Investing.com - Shares of China Yuhua Education Corp Ltd (HK:6169) plunged 37% on Tuesday, while other mainland education companies also tumbled as Beijing began seeking consultation over banning the expansion of education corporations, South China Morning Post reported on Monday.
Yuhua attempted to calm the nerves of investors on Tuesday that the changes in regulations are still in infancy and have not yet been announced.
The Ministry of Justice announced last Friday that it might prohibit non-profit school sector companies’ expansion through merger and acquisition. The announcement came after TAL Education, a leader in the sector, allegedly raised its net profit figures by at least 43.6% and inflated its 2016-2018 pre-tax profits to $153.2 million with faulty transactions.
The country’s Ministry Education also released a report earlier this year concerning non-compliance with its required teaching certificates and business licenses.
“If the regulations are passed, the scope of impact will range from kindergarten to grade 12, and to private colleges, with restrictions mainly applying to foreign institutions,” Bank of China International said.