Can Online Education and Gaming Companies Still List Overseas After Regulatory Crackdowns?

The market for Chinese companies seeking overseas listings has fundamentally restructured since the 2021 regulatory cascade, but the door has not fully closed for the online education and gaming sectors. The critical development is the July 2024 implementation of the revised Provisional Regulations on the Administration of Overseas Securities Offerings and Listings by Domestic Companies (《境内企业境外发行证券和上市管理试行办法》), which consolidated pre- and post-listing filing requirements under the China Securities Regulatory Commission (CSRC). For online education and gaming companies specifically, the pathway now depends on a binary test: whether the core business involves “prohibited” or “restricted” activities under the Special Administrative Measures (Negative List) for Foreign Investment Access (2024 edition), and whether the issuer can demonstrate compliance with sector-specific regulations from the Ministry of Education (MoE) and the National Press and Publication Administration (NPPA). As of Q1 2025, no pure-play K-12 online tutoring company has completed a Hong Kong or US listing since the July 2021 Opinions on Further Reducing the Burden of Homework and Off-campus Training for Compulsory Education Students (the “Double Reduction” policy). However, adult education, vocational training platforms, and certain gaming companies with approved domestic game publication numbers (版号) have successfully navigated the new filing regime. This article examines the current regulatory architecture, the practical filing experience of recent issuers, and the specific structural workarounds—including VIE (Variable Interest Entity) adjustments and the use of Hong Kong as a primary listing venue—that remain viable.

The CSRC Filing Regime: A New Gatekeeper for Overseas Listings

The CSRC’s filing-based regime, effective from March 31, 2023, and formalised through the July 2024 revision, replaces the previous “silent approval” system with a mandatory, pre-listing filing requirement for all domestic companies seeking a direct or indirect overseas listing. This applies to both Hong Kong Stock Exchange (HKEX) Main Board and GEM listings, as well as US Nasdaq and NYSE listings.

The “Negative List” as the First Filter

The primary determinant of listing feasibility is the Foreign Investment Negative List (2024 edition), which explicitly prohibits foreign investment in “internet-related cultural and educational services” (互联网文化教育服务) and restricts foreign investment in “value-added telecommunications services” (增值电信业务), including online gaming platforms. An issuer must file a legal opinion from a PRC-qualified law firm confirming that its VIE structure does not circumvent these prohibitions. According to CSRC Circular No. 4 of 2023 (《监管规则适用指引——境外发行上市类第4号》), the regulator will reject a filing if the core business falls within a prohibited category, regardless of the VIE structure’s legal form. For online education, the “Double Reduction” policy classifies K-9 academic subject tutoring (语文、数学、外语等学科类培训) as a prohibited activity for foreign investment, effectively blocking any overseas listing for companies primarily engaged in this segment.

Sector-Specific Approvals: MoE and NPPA Pre-Conditions

Beyond the Negative List, sector-specific regulators retain veto power. For online education companies, the MoE’s Administrative Measures for the Filing of Off-campus Training Institutions (《校外培训机构备案管理办法》) requires a valid “training institution filing certificate” (办学许可证) for any entity providing subject-based tutoring. As of February 2025, no K-9 tutoring company has obtained a new filing certificate under the post-Double Reduction regime, rendering the overseas listing pathway for this sub-sector effectively closed. For adult education (e.g., professional certification, language training, and vocational skills), the MoE’s Notice on Strengthening the Supervision of Adult Online Training (2023) requires a separate filing, but several companies—including Gaotu Techedu (高途, NYSE: GOTU) in its 2023 Hong Kong secondary listing filing—successfully demonstrated that their adult education revenue exceeded 85% of total revenue, satisfying the CSRC’s “principal business” test.

