal terms of the 2016 plan. Amendment of the Plan .
As of May 31, 2024, an aggregate of 21,469,262 non-vested equity shares remain outstanding under the 2016 Share Incentive Plan, excluding non-vested equity shares that were forfeited or cancelled after the relevant grant date. The following paragraphs describe the principal terms of the 2016 plan. 133 Table of Contents Amendment of the Plan .
(3) Includes (i) 169,235,000 common shares held by Tigerstep Developments Limited, a British Virgin Islands company wholly owned by Mr. Michael Minhong Yu and (ii) 3,283,716 ADSs (each representing ten underlying common shares), which consist of 3,215,054 ADSs held by Tigerstep Developments Limited and 68,662 ADSs held by Mr. Yu. Through a trust arrangement, Mr.
(3) Includes (i) 165,235,000 common shares held by Tigerstep Developments Limited, a British Virgin Islands company wholly owned by Mr. Michael Minhong Yu and (ii) 3,411,764 ADSs (each representing ten underlying common shares), which consist of 3,315,054 ADSs held by Tigerstep Developments Limited and 96,710 ADSs held by Mr. Yu. Through a trust arrangement, Mr.
We are required under PRC law to make contributions from time to time to employee benefit plans for our PRC-based full-time employees at specified percentages of the salaries, bonuses and certain allowances of such employees, up to a maximum amount specified by the local governments in China. Our employees are not covered by any collective bargaining agreement.
We are required under PRC law to make contributions from time to time to employee benefit plans for our PRC-based full-time employees at specified percentages of the salaries, bonuses and certain allowances of such employees, up to a maximum amount specified by the local governments in China. We consider our relations with our employees to be generally good. E.
As reported in the Schedule 13G, GIC has the sole voting and disposal power over 73,701,510 shares it beneficially owns and shares voting and disposal power over 11,282,583 shares it beneficially owns with the Monetary Authority of Singapore. GIC is wholly-owned by the Government of Singapore, who disclaims beneficial ownership of such shares, as reported in the Schedule 13G.
As reported in the Schedule 13G, GIC has the sole voting and disposal power over 72,369,822 shares it beneficially owns and shares voting and disposal power over 10,912,483 shares it beneficially owns with the Monetary Authority of Singapore. GIC is wholly-owned by the Government of Singapore, who disclaims beneficial ownership of such shares, as reported in the Schedule 13G.
As of May 31, 2023, awards to obtain an aggregate of 30,314,000 shares in East Buy remained outstanding under the East Buy 2023 Scheme. Awards to obtain 145,000 shares in East Buy shares were either forfeited or cancelled in the fiscal year ended May 31, 2023. C.
As of May 31, 2024, awards to obtain an aggregate of 17,646,330 shares in East Buy remained outstanding under the East Buy 2023 Scheme. Awards to obtain 399,000 shares in East Buy shares were either forfeited or cancelled in the fiscal year ended May 31, 2024. 134 Table of Contents C.
(NASDAQ: BIDU; HKEX: 9888), a leading AI company with strong Internet foundation. Mr. Li has served as the chairman of the board of directors of Baidu since its inception in January 2000 and as its chief executive officer since February 2004. He served as the president of Baidu from February 2000 to December 2003. Prior to founding Baidu, Mr.
Li has served as the chairman of the board of directors of Baidu since its inception in January 2000 and as its chief executive officer since February 2004. He served as the president of Baidu from February 2000 to December 2003. Prior to founding Baidu, Mr.
Yu currently serves as the chairman of the board and non-executive director of East Buy Holding Limited (HKEX: 1797). Mr. Yu also serves as Standing Committee Member of the Central Committee of the China Democratic League. Prior to founding our first school in 1993, Mr. Yu was an English instructor at Peking University from 1985 to 1991. Mr.
Yu currently serves as the chairman of the board, executive director and chief executive officer of East Buy Holding Limited (HKEX: 1797), our majority-owned subsidiary. Prior to founding our first school in 1993, Mr. Yu was an English instructor at Peking University from 1985 to 1991. Mr.
