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TABLE OF CONTENTS CHAPTER I GENERAL PROVISIONS CHAPTER II ESTABLISHMENT, ALTERATION AND WRITE-OFF CHAPTER III ORGANIZATIONS CHAPTER IV MANAGEMENT AND USE OF THE PROPERTY CHAPTER V SUPERVISION AND ADMINISTRATION CHAPTER VI LEGAL LIABILITIES CHAPTER VII SUPPLEMENTARY PROVISIONS CHAPTER I GENERAL PROVISIONS Article 1. This Regulation is hereby formulated for the purpose of regulating the organizations and activities of foundations, maintaining the legal rights and interests of the foundations, donors, and beneficiaries, and promoting the public organizations to participate in the welfare undertaking. Article 2. The "foundation" mentioned in this Regulation, refers to the non-profit legal person established in accordance with this Regulation by making use of the property donated by natural persons, legal persons, or other organizations with the purpose of pursuing welfare undertakings. Article 3. Foundations shall be divided into the foundation that solicits contributions from the general public (hereinafter referred to the public offering foundation) and the foundation that is prohibited from soliciting contributions from the general public (hereinafter referred to the non-public offering foundation). And the public offering foundation shall be divided into national public offering foundation and regional public offering foundation according to the scope of areas of the whip-round. Article 4. Foundations must abide by the Constitution, laws, statutes, regulations, and the state policy, and shall not endanger the national security, unity, and national solidarity, and shall not breach social morality. Article 5. Foundations shall engage in the welfare activities according to their charters, and follow the principle of openness and transparency. Article 6. The department of civil affairs of the State Council and the departments of civil affairs of the people's governments of the provinces, autonomous regions, and municipalities directly under the Central Government are the administrative department of registration for the foundations. The department of civil affairs of the State Council shall be responsible for the administration work for the registration of the following foundations and representative offices of the foundations: (1) The national public offering foundations; (2) Foundations whose legal representative is to be the non-mainland resident; (3) The non-public offering foundation whose original fund is over RMB 20 million Yuan, and the initiators have filed application for establishment to the department of civil affairs of the State Council; and (4) The representative offices established by overseas foundations within the Mainland of China. The departments of civil affairs of the people's governments of the provinces, autonomous regions, and municipalities directly under the Central Government shall be responsible for the administration work for the registration of the regional public offering foundations and the non-public offering foundations not falling within the scope of conditions of the preceding paragraph within their own administrative regions. Article 7. The relevant departments of the State Council or the organizations authorized by the State Council are the business supervisory authorities of the foundations that are registered at the department of civil affairs of the State Council, and of the representative offices of overseas foundations. The relevant department of the people's governments of provinces, autonomous regions, and municipalities directly under the Central Government or the organizations authorized by the people's governments of provinces, autonomous regions, and municipalities directly under the Central Government are the business supervisory authorities of the foundations that are registered at the departments of civil affairs of the people's governments of provinces, autonomous regions, and municipalities directly under the Central Government. CHAPTER II ESTABLISHMENT, ALTERATION AND WRITE-OFF Article 8 The following conditions shall be met for establishing a foundation: (1) Establishing for special welfare purpose; (2) The original fund of a national public offering foundation shall be no less than RMB 8 million Yuan. The original fund of a regional public offering foundation shall be no less than RMB 4 million Yuan. And the original fund of the non-public offering foundation shall be no less than RMB 2 million Yuan. The original fund shall be the currency capital having reached accounts; (3) Having normative name, charter, organizations and full-time staff matching with their carrying out of activities; (4) Having fixed residence; and (5) Being capable of bearing civil liabilities independently. Article 9. An applicant shall submit the following documents to the administrative department of registration when applying for establishing a foundation: (1) Application form; (2) Draft of charter; (3) Certificate of capital verification and certificate of residence; (4) Name list of directors, the identity certificate and resume of the planned director, vice-director, or secretary; and (5) Documents of approval of the business supervisory authority for the establishment. Article 10. The charter of a foundation shall clarify the welfare character of the foundation, and shall not specify contents that are beneficial to a special natural person, legal person, or other organization. The following matters concerned shall be specified in the charter of a foundation: (1) Name and residence; (2) Objectives for its establishment and the business scope for welfare activities; (3) Amount of original fund; (4) Composition, function and rules of procedure