Chapter One General Provisions
Article 1 These regulations have been formulated for the purpose of regulating organization and activities of foundations, maintaining legitimate rights and interests of foundations, donors and beneficiaries, as well as fostering the participation in public good by various social forces.
Article 2 The term "foundation" mentioned herein refers to non-profit legal persons incorporated for the purpose of doing public good, with the use of properties donated by natural persons, legal persons or other organizations in compliance with these regulations.
Article 3 Foundations shall be classified into foundations that raise funds from the public (hereinafter referred to as public foundations) and foundations that may not raise funds from the public (hereinafter referred to as non-public foundations). Based on the territories where the foundations may raise funds, public foundations shall be classified into national public foundations and local public foundations.
Article 4 Foundations shall abide by the Constitution, laws, regulations and state policies and may neither jeopardize national safety, unification and ethnic unity nor violate public ethics.
Article 5 Foundations shall observe the principles of openness and transparency when engaged in activities for the public good in accordance with their Articles of Associations.
Article 6 The Ministry of Civil Affairs of the State Council and departments of civil affairs under provincial, autonomous regional and municipal people's governments shall be the authorities in charge of registration of foundations [hereinafter referred to as the registration authority(ies)].
The Ministry of Civil Affairs of the State Council shall be responsible for regulating registration of the following foundations and representative offices of foundations.
1. National public foundations;
2. Foundations that propose to have persons other than residents of Mainland China become their legal representatives;
3. Non-public foundations with an initial capital exceeding 20 million Renminbi for the incorporation of which the promoter has applied to the Ministry of Civil Affairs of the State Council;
4. Representative offices established by overseas foundations within the territory of Mainland China.
Departments of civil affairs under provincial, autonomous regional and municipal people's governments shall be responsible for regulating registration of local public foundations and non-public foundations other than those provided for in the previous paragraph within their respective administrative jurisdictions.
Article 7 Relevant departments of the State Council or organizations authorized by the State Council are competent to act as the professional supervisory organizations of foundations and representative offices of overseas foundations that have registered with the Ministry of Civil Affairs of the State Council [hereinafter referred to as 'supervisory organizations'].
Relevant departments of or organizations authorized by the provincial, autonomous regional and municipal governments shall be the professional supervisory organizations of foundations that have registered with departments of civil affairs under provincial, autonomous regional and municipal people's governments.
Chapter Two Incorporation, Alteration and Cancellation
Article 8 For incorporation purpose, the following requirements shall be satisfied:
1. The foundation shall be incorporated for particular public good;
2. Initial capital for incorporating a national public foundation, a local public foundation or a non-public foundation shall be no less than eight million Renminbi, four million Renminbi or two million Renminbi respectively. Such initial capital shall be paid-up currency funds available at their respective bank accounts of the above three types of foundations;
3. The would-be foundation shall make ready a legitimate name, articles of association, structure of organizations as well as full-time employees in compliance with its activities;
4. The would-be foundation shall have a fixed address; 5. The would-be foundation shall be capable of independent assumption of civil liabilities.
Article 9 To apply for incorporation of a foundation, the application shall submit the following documents to the registration authorities:
1. Application;
2. Draft Articles of Association;
3. Capital Evaluation Report and Address Certification;
4. List of Board members, their identification certifications and resumes of proposed Board Chairperson, Vice Board Chairpersons and Secretary General;
5. Document(s) indicating approval from the professional supervisory organization of the intended incorporation
Article 10 The Articles of Association of a foundation shall explicitly lay down the nature of public good the foundation is dedicated to but may not contain provisions that benefit particular natural persons, legal persons or other organizations. The Articles of Association of a foundation shall explicitly state the following items:
1. Name and address of the foundation;
2. Purposes of incorporation and scope of activities for the public good;
3. Amount of incorporation capital;
4. Composition, duties, power and rules of procedure of the Board; qualifications, procedure of election and term of office of Board members;
5. Duties and responsibilities of legal representatives;
6. Duties, responsibilities, qualifications, procedure of election and term of office of Supervisors;
7. Systems for preparation and audit of financial reports;
8. System for management and utilization of properties;
9. Terms and conditions and procedure for termination of the foundation and post-termination disposal of properties.
Article 11 The registration authority shall decide whether to approve the registration application within 60 days as of its receipt of the full list of effective documents provided for in Article 9 of these regulations. Where the registration application is approved, the Certification of Registration of the Foundation Legal Person shall be granted; where the registration application is not approved, written justification thereof shall be provided.