The vesting schedule of equity share awards is subject to the applicable award agreement. 2016 Share Incentive Plan We adopted our 2016 Share Incentive Plan, or the 2016 plan, in January 2016 to continue to provide incentives to employees, directors and consultants after the expiration of our 2006 plan.
Share Incentives 2016 Share Incentive Plan We adopted our 2016 Share Incentive Plan, or the 2016 plan, in January 2016 to continue to provide incentives to employees, directors and consultants after the expiration of our 2006 plan.
Yang holds a Ph.D. degree in business administration from Columbia University, a master’s degree in sociology from Columbia University, a master’s degree in international and public affairs from the Woodrow Wilson School of Public and International Affairs at Princeton University, and a bachelor’s degree from the English Language and Literature Department of Peking University.
Yang holds a Ph.D. degree in business administration from Columbia University, a master’s degree in sociology from Columbia University, a master’s degree in international and public affairs from the Woodrow Wilson School of Public and International Affairs at Princeton University, and a bachelor’s degree from the English Language and Literature Department of Peking University. 132 Table of Contents Employment Agreements We have entered into employment agreements with each of our executive officers.
As of May 31, 2023, options to obtain an aggregate of 40,462,810 shares in East Buy remained outstanding under the East Buy Post-IPO Share Option Scheme. Options to obtain 1,216,275 shares in East Buy shares were either forfeited or cancelled in the fiscal year ended May 31, 2023.
As of May 31, 2024, options to obtain an aggregate of 34,483,946 shares in East Buy remained outstanding under the East Buy Post-IPO Share Option Scheme. Options to obtain 2,036,188 shares in East Buy shares were either forfeited or cancelled in the fiscal year ended May 31, 2024.
As of September 15, 2023, we had 1,655,124,293 common shares issued and outstanding, and Deutsche Bank Trust Company Americas, as the depositary of our ADS facility, was the only record holder of our common shares in the United States, holding approximately 54.8% of our total outstanding common shares.
As of September 16, 2024, we had 1,635,288,333 common shares outstanding, and Deutsche Bank Trust Company Americas, as the depositary of our ADS facility, was the only record holder of our common shares in the United States, holding approximately 49.5% of our total outstanding common shares.
Hsieh * * Robin Yanhong Li * * Denny Ting Bun Lee * * John Zhuang Yang * * All Directors and Executive Officers as a Group (4) 211,651,075 12.8 Principal Shareholders: Tigerstep Developments Limited (5) 201,385,540 12.2 GIC Private Limited (6) 84,984,093 5.1 * Less than 1% (1) Beneficial ownership is determined in accordance with the rules of the SEC.
Hsieh * * Robin Yanhong Li * * Denny Ting Bun Lee * * John Zhuang Yang * * All Directors and Executive Officers as a Group (4) 208,098,025 12.7 Principal Shareholders: Tigerstep Developments Limited (5) 198,385,540 12.1 FMR LLC and its affiliate (6) 89,227,574 5.5 GIC Private Limited (7) 82,282,305 5.0 * Less than 1% (1) Beneficial ownership is determined in accordance with the rules of the SEC.
Hsieh served as the global chief financial officer of NIO Inc. (NYSE: NIO; HKEX: 9866; SGX: NIO), a leading electric car original equipment manufacturer. Prior to joining us in 2005, Mr. Hsieh was the chief financial officer of ARIO Data Networks, Inc. in San Jose, California from 2004 to 2005. Prior to that, Mr.
Hsieh served as the global chief financial officer of NIO Inc. (NYSE: NIO; HKEX: 9866; SGX: NIO), a leading electric car original equipment manufacturer. From April 2021 to May 2024, he served as the global chief financial officer of Hesai Technology (NASDAQ:HSAI), a global leader in 3-D Lidar solutions. Prior to joining us in 2005, Mr.
From July 2021, he has also served as an independent director of UXIN Limited, which is a used car company listed on the Nasdaq Stock Market. Dr. Yang was Co-Dean and Professor of Management of the Beijing International MBA Program (BIMBA) at National School of Development of Peking University from 2001 to 2020.