of the council, and the qualifications, procedures for the election and tenure of the directors; (5) Responsibility of the legal representative; (6) Responsibility, qualifications, election procedure and tenure of the supervisors; (7) The system of compilation of, and examination and approval for the financial statement; (8) System for the management and use of the property; and (9) The conditions and procedures for the termination of the foundation and the handling of the property after termination. Article 11. The administration departments of registration shall, within 60 days after receiving all the effective documents listed in Article 9 of this Regulation, make decision on whether to approve the registration or not. If the registration is approved, the Certificate of Registration on Foundation Legal Person shall be issued. If the registration is not approved, the reason shall be explained in writing. The registration matters relating to the establishment of a foundation shall include: name, residence, type, objective, business scope of welfare activities, amount of original fund, and legal representative. Article 12. Where a foundation is to establish branches or representative offices, it shall file an application for registration to the original administration department of registration, and submit the documents concerning the name, residence, and the responsible person of the planned institutions. The administration departments of registration shall, within 60 days from the date of receiving all the effective documents listed in the preceding paragraph, make decisions on whether to approve the registration or not. If the registration is approved, the Certificate of Registration on the Branches or Representative Offices of Foundations shall be issued. If the registration is not approved, the reasons thereof shall be explained in writing. The registration matters relating to the establishment of the branches or representative offices of a foundation shall include: name, residence, business scope of welfare activities and the responsible person. The branches or representative offices of a foundation have no qualification of a legal person, and shall carry out activities upon the authorization of the foundation. Article 13. Where an overseas foundation establishes representative offices in the Mainland of China, it shall submit the following documents to the administrative department of registration upon the approval of the relevant business supervisory authority: (1) Application form; (2) Certificate proving the establishment of the foundation overseas according to law and the charter of the foundation; (3) The identity certificate and resume of the responsible person of the planned representative office; (4) Certificate of residence; and (5) Documents of the business supervisory authority approving the establishment of the representative offices within the Mainland of China. The administrative department of registration shall, within 60 days from the date of receiving all the effective documents listed in the preceding paragraph, make decision on whether to approve the registration or not. If the registration is approved, the Certificate of Registration for the Representative Office of Overseas Foundation shall be issued. If the registration is not approved, the reasons thereof shall be explained in writing. The registration matters concerning the establishment of the representative offices of an overseas foundation shall include: name, residence, business scope of welfare activities, and the responsible person. The representative offices of an overseas foundation shall undertake the welfare activities conforming to the character of Chinese welfare undertaking. The overseas foundation shall bear civil liabilities according to the Chinese law for the civil acts of its representative offices in the Mainland of China. Article 14. The foundations and the representative offices of an overseas foundation shall handle tax registration according to law after having registered in accordance with this Regulation. The foundations and the representative offices of an overseas foundation shall apply for organization code, engrave a seal, and open bank accounts according to law upon strength of the registration certificate. The foundations and the representative offices of an overseas foundation shall have the organization code, pattern of seal, bank account number and the photocopy of the certificate of tax registration reported to and put on record at the administration departments of registration. Article 15. Where a foundation, branch of a foundation, representative office of a foundation and representative office of an overseas foundation needs to alter its registration items, it shall apply for alteration registration to the administrative department of registration. Where a foundation amends its charter, it shall ask its business supervisory authority for approval and report to the administrative department of registration for ratification. Article 16. Where a foundation or representative office of an overseas foundation is under any of the following circumstances, it shall apply for writing off the registration to the administrative department of registration: (1) Terminating according to the provisions of the charter; (2) Being unable to continue pursuing the welfare activities according to the objectives prescribed in the charter; or (3) Terminating due to other reasons. Article 17. Where a foundation revokes its branches or representative offices, it shall handle write-off registration for them at the administrative department of registration. Where a foundation is written off, its branches or representative offices