Items to be registered for incorporation of a foundation shall include name, address, classification, purposes, scope of activities for the public good, amount of incorporation capital and legal representative of the foundation.
Article 12 Where a foundation plans to establish branch or representative office(s), it shall apply for registration of such establishment with the original registration authority and submit documents about the name(s), address(s) and head(s) of the proposed office(s).
The registration authority shall decide whether to approve the registration application within 60 days as of its receipt of the full list of effective documents provided for in the previous paragraph. Where the registration application is approved, the Certification on Registration of Foundation Branch (Representative) Office shall be granted; where the registration application is not approved, written justification thereof shall be provided.
Items to be registered for establishment of a branch or representative office of a foundation shall include name, address, classification, purposes, scope of activities for the public good, and head of the branch or office.
A branch or representative office of a foundation shall carry out its activities as authorized by the foundation and as such shall not enjoy the status of a legal person.
Article 13 Where an overseas foundation plans to establish a representative office in Mainland China, it shall submit the following documents to the relevant registration authority after obtaining approval from the professional supervisory organizations:
1. Application;
2. Certification proving that the foundation was legally incorporated overseas; the articles of association of the foundation;
3. Identification certification and resume of proposed office head;
4. Address certification;
5. Document(s) indicating approval from the professional supervisory organization concerning the establishment of such an office in Mainland China;
The registration authority shall decide whether to approve the registration application within 60 days as of its receipt of the full list of effective documents provided for in the previous paragraph. Where the registration application is approved, the Certification on Registration of the Representative Office of An Overseas Foundation shall be granted; where the registration application is not approved, written justification thereof shall be provided.
Items to be registered for establishment of a representative office of an overseas foundation shall include name, address, scope of activities for the public good, and head of the office.
A representative office of an overseas foundation shall engage itself in activities for the public good that are in conformity with the nature of the Chinese cause of public welfare. The overseas foundation shall assume civil liabilities in accordance with PRC law for civil acts of its representative office in Mainland China.
Article 14 After fulfilling registration formalities in accordance with these regulations, a foundation or a representative office of an overseas foundation shall complete registration formalities for tax purpose in accordance with law.
A foundation or a representative office of an overseas foundation shall, by producing its Registration Certification, apply for its identification code as an organization, have its official seals carved and open bank accounts.
A foundation or a representative office of an overseas foundation shall submit to the registration authority for filing purpose the following items, identification code as an organization, samples of official seals, bank account and a copy of its tax registration certification.
Article 15 Where a foundation, a branch office of a foundation, a representative office of a foundation or a representative office of an overseas foundation needs to alter any items regarding registration, it shall apply to the registration authority for such alteration.
Where a foundation needs to amend its Articles of Association, it shall apply to the professional supervisory organization for approval and report to the registration authority for verification purpose.
Article 16 Where a foundation or a representative office of an overseas foundation is caught in one of the following situations, it shall apply to the registration authority for cancellation of its registration:
1. The foundation or representative office shall be terminated according to its Articles of Association;
2. The foundation or representative office is incapable of continuing to conduct activities for the public good in accordance with its Articles of Association;
3. The foundation or representative office needs to be terminated for other reasons.
Article 17 Where a foundation needs to cancel its branch office or representative office, it shall apply to the registration authority for registration of such cancellation. Where a foundation is cancelled, its branch office or representative office shall be cancelled simultaneously.
Article 18 Prior to going through the formalities for cancellation registration, the foundation shall establish a liquidation organization and complete liquidation as instructed by the registration authority or the professional supervisory organization.
