State Council Order of the State Council of the People’s Republic of China No. 400 Regulations on Funds, adopted at the 38th executive meeting of the State Council on February 4th, 2004, are hereby promulgated. It Wen Jiabao,Premierr of the State Council March 8th, 2004 Regulations on Funds Chapter 1 General Provisions Article 1 This Regulation is formulated with a view to standardizing the organization and activities of funds, safeguarding the legitimate rights Article 2 “The fund” in this Regulation refers to the non-profit legal person incorporated under this Regulation for the purpose of public benefit Article 3 Funds include those that can solicit donations from the public (hereinafter referred to as public funds) and those that shall not Article 4 funds must abide by the constitution, laws, regulation, rules and national policies, shall not harm security and unification of the Article 5 Funds shall engage in philanthropic activities in accordance with the articles of incorporation thereof in compliance with the principle Article 6 The civil affairs authority of the State Council and such authorities under the people’s governments at the level of a province, an The civil affairs authorities under the State Council are responsible for the registration and administration of the following funds (1) National public funds; (2) Funds whose legal representative is proposed to be assumed by a non-Chinese-mainland resident; (3) Non-public funds whose original fund exceeds 20 million RMB Yuan and the sponsor thereof files the incorporation application to the (4) Representative institutions established on mainland of China by overseas funds. The civil affairs authorities under the people’s governments at the level of a province, an autonomous region and a municipality directly Article 7 Relevant authorities of the State Council or organizations authorized by the State Council are competent agencies for the business Relevant authorities under the people’s governments at the level of a province, an autonomous regions and a municipality directly Chapter 2 Incorporation, Alteration and Cancellation Article 8 A fund shall meet the following conditions to be incorporated: (1) it is incorporated for specific public benefit purposes; (2) the original fund shall be not less than, in the case of a national public fund RMB 8 million Yuan, in the case of a local public (3) it shall has a name, articles of incorporation, an organizational structure as well as full-time working staff in compliance with (4) it has a fixed domicile; (5) it can assume civil liabilities independently. Article 9 The applicant shall submit the following documents to the authorities responsible for registration and administration for the incorporation (1) the application; (2) the draft articles of incorporation; (3) the capital verification certificate and the domicile certificate; (4) the list of the directors, personal identity certificates thereof as well as resumes of the proposed chairman of the board, vice-chairman (5) the documents approving the incorporation issued by the competent authorities for business. Article 10 The articles of incorporation of a fund shall specify its public benefit nature and shall not inure to the benefits of specific natural The articles of incorporation shall set forth: (1) the name and the domicile; (2) the purpose of incorporation and the business scope of public benefit activities; (3) the amount of original fund (4) the composition, authorities and discussion rules of the board of directors, and the qualification, determination and term of office (5) the responsibilities of the legal representative; (6) the responsibilities, qualifications, determination and term of office of the supervisors; (7) the preparation and the examination and approval of financial accounting reports; (8) the system of the management and utilization of properties (9) the conditions and procedures for the termination of the fund and the disposal of properties after termination. Article 11 The registration and administration authorities shall, within 60 days from its receipt of all the valid documents set forth by Article The matters subject to incorporation registration of a fund include: the name, the domicile, the type, the purposes, the business Article 12 To establish branches or representative institutions, a fund shall file the application for registration to the original registration The registration and administration authorities shall, within 60 days from receipt of all the valid documents set forth in the previous The matters subject to incorporation registration of branch or representative institutions of a fund include: the name, the domicile, Branches or the representative institutions of a fund shall conduct activities as authorized by the fund and it does not possess the Article 13 To establish representative institutions in mainland China, an overseas fund shall submit the following documents to the competent (1) the application; (2) the certificate of legal establishment of the fund abroad according to law and the charter of the fund; (3) the identity certificate and resume of the person in charge of the proposed representative institutions; (4) the certificate of domicile; (5) the document issued by the competent authorities for the business approving the establishment of the representative institutions in The registration and administration authorities shall, within 60 days from receipt of all the valid documents set forth in the previous The matters subject to incorporation registration of the representative