John Zhuang Yang has served as our independent director since August 2007. From July 2021, he has also served as an independent director of UXIN Limited, which is a used car company listed on the Nasdaq Stock Market. Dr.
Hsieh was a technology investment banker at JP Morgan in San Francisco, California, where he was a vice president, and Credit Suisse First Boston in Palo Alto, California, where he was an associate. From 1990 to 1996, Mr. Hsieh was a corporate and securities attorney at White & Case LLP in Los Angeles. Mr.
Hsieh was the managing director and the Asia-Pacific tech/media/telecoms head of UBS Capital Asia Pacific, the private equity division of UBS AG. From 1997 to 2000, Mr. Hsieh was a technology investment banker at JP Morgan in San Francisco, California, where he was a vice president, and Credit Suisse First Boston in Palo Alto, California, where he was an associate.
(6) Represents (i) 73,701,510 common shares, including 28,124,830 common shares represented by 2,812,483 ADSs, and (ii) 11,282,583 common shares, including 6,346,660 common shares represented by 634,666 ADSs, beneficially owned by GIC Private Limited, or GIC, as reported in a Schedule 13G filed by GIC with the SEC on June 1, 2023 (the “Schedule 13G”).
(7) Represents (i) 72,369,822 common shares, including 28,159,510 common shares represented by 2,815,951 ADSs, and (ii) 10,912,483 common shares, including 3,976,560 common shares represented by 397,656 ADSs, beneficially owned by GIC Private Limited, or GIC, as reported in a Schedule 13G filed by GIC with the SEC on July 5, 2024 (the “Schedule 13G”).
We enter into employment contracts with our full-time employees which contain standard confidentiality provisions. We also enter into standalone confidentiality and non-compete agreements with our key full-time employees. Our contract teachers generally enter into exclusive service agreements with us.
Employees We had 46,653, 50,438 and 67,935 full-time employees and 6,418, 5,068 and 7,070 contract teachers and staff as of May 31, 2022, 2023 and 2024, respectively. We enter into employment contracts with our full-time employees which contain standard confidentiality provisions. We also enter into standalone confidentiality and non-compete agreements with our key full-time employees.
Hsieh holds a bachelor’s degree in industrial engineering and engineering management from Stanford University, an MBA degree from the Harvard Business School, and a J.D. degree from the University of California at Berkeley. Mr. Robin Yanhong Li has served as our independent director since September 2006. Mr. Li is a co-founder of Baidu, Inc.
From 1990 to 1996, Mr. Hsieh was a corporate and securities attorney at White & Case LLP in Los Angeles. Mr. Hsieh holds a bachelor’s degree in industrial engineering and engineering management from Stanford University, an MBA degree from the Harvard Business School, and a J.D. degree from the University of California at Berkeley. Mr.
Hsieh was a managing director for the private equity firm of Darby Asia Investors (HK) Limited from 2002 to 2003. From 2000 to 2002, Mr. Hsieh was the managing director and the Asia-Pacific tech/media/telecoms head of UBS Capital Asia Pacific, the private equity division of UBS AG. From 1997 to 2000, Mr.
Hsieh was the chief financial officer of ARIO Data Networks, Inc. in San Jose, California from 2004 to 2005. Prior to that, Mr. Hsieh was a managing director for the private equity firm of Darby Asia Investors (HK) Limited from 2002 to 2003. From 2000 to 2002, Mr.
Lee graduated from the Hong Kong Polytechnic University majoring in accounting and is a member of The Hong Kong Institute of Certified Public Accountants and The Chartered Association of Certified Accountants. 135 Table of Contents Dr. John Zhuang Yang has served as our independent director since August 2007.
Prior to joining NetEase.com, Inc., Mr. Lee worked in the Hong Kong office of KPMG for more than ten years. Mr. Lee graduated from the Hong Kong Polytechnic University majoring in accounting and is a member of The Hong Kong Institute of Certified Public Accountants and The Chartered Association of Certified Accountants. Dr.