The foundation shall complete formalities for registration cancellation with the registration authority within 15 days as of the completion of liquidation and may not carry out any activities other than those of or in connection with liquidation during the period of liquidation.
Article 19 Establishment, alteration and cancellation registration of a foundation, a branch office of a foundation, a representative office of a foundation or a representative office of an overseas foundation shall be disclosed to the general public by the registration authority.
Chapter Three Organizational Structure
Article 20 Any foundation shall establish a Board consisting of 5-25 members whose term of office shall be provided for by the Articles of Association of the foundation, provided that each term of office does not exceed a maximum of five years. At the expiry of his/her term of office, a Board member may be re-elected for another term.
For non-public foundations established with private properties, the total number of foundation Board members that have close relatives with each other may not exceed 1/3 of the full Board. For other foundations, those who are close relatives with each other may not serve the Board concurrently.
The number of Board members receiving remunerations from the foundation may not exceed 1/3 of the total number of Board members.
The Board shall set positions for Chairperson, Vice Chairperson(s) and Secretary General, who shall be elected from the Board members, with the Chairperson being legal representative of the foundation.
Article 21 The Board, being the decision-making body of the foundation, shall exercise its duties and power in conformity with the Articles of Association .
Meetings of the Board shall be held at least twice a year; a meeting of the Board shall be convened only if more than 2/3 of Board members are present. Any Board resolution shall be adopted and become effective by the affirmative votes of more than half of the attending Board members.
Resolutions on the following important matters shall be voted for by the attending Board members and shall become effective by affirmative votes of two-thirds of attending Board members.
1. Amendment to the Articles of Association;
2. Election or dismissal of the Chairperson, Vice Chairperson(s) or the Secretary General;
3. Substantial fund-raising or investment activities provided for in the Articles of Association;
4. Split of the foundation or consolidation with other foundation(s).
A Board meeting should produce minutes to be reviewed and signed by the attending Board members.
Article 22 A foundation shall set up the position of Supervisors. Term of office of a Supervisor is the same as that of a Board member. No Board member, or close relative of any Board member or accounting staff member of the foundation may concurrently hold position as Supervisor.
A Supervisor reviews financial and accounting information of the foundation and monitors Board compliance in accordance with the Articles of Association.
A Supervisor shall attend a Board meeting as an observer, shall be entitled to putting forward inquiries and recommendations to the Board and communicating relevant information to the registration authority, the professional supervisory organization, tax authority and accounting authority.
Article 23 Current government officials may not concurrently become Chairperson, Vice Chairperson(s) or the Secretary General of a foundation. Legal representative of the foundation may not concurrently be legal representative of any other organization. The position of legal representative of a public foundation or a non- public foundation whose incorporation capital came from Mainland China shall be made available exclusively to Mainland residents.
Anyone who has been sentenced to surveillance, detention, or imprisonment for criminal offences, where not more than five years has elapsed since the expiration of the period for enforcement of such sentences, or anyone who has been sentenced to the deprivation of his/her political rights, where he/she is serving the sentence or thereafter, or anyone who held the position of Chairperson, Vice Chairperson(s) or the Secretary General of a foundation whose registration was cancelled as a result of irregularities and was held personally responsible for such irregularities where not more than five years has elapsed since such cancellation, may not hold the positions as Chairperson, Vice Chairperson(s) or the Secretary General of another foundation.
Where personal interests of any Board member of a foundation are related to interests of the foundation, such Board member may not participate in decision-making of related issues. None of the Board members or Supervisors or their close relatives may be engaged in any transactions with the foundation they are serving.
Neither Supervisors nor Board members that do not work in the foundation on full-time basis may be remunerated by the foundation.
Article 24 Residents of Hong Kong, Macao and Taiwan, foreigners and heads of representative offices of overseas foundations who hold positions of Chairperson, Vice Chairperson(s) or Secretary General must reside in Mainland China for no less than three months per annum.