institution of an overseas fund include: the name, the domicile, Representative institution of an overseas fund shall engage in activities in compliance with the nature of Chinese public benefit Article 14 Funds and representative institutions of overseas funds shall, after registration in accordance with this Regulation, go through tax Funds and representative institutions of overseas funds shall, based on registration certificates, apply for organization code, prepare Funds and representative institutions of overseas funds shall file with the registration and administration authorities the organization Article 15 Funds, branches of funds, representative institutions of funds, and representative institutions of overseas funds shall, in case of Amendments to the articles of incorporation of the fund shall be approved by the competent authorities of business and ratified by Article 16 Funds and representative institutions of overseas funds shall apply for cancellation registration to the registration and administration (1) termination pursuant to articles of incorporation; (2) inability to continue to engage in the public benefit activities pursuant to the purposes provided in the articles of incorporation; (3) termination on account of other reasons. Article 17 A fund shall, in event of cancellation of its branches or its representative institutions, make cancellation registration of its branches Where a fund is canceled, its branches or representative institutions shall be canceled simultaneously. Article 18 A fund shall, before cancellation registration, establish a liquidation group and complete liquidation under the guidance of the registration A fund shall, within 15 days from the date when liquidation terminates, make cancellation registration with the registration and administration Article 19 Registration of incorporation, alteration or cancellation of funds, branches of funds, representative institutions of funds and representative Chapter 3 Organizational Structure Article 20 A fund shall have a board of directors composed of 5 to 25 directors. Each term of office of the directors is provided for in the In the case of a non-public fund incorporated with private properties, the total number of directors as near relatives shall not exceed The number of directors receiving remuneration from the fund shall not exceed one third of the total number of the directors. Chairman of the board, vice-chairman of the board and secretary general of a fund are elected from the directors. The chairman of Article 21 Board of directors, the decision-making organ of a foundation, shall perform its functions provided in the articles of incorporation The board of directors shall convene at least twice a year. The board of directors shall meet only if more than two thirds of the Resolution with respect to the following important matters shall be subject to vote by the directors present and approved by two thirds (1) amendments to the articles of incorporation; (2) election or removal of the Chairman of the Board, vice-chairman of the Board or the secretary general; (3) significant solicitation of donations or investment activities provided for in the articles of incorporation; (4) division or merger of the fund. Meetings of the board shall be minted. Such minutes shall be checked, approved and signed by the directors present. Article 22 A fund shall have a Board of supervisors, whose term of office is the same with that of the directors. Directors, close relatives Supervisors shall examine the financial and accounting materials pursuant to the procedures provided for in the articles of incorporation, Supervisors shall attend meetings of the board of directors as non-voting delegates. They have the right to inquire the board of directors Article 23 The positions of Chairman of the board, Vice-chairman and secretary general of funds shall not be held by current public servants. Anyone who was sentenced to public surveillance, detention or set term of imprisonment for committing a crime and not more than five Directors of a fund shall not engage in the decision-making of relevant matters where their personal interests are related with the Supervisors and part-time directors serving in a fund shall not receive remuneration therefrom. Article 24 Residents from Hong Kong, Macau, Taiwan and foreigners serving as Chairman of the board, Vice-chairman or secretary general of funds Chapter 4 Management and Utilization of Properties Article 25 Funds shall solicit donations and accept donations in accordance with purposes and business scope of public benefit activities provided Public funds shall, in case of donations soliciting, make a public notice of the public benefit activities proposed to be held and Article 26 Funds and donators and beneficiaries enjoy the preferential taxation treatment in accordance with the provisions of laws and administrative Article 27 The properties and other income of funds are protected by law and shall not be illicitly distributed, seized or embezzled among any Funds shall utilize its properties in accordance with purposes and business scope of public benefit activities provided for in the Where donated materials are unable to be utilized in compliance with the purposes, funds may auction or sell it, and the income thereof Article 28 Funds shall realize the preservation and increase of the value of funds on the principle of safety and efficiency according to law. Article 29 Expenditure on the public benefit undertakings stipulated in the articles of incorporation every year shall be not less