shall be written off at the same time. Article 18. Before handling the write-off registration, a foundation shall set up a liquidation organ under the leadership of the administrative department of registration and the business supervisory authority to complete the liquidation work. A foundation shall handle write-off registration at the administrative department of registration within 15 days from the date of completing the liquidation, and shall not carry out activities other than the liquidation during the period of liquidation. Article 19. The administrative departments of registration shall make announcement to the general public on the registration of the establishment, alteration and write-off of a foundation, branch of a foundation, representative office of a foundation and representative office of an overseas foundation. CHAPTER III ORGANIZATIONS Article 20. A foundation shall establish a council, with 5 to 25 directors, the term of a director shall be prescribed by the charter, but the tenure for each term shall not exceed 5 years. At the expiration of the term of a director, he may be reelected and reappointed. As to a non-public offering foundation, which is established with the private property, if the some of the directors thereof are close relatives, the total number thereof shall not exceed one third of the total number of the directors. The directors of other foundations who are close relatives shall not hold a post concurrently at the council. The number of directors who receive remunerations in a foundation shall not exceed one third of the total number of the directors. The council shall have general directors, vice-general-directors, and secretaries, who shall be elected from directors, and the general director shall be the legal representative of the foundation. Article 21. The council is the decision-making body of a foundation, and shall exercise functions prescribed in the charter according to law. The council shall convene at least two meetings each year. No meeting of the council may be convened until there are over two thirds of the directors in attendance; the decision of the council shall be deemed as valid only when it has been passed by half of the directors in attendance. The decisions on the following major matters concerned shall be voted by the directors in attendance, and shall be deemed as valid when they are passed by two thirds of the directors: (1) Amendment to the charter; (2) Electing or dismissing the director-general, vice-director general, or secretary; (3) Major solicitation of contributions or investment activities prescribed by the charter; (4) The division or merger of the foundation. Minutes of meeting shall be made for the council meeting, and shall be checked and approved or signed by the directors in attendance. Article 22. A foundation shall establish supervisors. The term of a supervisor shall be the same as that of a director. The director, his relatives and the financial staff of a foundation shall not concurrently assume the post of a supervisor. The supervisors shall examine the financial and accounting data of the foundation in accordance with the procedures prescribed in the charter, and supervise over the council for their observance of laws and the charter. The supervisors shall attend the meeting of the council without voting rights, and have the right to bring forward inquiry and suggestion to the council, and shall reflect information to the administrative departments of registration, business supervisory authority, and tax authorities or the accounting department in charge. Article 23. The existing state functionary in post shall not concurrently assume the post of a general director, vice-general-director and secretary of a foundation. The legal representative of a foundation shall not assume the post of a legal representative of other organizations concurrently. Where a public offering foundation and the non-public offering foundation whose fund is originated from the Mainland of China, their legal representatives shall be the residents of the Mainland. Where a person had been sentenced to a punishment of putting under surveillance, taking into custody or set term of imprisonment, and it has not exceeded five years from the date of completing the implementation of his term of imprisonment, or a person is sentenced to a punishment of depriving of political rights due to commitment of a crime and is in the execution period, or has ever been sentenced to a punishment of depriving of political rights, or has assumed the post of a general director, vice-general-director or secretary of the foundation whose registration was revoked due to violation of laws, and has personal liability for the illegal acts of the foundation, and the time from the date of revocation of the foundation does not exceed five years, he shall not assume the post of a general director, vice-general director, or secretary. Where a director of a foundation encounters the circumstances of relevancy of personal interests with the interests of the foundation, he or she shall not take part in the decision-making on the relevant matters concerned. And the directors, supervisors of the foundation and their close relatives shall not have any transaction act with the foundation they work in. The supervisors and the directors who don't have full-time job in a foundation shall not receive remunerations from the foundation. Article 24. Where a Hong Kong resident, Macao resident, Taiwan resident, a foreigner, and the responsible person of the representative office of an overseas foundation assumes the post of the general director, vice-general-director or secretary of a foundation, the time for their