Chapter Four Management and Utilization of Properties
Article 25 A foundation shall comply with purposes and scope of activities for the public good that are laid down in its Articles of Association when it organizes fund-raising activities and accepts donations. Representative offices of overseas foundations may not organize fund-raising activities or accept donations within the territory of P. R. China. While organizing fund-raising activities, public foundations shall publish its proposed activities for the public good and detailed fund utilization plan after completion of such activities.
Article 26 Foundations and their donors and beneficiaries shall enjoy tax credits in accordance with relevant laws and administrative regulations.
Article 27 Properties and other revenues of a foundation shall be protected by law and may not be distributed, seized, or misappropriated by any unit or individual without due authorization.
A foundation shall utilize its properties in accordance with purposes and scope of activities for the public good that are laid down in its Articles of Association. Where the donation agreement specifies the ways of fund utilization, donated funds shall be used in conformity with such agreement.
Where the accepted donations of physical articles are incapable of being used in compliance with purposes that are laid down in the foundation Articles of Association, the foundation may auction or dispose such articles according to the law and donate any proceeds arising thereof.
Article 28 A foundation shall realize value preservation and appreciation of its funds on the principles of legitimacy, safety and effectiveness.
Article 29 A public foundation shall spend on activities for the public good provided for in the Articles of Association by an annual amount equivalent to at least 70% of the previous year's overall income. A non-public foundation shall spend on activities for the public good provided for in the Articles of Association by an annual amount equivalent to at least 8% of the previous year's fund balance.
Salaries and benefits of foundation staff and administrative and office expenses of the foundation may not exceed 10% of the foundation's total expenditure for the concerned financial year.
Article 30 To carry out assistance projects for the public good, a foundation shall publish to the general public the category as well as application and review/assessment procedures of such projects.
Article 31 A foundation may conclude an agreement with the assisted party(ies), providing for the approach and amount of assistance and the purposes and ways of fund use.
A foundation shall be entitled to supervision over utilization of the funds it has assisted. Where the assisted fails to utilize assistance in accordance with agreed provisions or has breached the assistance agreement in other ways, the foundation shall have the right to terminate the assistance agreement.
Article 32 The foundation shall implement the uniform national accounting system, carry out accounting treatment and establish an internal control system.
Article 33 Residual properties after termination of the foundation shall be used for the public good according to the Articles of Association. Where it is impossible to dispose the properties in accordance with the Articles of Association, the registration authority shall organize the donation of such properties to welfare organizations that share the same nature and purpose with the foundation.
Chapter Five Supervision and Administration
Article 34 The registration authority of the foundation shall perform the following regulatory duties and responsibilities:
1. Carry out annual inspection of foundations and representative offices of overseas foundations;
2. Regulate on a routine basis foundations and representative offices of overseas foundations as to whether they carry out activities in accordance with these regulations and their Articles of Associations;
3. Meter out penalties against acts of foundations and/or representative offices of overseas foundations that are in violation of these regulations.
Article 35 The professional supervisory organizations of foundations shall perform the following regulatory duties and responsibilities:
1. Instruct and supervise foundations and representative offices of overseas foundations to conduct activities for the public good in conformity with relevant laws and Articles of Association s;
2. Perform preliminary review for annual inspection of foundations and representative offices of overseas foundations;
3. Cooperate with the registration authority and other law enforcement agencies to investigate into and sanction irregularities of foundations and representative offices of overseas foundations.
Article 36 Foundations and representative offices of overseas foundations shall submit their annual work reports to the registration authorities no later than March 31st each year for annual inspection purpose, prior to which submission such reports shall be reviewed and approved by the professional supervisory organization.
An annual work report shall include a financial/accounting report, an audited report by a CPA, conduct of fund-raising activities, acceptance of donations and provision of assistance, movement of human resources and organizational changes.
Article 37 A foundation shall subject itself to regulation by tax authorities and accounting authorities.
A foundation shall undergo financial audit prior to its re-election and change of its legal representative.
Article 38 After passing annual inspection carried out by the registration authority, foundations and representative offices of overseas foundations shall publish their annual work reports on the media designated by the registration authority for public enquiry and supervision purposes.
Article 39 A donor shall be entitled to inquiring a foundation concerning the use and management of his/her/its donations and produce comments and recommendations thereof.