Hsieh currently serves as the global chief financial officer, since April 2021, and board director, since June 2021, of Hesai Technology, a global leader in 3-D Lidar solutions. Mr. Hsieh also serves as an independent director since May 2014, of JD.com Inc.
Hsieh also serves as an independent director and chairman of the audit committee since May 2014, of JD.com Inc.
Removed
Prior to joining NetEase.com, Inc., Mr. Lee worked in the Hong Kong office of KPMG for more than ten years. In addition, from August 2013 to June 2022, Mr. Lee served as independent non-executive director on the board of China Metal Resources Utilization Ltd. (HKEX: 1636), which is listed on the main board of Hong Kong Stock Exchange. Mr.
Added
Robin Yanhong Li has served as our independent director since September 2006. Mr. Li is a co-founder of Baidu, Inc. (NASDAQ: BIDU; HKEX: 9888), a leading AI company with strong Internet foundation. Mr.
Removed
He is now Professor Emeritus of Peking University. Dr.
Added
Yang was Co-Dean and Professor of Management of the Beijing International MBA Program (BIMBA) at National School of Development of Peking University from 2001 to 2020. He is now Professor Emeritus of Peking University and an adjunct professor of management at Schwarzman College, Tsinghua University. Dr.
Removed
Employment Agreements We have entered into employment agreements with each of our executive officers.
Added
Hsieh * † 09/09/2022 06/30/2025 Robin Yanhong Li * † 09/09/2022 06/30/2025 Denny Ting Bun Lee * † 09/09/2022 06/30/2025 John Zhuang Yang * † 09/09/2022 06/30/2025 * Less than 1% of our total outstanding voting securities. † Non-vested equity share awards.
Removed
Share Incentives 2006 Share Incentive Plan Our 2006 Share Incentive Plan, as amended, or the 2006 plan, is designed to attract and retain the best available personnel, provide additional incentives to employees, directors and consultants and promote the success of our business.
Added
The registered address of Tigerstep Developments Limited is Oleander Building, Suites OL-7 and OL-8, 13a J. R. O’Neal Drive, P.O. Box 2416, Port Purcell, Tortola, VG1110, British Virgin Islands. 137 Table of Contents (6) Represents 89,227,574 common shares beneficially owned by FMR LLC and Abigail P. Johnson, as reported in a Schedule 13G filed by FMR LLC and Abigail P.
Removed
The maximum aggregate number of shares which may be issued pursuant to all awards (including options) granted under the 2006 plan is 8,000,000 shares (without taking into account the one-for-ten share split that took effect on March 10, 2021), plus (1) 5,000,000 shares added on January 1, 2007, (2) 5,000,000 shares added on January 1, 2008 and (3) an annual increase on the first business day of each calendar year beginning in 2009 equal to the lesser of (x) 3,000,000 shares, (y) two percent (2%) of the number of shares outstanding as of such date, and (z) a lesser number of shares determined by the administrator of the 2006 plan.
Added
Johnson with the SEC on February 9, 2024 (the “Schedule 13G”). As reported in the Schedule 13G, members of the Johnson family, including Abigail P. Johnson, a director, the chairman and the chief executive officer of FMR LLC, may be deemed under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC.
Removed
The 2006 plan expired in January 2016. No additional awards may be granted under the 2006 plan after its expiration, but the expiration of the plan would not impair any award previously granted under the plan.
Added
The address of FMR LLC is 245 Summer Street, Boston, Massachusetts 02210, United States.
Removed
We do not have any outstanding awards under our 2006 plan. 136 Table of Contents The following paragraphs describe the principal terms of the 2006 plan. Types of Awards .
Removed
We may grant the following types of awards under our 2006 plan: • options to purchase our common shares; • restricted shares, which are common shares issued to the grantee that are subject to transfer restrictions, right of first refusal, repurchase, forfeiture, and other terms and conditions as established by our plan administrator; and restricted share units, which may be earned upon the passage of time or the attainment of performance criteria and which may be settled for cash, common shares or other securities, or a combination of cash, common shares or other securities as established by our plan administrator; • share appreciation rights, which entitle the grantee the right to common shares or cash compensation measured by the appreciation in the value of common shares; and • dividend equivalent rights, which entitle the grantee to compensation measured by dividends paid with respect to common shares.
