Complex sentence: Before 2012, those students were picked from a lottery, whereas the regulation established a system of entrance exams for Experimental Schools which occurred in the 1st grade of lower and upper high school that the students had to pass in order to be selected.
Split into simpler sentences: Before 2012, those students were picked from a draw, whereas the new regulation established a system of entrance exams for Experimental Schools. This would take place in the 1st grade of lower and upper high school that the students had to pass in order to be selected.