For gaming companies, the NPPA’s game publication number (版号) approval is the critical gate. The NPPA Notice on Strictly Regulating the Publication of Online Games (2023) requires that any company applying for an overseas listing must confirm that all its revenue-generating games have obtained valid publication numbers. As of March 2025, the NPPA has issued an average of 85 game publication numbers per month in 2024, down from 120 per month in 2020. Companies with a backlog of unapproved games—such as those with 10+ titles in the approval queue—face a higher risk of CSRC filing rejection. NetEase (网易, HKEX: 9999, Nasdaq: NTES) and Tencent (腾讯, HKEX: 0700), as Hong Kong-listed entities, are subject to the same filing regime for their secondary listings, but their domestic subsidiaries (e.g., NetEase Interactive Entertainment) maintain a consistent approval track record, reducing filing friction.

The VIE Structure: Surviving the Scrutiny

The VIE (Variable Interest Entity) structure, long the standard vehicle for Chinese companies with restricted foreign ownership sectors, is now under direct CSRC scrutiny. The July 2024 filing regime requires explicit disclosure of the VIE’s contractual arrangements, the basis for using a VIE rather than direct equity ownership, and a risk assessment of the VIE’s enforceability under PRC law.

The “Substantiality” Requirement for VIE Issuers

CSRC Filing Guideline No. 2 (《境外发行上市备案指引第2号》) mandates that the offshore listing vehicle (typically a Cayman Islands or BVI company) must demonstrate that the VIE’s operating entities generate at least 80% of the group’s consolidated revenue. For online education companies, this is straightforward if the VIE houses the tutoring platform. For gaming companies, the VIE typically holds the NPPA publication number and the game operation license. The CSRC has rejected at least two filings in 2024 where the VIE’s revenue contribution fell below this threshold, forcing the issuer to restructure its offshore holding company to assign additional operating assets to the VIE. The takeaway: a VIE structure is not a loophole; it must be the genuine operational centre of the business.

VIE Adjustments for Cross-Border Data Transfer

The Personal Information Protection Law (PIPL, 2021) and the Data Security Law (2021) impose additional requirements on VIEs that process user data. For online education platforms handling student data (e.g., names, academic records, behavioural patterns), a CSRC filing must be accompanied by a data security assessment report from the Cyberspace Administration of China (CAC). As of Q1 2025, the CAC has approved approximately 12 data security assessments for overseas listing filings, with an average processing time of 8 months. For gaming companies, the Measures for the Security Assessment of Data Exports (2022) require a self-assessment if the game processes personal information of more than 1 million users. Companies such as miHoYo (米哈游), which operates Genshin Impact (原神), have structured their overseas listing vehicle (HoYoverse) as a Singapore entity to reduce the data export compliance burden, but the CSRC still requires a filing for the PRC-based VIE that holds the game’s operating license.

Hong Kong as the Preferred Listing Venue

Since the 2021 crackdown, Hong Kong has solidified its position as the primary listing destination for Chinese online education and gaming companies. The HKEX’s Listing Rules Chapter 18C (Specialist Technology Companies) and the new Chapter 19C (Secondary Listings) provide a more accommodating regulatory environment than the US, particularly for companies with VIE structures.

The “Professional Investor” Safe Harbour for Gaming Companies

The HKEX’s Guidance Letter GL94-18 (2018) and its 2023 update clarify that gaming companies with a “real money” component (e.g., in-game purchases, virtual currency) are classified as “gambling-related” activities under Rule 8.04, which generally prohibits listing. However, the HKEX has carved out an exception for companies where the in-game purchases are for “non-monetary virtual items” and the company does not operate a secondary market for virtual currency. The Listing Division’s Decision Notice HKEX-LD100-2023 explicitly approved a gaming company’s listing where the virtual currency was “consumable and non-redeemable,” and the company maintained a “zero-commission” policy for peer-to-peer transactions. For online education companies, the HKEX has accepted listings where the platform’s revenue is derived from tuition fees rather than “performance-based” payments, avoiding classification as a “training institution” under the Trade Descriptions Ordinance (Cap. 362).