Removed
Plan Administration . Our board of directors, or a committee designated by our board or directors, administers the 2006 plan. The committee or the full board of directors, as appropriate, determines the provisions and terms and conditions of each award grant. Award Agreement .
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Awards granted under our 2006 plan are evidenced by an award agreement that sets forth the terms, conditions and limitations for each award. In addition, the award agreement also specifies whether the option constitutes an incentive share option, or ISO, or a non-qualifying stock option. Eligibility .
Removed
We may grant awards to our employees, directors and consultants, including those of our parent companies and subsidiaries. However, we may grant options that are intended to qualify as ISOs only to our employees and employees of our parent companies and subsidiaries. Acceleration of Awards upon Corporate Transactions .
Removed
The outstanding awards will terminate and accelerate upon occurrence of certain significant corporate transactions, including amalgamations, consolidations, liquidations or dissolutions, sales of substantially all or all of the assets, reverse takeovers or acquisitions resulting in a change of control.
Removed
If the successor entity assumes or replaces our outstanding awards under the 2006 plan, such assumed or replaced awards will become fully vested and immediately exercisable and payable, and be released from repurchase or forfeiture rights immediately upon termination of the grantee’s continuous service to us if such service is terminated by the successor entity without cause within 12 months after the effective date of the corporate transaction.
Removed
Furthermore, if the successor entity does not assume or replace our outstanding awards, each outstanding award will become fully vested and immediately exercisable and payable, and will be released from any repurchase or forfeiture rights immediately before the effective date of the corporate transaction, as long as the grantee’s continuous service with us has not been terminated before this date.
Removed
Exercise Price and Term of Awards . In general, the plan administrator determines the exercise price of an option and sets forth the price in the award agreement. The exercise price may be a fixed or variable price related to the fair market value of our common shares.
Removed
In September 2012, we amended the 2006 plan to clarify that the plan administrator has the power to reduce the exercise price of an outstanding option and also reduce the number of the underlying common shares without seeking shareholders’ approval, if such modification would not result in significant additional share-based compensation expenses to be incurred by our company.
Removed
The term of each award under our 2006 plan will be specified in an award agreement, but the term of an ISO shall not exceed ten years from the date of grant thereof. 137 Table of Contents Vesting Schedule .
Removed
In general, one-sixth of the common shares underlying the option will vest on each six-month anniversary of the vesting commencement date specified in the option award notice. The vesting will be suspended if the grantee’s leave of absence exceeds 90 days and will resume upon the grantee’s return to service to us.
Removed
Employees We had 88,126, 46,653 and 50,438 full-time employees and 17,086, 6,418 and 5,068 contract teachers and staff as of May 31, 2021, 2022 and 2023, respectively.
Removed
The decrease in the number of employees as of May 31, 2022, and the decreases in the number of contract teachers and staff as of May 31, 2022 was primarily due to the cessation of our K-9 Academic AST services, in order to comply with the government policies in China.
Removed
We consider our relations with our employees to be generally good. E.
Removed
The registered address of Tigerstep Developments Limited is Marcy Building, 2nd Floor, P.O. Box 2416, Road Town, Tortola, the British Virgin Islands.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

11 edited+4 added−6 removed3 unchanged
Biggest changeAs of May 31, 2023, amounts due to Metropolis Holding were US$0.2 million, which represented accrued but unpaid service fee. 143 Table of Contents Loans to Related Parties Beijing Dianshi Jingwei Technology Co., Ltd., or Dianshi Jingwei, is an equity method investee of us.
Biggest changeAs of May 31, 2024, amounts due to Metropolis Holding were US$0.3 million, which represented accrued but unpaid service fee. Acquisition of Sponsorship Interest from a Related Party In June 2023 and February 2024, we acquired 9.09% and 90.91% of the sponsorship interest in Beijing Changping District Miaofeng Academy Training School, or Beijing Miaofeng, held by Mr.
