Legal and Regulatory Matters

9 Months Ended

Sep. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Legal and Regulatory Matters

Legal and Regulatory Matters

Laureate is subject to legal proceedings arising in the ordinary course of business. In management’s opinion, we have adequate legal defenses, insurance coverage, and/or accrued liabilities with respect to the eventuality of these actions. Management believes that any settlement would not have a material impact on Laureate’s financial position, results of operations, or cash flows.

Our institutions are subject to uncertain and varying laws and regulations, and any changes to these laws or regulations or their application to us may materially adversely affect our business, financial condition and results of operations. Except as set forth below, there have been no material changes to the laws and regulations affecting our higher education institutions that are described in our Annual Report on Form 10-K for the year ended December 31, 2020.

Mexican Regulation – COVID-19 Update

Administrative activities and limited face-to-face educational activities have resumed at all campuses. Education was determined to be an essential activity for the country and thus no longer restrained by the country’s color-coded sanitary alert system.

Peruvian Regulation

COVID-19 Update

Peru’s national sanitary emergency has been extended until March 2022 in an effort to prevent a third wave of COVID-19. Lima’s emergency status has been upgraded as a result of increasing vaccination rates and significantly decreasing COVID-19 infection rates. Economic activities are close to pre-pandemic levels, however, presential gathering, such as in-person instruction, are still suspended in most cases. Nevertheless, the government has announced that face-to-face classes at higher education institutions may resume in 2022, initially semi-presential. The actual resumption of classes will depend upon COVID-19 infection rates at such time.

Peruvian Nonresident Capital Gains Tax

Holders who sell, exchange, or otherwise dispose of Company shares may be subject to Peruvian tax at a rate of 30% on their gain realized in such transaction determined under certain Peruvian valuation rules regardless of whether the transaction is taxable for non-Peruvian purposes. In determining the amount of such gain subject to such tax, the gain is first multiplied by the percentage of the Company’s value that is represented by its Peruvian business determined under certain Peruvian valuation rules (the “Peru Ratio”). This tax applies if the value of stock determined under certain Peruvian valuation rules (calculated in PEN) transferred multiplied by the Peru Ratio exceeds approximately $42,500 applying the PEN/USD exchange rate of September 30, 2021 (the “Threshold”). The Threshold is calculated in PEN and changes with currency exchange rates. For purposes of determining whether the Threshold has been exceeded by any holder, all transfers made by such holder over any 12-month period are aggregated. For purposes of determining whether any tax is owed, the holder must have their basis “certified” by the Peruvian tax authorities in advance of such transaction. If the holder exceeds the Threshold and does not obtain a tax basis certificate before the transaction, the holder’s tax basis in the shares will be considered zero for Peruvian tax purposes.