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REGULATIONS FOR THE MANAGEMENT OF FOUNDATIONS

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

 

 

 

 

SUBJECT: FINANCE & BANKING

ISSUING-DEPT: STATE COUNCIL OF CHINA

ISSUE-DATE: 09/27/1988

IMPLEMENT-DATE: 09/27/1988

LENGTH: 897 words

TEXT:

[Article 1] These Regulations are hereby formulated with the view to exercising more effictive control over foundations and promote the healthy development of foundations.

[Article 2] The foundations referred to in these Regulations are non-governmental and non-profit institutions which are established and operated through voluntary donations made by domestic and foreign social associations, other organizations and individuals. The foundations are social organizational entities.

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

These Regulations are not applicable to foundations established under the State allocation plans to subsidize scientific research and 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, management group and the required accounting personnel;

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

[Article 4] The foundation may solicit donations from enterprises, institutions, societies, other organizations and individuals which voluntarily support the operational purpose of the foundation on condition that such donations are made willingly by benefitors themselves. 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 method, establish strict system for fund arising, 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 operations and activities in conformity with the purpose of the foundation. Misappropriation of funds shall be prohibited. The foundation are not be entitled to engage in business and manage business enterprises.

[Article 7] The foundation may deposit its funds with financial institutions, benefit from the interest therefrom, and purchase bonds, stocks and other negotiable instruments, provided that purchase of stocks from an enterprise shall not be more than 20% 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 used. In case of violation of the financial support agreement in the utilization of funds, the foundation may decrease, suspend or recall the supporting 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. The foundation may open a foreign exchange deposit account.

Materials contributed to the foundation from outside China shall be free from the custom duties and belong to the foundation. The foundation is entitled 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 legal entity without having approval by the People's Bank and registered with and granted a licence by the departments of civil affairs.

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 the record. Local foundations shall submit their application to the branches of the People's Bank of China located in provinces, autonomous regions and municipalities directly subordinated to the central government, and keep the files with the People's Government of provinces, autonomous regions and muncipalities directly subordinated to 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 shall submit annual reports of their financial standing and operations to People's Banks and departments of civil affairs. They shall accept the supervision by the People's Banks and departments of civil affairs.

In case of violation of these Regulations by any foundations, People's Banks may take such disciplinary action as suspending payment of bills, barring funds or ordering reorganization of the foundation, and the deprtments of civil affairs may give disciplinary warnings or cancel the licence issued to the foundation.

[Article 13] The People's Bank of China and 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 their date of promulgation.