Where a foundation violates the donation agreement in its use of the donations, the donor shall be entitled to require that the foundation observe the donation agreement or apply to a people's court for revocation of the concerned donation act and termination of the donation agreement.
Chapter Six Legal Liabilities
Article 40 Where any organization carries out activities in the name of a foundation, a branch office of a foundation, a representative office of a foundation or a representative office of an overseas foundation, without registering itself as such foundation or office or after revocation of its foundation or office registration, the registration office shall ban such organization, confiscate its illegal properties and disclose the information thereof to the general public.
Article 41 Where a foundation, a branch office of a foundation, a representative office of a foundation or a representative office of an overseas foundation commits any of the following irregularities, the registration office shall revoke its registration.
1. The foundation or office has cheated in the process of registration by submitting fraudulent application, or has failed to carry out activities within 12 months as of its obtaining the Registration Certification;
2. Despite its satisfaction with terms and conditions for cancellation, the foundation or office has failed to complete such cancellation formalities and continued its activities, which constitutes violation of these regulations.
Article 42 Where a foundation, a branch office of a foundation, a representative office of a foundation or a representative office of an overseas foundation commits any of the following irregularities, the registration office shall mete out warnings, or order the foundation or office to discontinue its activities. Where such irregularity(ies) are of a serious nature, the registration office shall cancel registration of the foundation or office.
1. The foundation or office has failed to carry out activities in conformity with the purposes and scope of activities for the public good that are laid down in these regulations;
2. The foundation or office has included fraudulent information in its accounting vouchers, books and financial reports;
3. The foundation or office has failed to register its alterations in conformity with relevant provisions;
4. The foundation or office has failed to complete its quota of expenditures for the public good in conformity with these regulations;
5. The foundation or office has not gone through annual inspection in conformity with these regulations or has failed such annual inspection;
6. The foundation or office has failed to perform its obligation to disclose information or has disclosed fraudulent information.
Where a foundation or a representative office of an overseas foundation commits any of the acts mentioned in the previous paragraph, the registration authority shall request that the relevant tax authorities order the foundation or office to make up the payment of taxes which shall be payable otherwise but was exempted or reduced due to the tax credits or exemptions enjoyed by such foundations or offices during the period of existence of above irregularities.
Article 43 Where the Board of a foundation makes improper decisions in violation of these regulations and the foundation Articles of Association resulting in financial losses to the foundation, the Board member(s) participating in such decision-making shall be held liable for corresponding damages.
Where Board member(s), Supervisors(s) and full-time staff member(s) commit any unauthorized distribution, seizure or misappropriation of foundation properties, they shall return any properties illegally occupied thereby. Where such acts constitute crime(s), they shall be pursued for fix of criminal liabilities.
Article 44 Where a foundation or a representative office of an overseas foundation is ordered to discontinue its activities, the registration authority shall seal up its Registration Certification, official seals and financial vouchers.
Article 45 Where staff member(s) of the registration authority or the professional supervisory organization abuse their power, are negligent in performing their duties, or commit frauds for personal gains, such persons shall be pursued for fix of criminal liabilities when such acts constitute crime(s) or such persons shall be subject to administrative or disciplinary sanctions when such acts do not constitute crime(s).
Chapter Seven Supplementary Provisions
Article 46 The term "overseas foundation" mentioned herein refers to foundations that are legitimately established in foreign countries and Hong Kong Administrative Region, Macao Administrative Region and Taiwan Region of the People's Republic of China.
Article 47 The formats of foundation registration application and foundation annual work report and sample of foundation Chart shall be produced by the Ministry of Civil Affairs of the State Council.
Article 48 These regulations shall be implemented as of June 1st 2004 on which date the Practice Directions for Regulating Foundations promulgated by the State Council on September 27th 1988 shall become nullified simultaneously.
Foundations or representative offices of overseas foundations that have been established prior to implementation of these regulations shall apply for replacement of their existing Registration Certifications with new ones in conformity with these regulations within 6 months as of the date of implementation of these regulations.
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