Organizational Structure—Contractual Arrangements with New Oriental China, Its Schools and Subsidiaries and Its Shareholder” for a summary of the contractual arrangements we have entered into with New Oriental China and its subsidiaries and shareholder. Contractual Arrangements with Beijing Xuncheng, Its Subsidiaries and Shareholders See “Item 4. Information on the Company—C.
Contractual Arrangements with New Oriental China, Its Schools, Subsidiaries and Shareholder See “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with New Oriental China, Its Schools and Subsidiaries and Its Shareholder” for a summary of the contractual arrangements we have entered into with New Oriental China and its subsidiaries and shareholder.
Lease Arrangements with an Affiliate Since April 2010, we have been renting several floors of office space in a building in Beijing owned by Metropolis Holding China Limited, or Metropolis Holding. In March 2012, Fine Talent Holdings Limited, a British Virgin Islands company wholly-owned by Mr.
Lease Arrangements with a Related Party Since April 2010, we have been renting several floors of office space in a building in Beijing owned by Metropolis Holding China Limited, or Metropolis Holding. In March 2012, Fine Talent Holdings Limited, a British Virgin Islands company wholly-owned by Mr.
As of May 31, 2023, 18 of our operating entities rented office space from Metropolis Holding pursuant to a series of lease agreements. The terms and conditions, including rental rates, of these lease agreements are generally the same as other tenants in the same building.
As of May 31, 2024, 24 of our operating entities rented office space from Metropolis Holding pursuant to a series of lease agreements. The terms and conditions, including rental rates, of these lease agreements are generally the same as other tenants in the same building.
These lease agreements are typically three years and can be renewed upon mutual agreements upon expiration. The lease arrangements were approved by all of our directors, including all of the disinterested directors. During the fiscal year ended May 31, 2023, we accrued a total of US$8.4 million rent to Metropolis Holding.
These lease agreements are typically three years and can be renewed upon mutual agreements upon expiration. The lease arrangements were approved by all of our directors, including all of the disinterested directors. During the fiscal year ended May 31, 2024, we accrued a total of US$10.9 million rent to Metropolis Holding.
As of May 31, 2023, amounts due from Metropolis Holding were US$3.8 million, which represented prepaid rent and rental deposit. In addition, Metropolis Holding, as a property management company, also provided property management services to the Company for several rented floors of office space.
As of May 31, 2024, amounts due from Metropolis Holding were US$4.5 million, which represented prepaid rent and rental deposit. In addition, Metropolis Holding, as a property management company, also provided property management services to the Company for several rented floors of office space.
As of May 31, 2023, we had US$7.3 million in aggregate due from other related parties and US$110 thousand in aggregate due to other related parties. C. Interests of Experts and Counsel Not applicable.
As of May 31, 2024, we had US$7.1 million in aggregate due from other related parties and US$238 thousand in aggregate due to other related parties. C. Interests of Experts and Counsel Not applicable.
Organizational Structure—Contractual Arrangements with Beijing Xuncheng, Its Subsidiaries and Shareholders” for a summary of the contractual arrangements we have entered into with Beijing Xuncheng, its subsidiaries and shareholders. Employment Agreements See “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management” for a description of the employment agreements we have entered into with our senior executive officers.
Contractual Arrangements with Beijing Xuncheng, Its Subsidiaries and Shareholders See “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with Beijing Xuncheng, Its Subsidiaries and Shareholders” for a summary of the contractual arrangements we have entered into with Beijing Xuncheng, its subsidiaries and shareholders. Employment Agreements See “Item 6. Directors, Senior Management and Employees—A.
Share Incentives See “Item 6. Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers” for a description of share-based compensation we have provided to our directors, officers and other individuals as a group.
Directors and Senior Management” for a description of the employment agreements we have entered into with our senior executive officers. 138 Table of Contents Share Incentives See “Item 6. Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers” for a description of share-based compensation we have provided to our directors, officers and other individuals as a group.
