Laws of the People's Republic of China

REGULATIONS FOR THE MANAGEMENT OF FOUNDATIONS

(Issued by the State Council on September 27, 1988)

SUBJECT: EQUITY JOINT VENTURES

ISSUING-DEPT: MINISTRY OF FOREIGN ECONOMIC RELATIONS & TRADE

ISSUE-DATE: 01/01/1988

IMPLEMENT-DATE: 03/01/1988

LENGTH: 894 words

TEXT:

[Article 1] The following Regulations are formulated with the view to exercising more effective control over foundations and promote the healthy development of foundations.

[Article 2]

The foundations referred to in these Regulations are corporate bodies limited to domestic and foreign associations, other organizations, and non-governmental non-profit institutions which are operated through willing donations by individuals.

The operational purpose of the foundation is to advance the development of scientific research, culture, education, social welfare and other public purposes through financial assistance.

These Regulations are not applicable to foundations established under state allocation plans to subsidize scientific research and various other organizations for the management of special funds.

[Article 3] The following requirements must be satisfied for the establishment of a foundation:

(1) The nature, purpose and source of funds are in conformity with Article 2 of these Regulations;

(2) An amount of registered funds over 100,000 RMB Yuan (or an equivalent amount of foreign exchange) is available;

(3) Articles of association of the foundation, a management group and the required accounting personnel;

(4) A fixed place of business must be provided.

[Article 4] The foundation may appeal for donations to enterprises, institutions, societies and other entities which voluntarily support its operational purpose on condition that such donations are made willingly by the benefitors themselves.0 Any kind of complusion is prohibited.

[Article 5] Leading posts of the foundation shall not be held by current government staffs.

A foundation shall carry out democratic management system, establish strict rules for the pool of resources and management and use of funds and make regular publication of accounts for income and expenditure.

[Article 6] The funds of the foundation shall be used to assist such operations or activities as conform to the purpose of the foundation. Misappropriation of funds shall be prohibited. The foundation has no power to manage businesses.

[Article 7] The foundation may deposit its funds with financial institutions, benefit from the interests therefrom, and purchase bonds, stocks and other negotiable instruments provided that purchase of stocks from an enterprise shall not be more than twenty percent of the total amount of stocks of the said enterprise.

[Article 8] The foundation shall have the power to supervise the subsidized parties as to how the funds are being utilized. In case of violation of the financial assistance agreement in the utilization of funds, the foundation may decrease, suspend or recall the assisting funds.

[Article 9] The wages and office expenditures of the foundation's staff members shall be paid from the interest revenue of the foundation.

[Article 10] Foreign exchange donated from outside China belong to the foundation.0 The foundation may open a foreign exchange deposit account.

Materials contributed to the foundation from outside China shall be free from the customs duties and belong to the foundation. The foundation shall have the right to transfer such materials without compensation to the units or individuals connected with its operational purpose. But selling of such materials is prohibited.

[Article 11] To establish a foundation, the relevant upper-level authorities shall submit the application to the People's Bank for examination and approval. The foundation shall not start its operations as a corporate body before it is approved by the People's Bank and registered with and granted a licence by the civil affairs departments.

National foundation shall apply to the People's Bank of China for examination and approval, register with the Ministry of Civil Affairs and report to the State Council for record. Local foundations shall submit their application to the branches of the Peple's Bank of China in provinces, autonomous regions and municipalities directly under the central government, and keep the file with the local People's Government of provinces, autonomos regions and municipalities directly under the central government.

The foundation, when changing its name, merging or being cancelled, shall go through the procedures as provided for its establishment.

[Article 12] Foundations should submit annual reports to the People's Bank and civil affairs departments in respect of their financial standing and on how their operations are being carried out. They should accept the supervision by the People's Bank and civil affairs departments.

In case of violation of the present regulations by any foundations, the People's Bank may take such disciplinary action as suspending payment of bills, blocking funds or ordering reorganization of the foundation, and the civil affairs departments may give disciplinary warnings or cancel the licence issued to the foundation.

[Article 13] The People's Bank of China and the Ministry of Civil Affairs shall be responsible for the implementation of these Regulations and may formulate relevant detailed rules for implementation.

[Article 14] These Regulations shall come into force from the date of their promulgation.