Laws of the People's Republic of China

    Article 1  These Measures are formulated in order to
strengthen the management of foundations so as to ensure their
healthy development.

    Article 2  ``Foundations'', as referred to in these Measures,
means non-governmental and non-profit organizations which
conduct management of funds donated voluntarily by social
organizations or other organizations or individuals either
at home or abroad and which are legal person social
organizations.

    The purpose of foundations is to promote the development of
scientific research, cultural education, social welfare and
other public welfare undertakings through financial assistance.

    These Measures shall not apply to foundations established
with government appropriations for scientific research, nor to
organizations managing other types of special funds.

    Article 3  Foundations to be established must satisfy the
following requirements:

    (1) The nature and aim of the foundation and the source of
funds accord with the provisions of Article 2 of these Measures;

    (2) Have a registered capital of at least 100,000 RMB yuan
(or at least the equivalent of 200,000 RMB yuan in foreign
exchange);

    (3) Have a foundation constitution, management organization
and necessary financial personnel; and

    (4) Have a fixed working place.

    Article 4  Foundations may raise funds by soliciting
contributions from enterprises, institutions, social
organizations or other organizations or individuals either at
home or abroad who support the aims of the foundation, provided
that the contributions are made on a voluntary basis.
Apportionment is strictly prohibited.

    Article 5  The leading position of a foundation may not be
concurrently held by any active government personnel.

    Foundations shall carry out democratic management, institute
a strict system for the raising, use and management of funds and
publish a balance sheet regularly.

    Article 6  Foundation funds shall be used for those
activities and undertakings which accord with the aim of the
foundation and may not be appropriated for other purposes.
Foundations may not operate or manage enterprises.

    Article 7  Foundations may place their funds in interest-
bearing financial institutions, or may purchase bonds, stocks or
other securities provided that the amount of stocks purchased
from an enterprise shall not exceed 20 percent of the total stock
of the enterprise.

    Article 8  Foundations are entitled to supervise those
accepting an offering of funds with regards to the use of the
funds. In the event that the foundation discovers that the use of
donated funds violates the agreement reached, the foundation is
entitled to reduce or stop the offering of such funds, or to
recall funds already offered.

    Article 9  The salaries of personnel and the administrative
expenses of a foundation shall come from the interest income of
the foundations assets or the like.

    Article 10  Foreign exchange donated to a foundation from
abroad shall be owned by the foundation. Foundations are allowed
to open foreign exchange deposit accounts.

    Goods and materials donated to a foundation from abroad are
exempted from customs duty and shall be owned by the foundation;
foundations are entitled to transfer those goods and materials
free of charge to assist organizations or individuals who are
associated with the aim of the foundation. Such goods and
materials may not be sold.

    Article 11  Application for the establishment of a foundation
shall be submitted to the People's Bank of China for examination
and approval by the authoritative administrative department.
After examination and approval by the People's Bank, the
foundation shall register with and obtain a license from the
civil administration department. Only after obtaining qualification
as a body corporate by going through the above procedures may a
foundation begin its activities.

    Application for the establishment of national foundations
shall be submitted to the People's Bank of China for examination
and approval and shall apply to the Ministry of Civil Affairs for
registration, and then be submitted to the State Council for
filing. Application for the establishment of local foundations
shall be submitted to the local provincial, regional or municipal
branch of the People's Bank of China for examination and approval
and shall apply for registration to the civil administration
department of the people's government of that province,
autonomous region or municipality directly under the central
government, and then be submitted for filing to the people's
government of that province, autonomous region or municipality
directly under the central government.

    Changes in name, merging or rescission of foundations shall
be handled in accordance with the procedures prescribed for their
establishment.

    Article 12  Foundations shall submit annual reports to the
People's Bank of China and civil administration departments
concerning their revenues, expenditures and activities.
Foundations are subject to the supervision of the People's Bank
and civil administration departments.

    If any foundation's activities violate these Measures, the
People's Bank is entitled to stop payment, freeze foundation
funds and order a rectification; the civil administration
departments are authorized to issue penalties such as warnings
or revocation of the operational license.

    Article 13  The People's Bank of China and the Ministry of
Civil Affairs shall implement these Measures. They may draw up
the necessary rules for implementation.

    Article 14  These Measures shall go into effect as of the
date of promulgation.