residence in the Mainland of China each year shall be no less than 3 months. CHAPTER IV MANAGEMENT AND USE OF THE PROPERTY Article 25. Where a foundation organizes solicitation of contributions or accepts donations, it shall conform to the objectives prescribed in the charter and the business scope for welfare activities. No representative office of an overseas foundation may organize solicitation of contributions or accept donations within the territory of China. Where a public offering foundation organizes solicitation of contributions, it shall publicize to the general public the welfare activities they plan to carry out after raising the fund and the detailed plan for the use of such funds. Article 26. A foundation and its donators or beneficiaries shall enjoy tax preference according to the prescription of laws and administrative regulations. Article 27. The property of a foundation and its other income shall be subject to the protection of laws, no entity or individual may privately divide, seize or impropriate it. A foundation shall use its property in accordance with the objectives prescribed in its charter and within the business scope of welfare activities. If the donation agreement clarifies the concrete way for using the donations, then they shall be used according to the stipulations of the donation agreement. In case the materials donated are unable to be used in conformity with its purpose, the foundation may auction or sell off them according to law, the income from which shall be used for donation purpose. Article 28. A foundation shall realize the inflation proof and value increment of the fund in light of the principle of legality, safety and effectiveness. Article 29. The expenditure of a public offering foundation that is used for pursuing the welfare undertaking each year prescribed in the charter shall be no less than 70% of the total income of the previous year. And such expenditure of a non-public offering foundation each year shall be no less than 8% of the balance of the fund of the previous year. The wages and welfare of the staff of a foundation and the expenses of administration shall not exceed 10% of the total expenditure of the current year. Article 30. Where a foundation carries out welfare funding items, it shall publicize the kind of items of welfare funding it carries out and the procedures for application and appraisal. Article 31. A foundation may sign an agreement with the assisted person, stipulating the way and amount of funding, and the usage of the fund and way for its use. The foundation shall have the right to make supervision over the use of the fund. In case the assisted person fails to use the fund as the agreement stipulates, or has any other circumstance in breach of the agreement, the foundation shall have the right to cancel the funding agreement. Article 32. The foundations shall implement the uniform accounting system of the state, make business accounting according to law, and establish and improve internal accounting supervision system. Article 33. The remained property of a foundation after its write-off shall be used for welfare purpose in accordance with the provisions of the charter. If it cannot be handled according to the provisions of the charter, the administrative departments of registration shall organize to donate it to the public welfare organizations which have the same character and objectives with the foundation, and make announcement to the general public. CHAPTER V SUPERVISION AND ADMINISTRATION Article 34. The administrative departments of registration for foundations shall perform the following functions of supervision and administration: (1) Making inspection on foundations or the representative offices of an overseas foundation annually; (2) Making routine supervision and administration on the carrying out of activities by the foundations or the representative offices of an overseas foundation in pursuance of the present Regulation and the charter; and (3) Imposing punishment according to law on acts of a foundation or the representative office of an overseas foundation in violation of this Regulation. Article 35. The business supervisory authority of a foundation shall perform the following functions of supervision and administration: (1) Directing or supervising the carrying out of welfare activities of the foundations or representative offices of an overseas foundation according to law and the charter; (2) Being responsible for the preliminary examination of the annual inspection on foundations and representative offices of an overseas foundation; and (3) Cooperating with the administrative departments of registration, other law enforcement departments to investigate into and impose punishment on the illegal acts of foundations or representative offices of an overseas foundation. Article 36. The foundations and the representative offices of an overseas foundation shall submit the work report of the previous year before March 31 every year, and accept annual inspection. The annual work report shall be examined and approved by the business supervisory authority before being submitted to the administrative departments of registration. The annual work report shall cover: financial statement, auditing report of a certified public accountant, and conditions of carrying out solicitation of contributions, accepting donations, and providing fund, and other activities, as well as the alteration of the personnel and institutions, etc.. Article 37. The foundations shall accept the tax supervision and the accounting supervision by the competent departments of taxation and the competent accounting departments. A foundation shall make audit on financial affairs