than, in case Expenditure on staff salary and welfare and administrative outlay of funds shall not exceed 10% of total expenditure in the current Article 30 Funds shall, in implementing public benefit financial support programmes, make a public notice of the types of the public benefit Article 31 Funds may enter into contracts with beneficiaries, and the way of support to provide for the amount of support as well as the purpose Funds have the right to supervise the utilization of the financial support. In case beneficiaries fail to utilize the financial support Article 32 Funds should carry out the national uniform accounting system, conduct accounting check-up according to law and establish and perfect Article 33 Remaining fund properties after cancellation shall be utilized for public benefit purposes as stipulated in the articles of incorporation. Chapter 5 Supervision and Administration Article 34 Fund registration and administration authorities perform the following supervisory and administrative functions: (1) conduct annual inspection on funds and representative institutions of overseas funds, (2) conduct daily supervision and administration over the activities of funds and representative institution of overseas funds in accordance (3) punish the actions of funds and representative institutions of overseas funds in violation of this Regulation. Article 35 Competent authorities for the business of the fund shall perform the following supervisory and administrative functions: (1) guide and supervise public benefit activities of funds and representative institutions of overseas funds in accordance with law and (2) take charge of preliminary examination of the annual inspection on funds and representative institutions of overseas funds (3) cooperate with the registration and administration authorities and other law enforcement agencies to inspect and punish illegal actions Article 36 Funds and representative institutions of overseas funds shall submit annual working reports to the registration and administration Annual working reports shall include: financial accounting reports, auditing reports issued by certified public accountants, reports Article 37 Funds shall be subject to taxation and accounting supervision conducted by authorities responsible for taxation and accounting according Funds shall, before reelection at expiration of office terms and change of legal representatives, conduct financial auditing. Article 38 Funds and representative institutions of overseas funds shall, after passing the annual examination conducted by the registration Article 39 Donators are enpost_titled to inquire with funds the utilization and management of donated properties and make suggestions. Funds should In case funds utilize donated properties in violation of the donation contracts, donators are enpost_titled to request funds to act in Chapter 6 Legal Liabilities Article 40 In case any organization that have not been registered or have its registration cancelled carries out activities in the name of a Article 41 In the following cases, registration of involved funds, branches of funds, representative institutions of funds or representative (1) conceal real situations and practice fraud when applying for registration, or fail to conduct activities in accordance with articles (2) where they satisfy conditions for cancellation but do not go through cancellation registration in accordance with this Regulation Article 42 In the following cases, funds, branches of funds, representative institutions of funds or representative institutions of overseas (1) fail to conduct activities in accordance with purposes and business scope of public benefit activities provided for in the articles (2) conceal real situations and practice fraud when preparing accounting certificates, registering accounting records or preparing financial (3) fail to go through alteration registration procedures in accordance with provisions; (4) fail to fulfill the expenditure amount for public benefit undertakings in accordance with this Regulation; (5) fail to accept annual examination in accordance with this Regulation, or fail to qualify therein; (6) fail to perform the obligation of information disclosure or disclose fraudulent information In case funds and representative institutions of overseas funds engaging in any of the above actions, the registration and administration Article 43 In case the board of directors make inappropriate decisions in violation of the provisions of this Regulation and articles of incorporation, Directors, supervisors and full-time working staff of funds who illegally distribute, seize or embezzle fund properties, shall return Article 44 In case funds and representative institutions of overseas funds are ordered to cease activities, the registration and administration Article 45 In case any staff member working in the registration and administration authority and competent authorities of businesses abuses his Chapter 7 Supplementary Provisions Article 46 For the purposes of this Regulation, overseas funds refer to funds incorporated according to law in foreign countries as well as in Article 47 Applications for establishing funds, format for annual working reports of funds and sample for articles of incorporation of funds Article 48 This Regulation shall enter into force as of June 1, 2004, and Measures for Funds Administration promulgated by the State Council Funds and representative institutions of overseas funds established before this Regulation goes into force shall, within six months |
State Council
2004-03-08