As of May 31, 2022, the outstanding balance of the loans was US$40.2 million, which was fully impaired. Transactions with Other Related Parties During the fiscal year ended May 31, 2023, we recorded revenue in the amount of US$2.1 million from other related parties.
As of May 31, 2022, the outstanding balance of the loans was US$40.2 million, which was fully impaired. Transactions with Other Related Parties Beijing Dianshi Jingwei Technology Co., Ltd., or Dianshi Jingwei, is an equity method investee of us.
Subsequent to May 31, 2022, we transferred our equity investment in Dianshi Jingwei to the founder of Dianshi Jingwei and ceased our business cooperation with Dianshi Jingwei. Beijing MaxEn International Education Consulting Company Limited, or Beijing MaxEn is an equity method investee of us.
Subsequent to May 31, 2022, we transferred our equity investment in Dianshi Jingwei to the founder of Dianshi Jingwei and ceased our business cooperation with Dianshi Jingwei. During the fiscal year ended May 31, 2024, we recorded revenue in the amount of US$251 thousand from other related parties.
Removed
Related Party Transactions Agreements with East Buy Deed of Non-Competition Undertakings On March 28, 2019, East Buy completed its initial public offering and the listing of its shares on the Main Board of The Stock Exchange of Hong Kong Limited, or the HKEx.
Added
Related Party Transactions Acquisition of Online Education Business from East Buy On November 21, 2023, as part of our business line reorganization, Elite Concept Holdings Limited, our wholly-owned subsidiary and New Oriental China entered into an agreement with East Buy and its subsidiaries and variable interest entity, pursuant to which Elite Concept Holdings Limited and New Oriental China agreed to acquire East Buy’s online education business at an aggregate consideration of RMB1.5 billion.
Removed
We issued a deed of non-competition undertakings on August 28, 2018 in favor of East Buy with respect to the ongoing relationship between us and East Buy after the listing of East Buy’s securities on the HKEx.
Added
The consideration was agreed by the parties after arm’s length negotiations, with reference to an independent valuation. The acquisition was completed in March 2024. Upon completion, the online education business was deconsolidated from East Buy’s consolidated financial statements and is now recorded by us under educational services.
Removed
Pursuant to this deed, we undertake, among other things, not to, and procure our group entities not to, carry on engage or participate in online education services within China, except for (i) making minority investments in a business that provide online education services in China, or (ii) operating our existing Blingabc and Leci businesses with the restrictions set forth in the deed of non-competition undertakings, provided, however, if we propose to issue or transfer any equity interest in these businesses, East Buy has the option to purchase all or any portion of the offered equity interest.
Added
Yu, our executive chairman, for a consideration of US$13.8 thousand and US$138.1 thousand, respectively. In connection with the acquisition, we provided a loan with a principal amount of US$36.2 million to Beijing Miaofeng primarily for obtaining a land use right that is in the process of registration application by Beijing Miaofeng for our future operational use.
Removed
The foregoing undertaking will end if East Buy’s securities cease to be listed on HKEx or 12 months after we cease to be the controlling shareholder of East Buy, whichever is earlier. Contractual Arrangements with New Oriental China, Its Schools, Subsidiaries and Shareholder See “Item 4. Information on the Company—C.
Added
We have become the sole sponsor of Beijing Miaofeng since February 2024 and therefore Beijing Miaofeng has since ceased to be a related party. Loans to a Related Party Beijing MaxEn International Education Consulting Company Limited is an equity method investee of us.
Removed
The loans were initially granted in 2018 and the maturity date of the loans were extended several times and recorded as non-current assets as of May 31, 2020. The extended loans were personally guaranteed by Mr. Michael Minhong Yu, our executive chairman, and Mr. Yunhai Jia, the chief executive officer of Dianshi Jingwei.
Removed
According to the loan agreements, if Dianshi Jingwei defaults on the loan payments and interests, we have the right to convert the unpaid loans into Dianshi Jingwei’s equity. The outstanding balance of US$21.0 million had been fully repaid by Dianshi Jingwei as of May 31, 2021.

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