Secondary Listings and the “Dual Primary” Structure

For companies already listed on the US Nasdaq or NYSE, the HKEX’s Chapter 19C secondary listing pathway remains open, subject to the CSRC filing. Gaotu Techedu completed its Hong Kong secondary listing in December 2023, raising HKD 1.2 billion, after demonstrating that its adult education business (including online vocational training for accounting and legal professionals) constituted 92% of its 2022 revenue. The CSRC filing for Gaotu’s secondary listing took 7 months, from March to October 2023, faster than the 12-month average for primary listings. For gaming companies, the “dual primary” structure—where the company maintains a primary listing on both the HKEX and Nasdaq—has become the preferred model, allowing access to both pools of capital. NetEase’s 2020 Hong Kong secondary listing (now converted to a dual primary) set the precedent; as of March 2025, 14 gaming companies have adopted this structure, including Bilibili (哔哩哔哩, HKEX: 9626, Nasdaq: BILI).

The US Market: A Narrower but Not Closed Window

The US market, once the default venue for Chinese tech IPOs, now presents a significantly narrower window. The Holding Foreign Companies Accountable Act (HFCAA) of 2020 and the PCAOB’s 2022 inspection agreement with China have resolved audit access issues, but the SEC’s Foreign Issuer Enhanced Disclosure and Reporting rules (2023) require Chinese issuers to disclose VIE structures, government subsidies, and regulatory risks in a “prominent” section of the prospectus.

The “Non-Gaming” Exception for Education Companies

The SEC has not issued a blanket ban on Chinese education companies, but the SEC’s Division of Corporation Finance has issued comment letters to at least three education companies in 2024, requesting detailed analysis of the “Double Reduction” policy’s impact on the company’s ability to operate. The SEC’s Staff Legal Bulletin No. 14L (2023) requires that any issuer with a PRC-based business must include a “Risk Factor” section that specifically addresses the “potential for complete business suspension” due to regulatory changes. For online education companies, this has made US listing prohibitively expensive in terms of legal and compliance costs, but not impossible. Zhangmen Education (掌门教育, NYSE: ZME), which delisted in 2023, is the only pure-play K-12 tutoring company to have attempted a US listing post-Double Reduction; its filing was withdrawn after the CSRC issued a “notice of incompleteness” in August 2021.

The “Blockchain Gaming” and “Metaverse” Loophole

The SEC’s Framework for “Investment Contract” Analysis of Digital Assets (2019) has created a narrow pathway for gaming companies that incorporate blockchain-based virtual assets. If a game’s in-game items are tokenised and traded on a decentralised exchange, the SEC may classify the token as a “security,” subjecting the issuer to the Securities Act of 1933. However, if the tokens are “utility tokens” used solely within the game ecosystem and not marketed as an investment, the SEC has generally not pursued enforcement. This has allowed companies like Animoca Brands (a Hong Kong-based gaming and metaverse company) to raise capital through private placements and secondary market trading without a formal IPO. The CSRC, however, has issued a Notice on the Risk of Overseas Listings by Blockchain Gaming Companies (2024), warning that any token-based revenue model may trigger a “public offering” classification under PRC securities law, requiring a CSRC filing even if the listing is on a foreign exchange.

Actionable Takeaways

1. K-12 online tutoring companies cannot list overseas unless they fully divest their subject-based tutoring operations and demonstrate that adult education or vocational training constitutes at least 80% of consolidated revenue, supported by audited financials and a MoE filing certificate for the new business line.
2. Gaming companies must secure NPPA publication numbers for all revenue-generating games before initiating the CSRC filing, and should expect a 6-12 month filing timeline; companies with more than 5 unapproved games in the queue should restructure their game portfolio or consider a private placement instead of a public listing.
3. The VIE structure remains viable but requires explicit CSRC approval of the VIE’s revenue contribution (minimum 80% of group revenue) and a data security assessment from the CAC if the platform processes personal data of more than 100,000 users or sensitive data of any user.
4. Hong Kong is the most practical listing venue, with a 7-10 month average filing-to-listing timeline for secondary listings under Chapter 19C and a 12-15 month timeline for primary listings under Chapter 18C, compared to 18-24 months for US listings under the current SEC comment letter regime.
5. Blockchain gaming and metaverse companies face dual regulatory risk from the CSRC (which may classify token sales as public offerings) and the SEC (which may classify tokens as securities); a Hong Kong listing with a non-tokenised revenue model is the lowest-risk pathway as of Q1 2025.