(Yicai Global) July 12 -- Several universities in the central Chinese city of Wuhan have started to divest the assets of their listed companies to focus on education, local media Changjiang Daily reported today.

These institutions set up companies in the late 1980s to make up for insufficient teaching funds and promote the transformation of their scientific and technological achievements. These enterprises sought to go public after 2000, with five ultimately successfully listing. The largest, Huagong Tech [SHE:000988], has a production value of over CNY6 billion (USD872 million).

"The fundamental purpose of this reform is that clearing up historical issues will allow universities to 'slim down' and return to their teaching roots and further standardize and legalize themselves," explained Lu Yuan, secretary general of the University of Hubei Province University-Run Industry Association.

Some universities in Wuhan reported information on their subsidiaries to the Ministry of Education and the Ministry of Finance before June 30, they must come up with rectification plans in the second half and complete their system reforms by next year, per the report.

 Some colleges and universities actually began to reduce their holdings in the first half. Huagong Technology announced in March that its main shareholder Huazhong University of Science and Technology plans to pare its shareholding by up to 40 million shares, as much as 3.98 percent of the company's shares. HUST had cut its stake in its company to 27.68 percent from 28.68 percent by April 15. 

The source of funds for colleges and universities is still financial expenditures and 90 percent of school-run enterprises are incapable of funding universities, Lu said.

Editor: Ben Armour