before changing and altering legal representative. Article 38. The foundations and the representative offices of an overseas foundation shall, after passing the annual inspection made by the administrative departments of registration, publicize the annual work report at the media designated by the administrative departments of registration, and accept the inquiry and supervision of the general public. Article 39. A donor shall have the right to consult the use and management of the property donated, and put forward opinions and suggestions. The foundation shall reply according to facts in time the inquiry of a donor. Where a foundation uses the donated property in violation of the donation agreement, the donors shall have the right to ask the foundation to observe the donation agreement or shall have the right to apply for revoking the act of donation or canceling donation agreement to the people's court. CHAPTER VI LEGAL LIABILITIES Article 40. Where a foundation carries out activities in the name of a foundation, the branches of a foundation, representative office of a foundation or that of an overseas foundation without registration or after being revoked of registration, the administrative departments of registration shall ban it, confiscate illegal property and publicize that to the general public. Article 41. Where a foundation, branch of a foundation, representative office of a foundation or that of an overseas foundation is under any of the following circumstances, the administrative departments of registration shall revoke the registration: (1) Falsifying and cheating in registration when applying for registration, or failing to carry out activities in accordance with the provisions of the charter within 12 months from the date of obtaining the registration certificate; or (2) It meets the conditions for write-off, but fails to handle write-off registration in accordance with the provisions of this Regulation and continues to carry out activities. Article 42. Where a foundation, the branch of a foundation, representative office of a foundation or that of an overseas foundation is under any of the following circumstances, the administrative departments of registration shall give it warnings or order it to stop such activities. If the circumstances are serious, its registration may be revoked: (1) Failing to carry out activities in accordance with the objectives prescribed in the charter and the business scope of welfare activities; (2) Making falsification in filling out accounting vouchers, registering accounting book or compiling financial statements; (3) Failing to handle alteration registration required; (4) Failing to complete the disbursement for welfare undertaking in accordance with the provisions of this Regulation; (5) Failing to accept annual inspection prescribed in this Regulation, or being inspected in the annual inspection as unqualified; or (6) Failing to perform the duty of information publicity or publicizing false information. Where a foundation or the representative office of an overseas foundation has any act listed in the preceding paragraph, the administrative department of registration shall ask the tax authorities to order it to make up for the tax deduction or exemption it has enjoyed during the continuance of its illegal acts. Article 43. Where the council of a foundation violates this Regulation and the provisions of its charter and makes impropriate decision, which leads to property losses to the foundation, the directors taking part in the decision-making shall undertake corresponding compensation liabilities. Where a director, supervisor or full-time personnel of a foundation privately divides, seizes or embezzles the property of a foundation, he shall send back the property he has engrossed illegally. If a crime is constituted, he shall be prosecuted for criminal liabilities according to law. Article 44. Where a foundation or representative office of an overseas foundation is ordered to stop activities, the administrative departments of registration shall seal up and keep its registration certificate, seal and financial voucher. Article 45. Where the staff members of the administrative departments of registration or the business supervisory authority misuse their authority, are derelict of duty, practice favoritism, which constitute crimes, they shall be prosecuted for criminal liabilities according to law. If the circumstances are not serious enough to constitute a crime, they shall be imposed upon administrative punishments or disciplinary punishments according to law. CHAPTER VII SUPPLEMENTARY PROVISIONS Article 46. The "overseas foundation" mentioned in this Regulation, refers to the foundation legally established in foreign countries, and in the Hong Kong Special Administrative Region, Macao Special Administrative Region, or Taiwan region of the People's Republic of China. Article 47. The departments of civil affairs of the State Council shall be responsible for formulating the application form for establishment of a foundation, the format of the annual work report of a foundation, and the model text of the charter of the foundation. Article 48. This Regulation shall be implemented as of June 1, 2004. The Measures for the Administration on Foundations promulgated by the State Council on September 27, 1988 shall be repealed simultaneously. The foundations or representative offices of an overseas foundation established before the implementation of this Regulation shall, within 6 months from the date of promulgation of this Regulation, apply for change of registration certificate according to the provisions of this Regulation. |
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