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| Q&A Concerning Law on the Management of the Activities of Overseas NGOs within Mainland China |
| Time：2021-12-27 22:36:48 Source：Website |
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1. When overseas schools, hospitals, research institutes or academic organizations dedicated to natural science and engineering technologies conduct exchange and cooperation with domestic schools, hospitals, research institutes or academic organizations dedicated to natural science and engineering technologies, will such cooperation be governed by the Law on the Management of the Activities of Overseas NGOs within Mainland China?
To put it simply, this law is not applicable in this case.
Regarding the definition of overseas NGOs, this law provides clear-cut definitions. The overseas NGOs mentioned in this law refer to non-profit, non-governmental social organizations such as foundations, social groups and think tanks that have been lawfully established outside of mainland China. Overseas schools, hospitals, research institutes or academic organizations dedicated to natural science and engineering technologies are not governed by this law, they shall be governed by other national regulations, excluding Article 5 of this law. Article 5 of this law stipulates: Overseas NGOs that conduct activities in China shall operate according to Chinese laws; not threaten China’s security or national and ethnic unity; and not harm China’s national interests, societal public interests, and the legal rights of citizens, legal persons and other groups. Overseas NGOs that conduct activities in mainland China must not engage in or fund for-profit activities or political activities. They must also not illegally conduct or fund religious activities.
2. How will the Law on the Management of the Activities of Overseas NGOs within Mainland China affect overseas foundations in funding domestic NGOs?
It should set up representative office or file temporary record.
According to Article 9 of the Law on the Management of the Activities of Overseas NGOs within Mainland China, “Overseas NGOs that conducts activities in China shall legally register and establish a representative office. Unregistered overseas NGOs that wish to conduct temporary activities in China shall legally file a record.
Without registration and setup of representative office, or record-filing of temporary activities, overseas NGOs must not conduct activities or indirectly conduct activities within China, they must not commission, fund or indirectly commission, fund any units or individuals within China to conduct activities within China”.
If such overseas foundation still has not set up representative office within China by next year, the Chinese partner organization needs to cooperate to apply for temporary activities record-filing (whose validity period shall not exceed one year, in case of extension, it is allowed to apply for re-filing).
3. In order to evade the Law on the Management of the Activities of Overseas NGOs within Mainland China, can foreign NGOs conduct charity activities in China in the form of company registration?
No, it is not allowed.
According to Article 9 of this law, without registration and setup of representative office, or record-filing of temporary activities, overseas NGOs must not conduct activities or indirectly conduct activities within China, they must not commission, fund or indirectly commission, fund any units or individuals within China to conduct activities within China. Therefore, overseas NGOs are not allowed to conduct charity activities within China in the form of company registration.
In addition, Article 5 of the law also stipulates that, overseas NGOs that conduct activities in mainland China must not engage in or fund for-profit activities. Therefore, strictly speaking, overseas NGOs are not allowed to invest and set up company within China to engage in profit-earning activities.
4. If the answer to the question above is no, then will a foreign invested enterprise be investigated regarding its overseas background? For instance, whether or not it has agency relationship with the overseas NGOs?
If such foreign invested enterprise indeed engages in activities on behalf of overseas NGO within China, it may have to receive penalties.
According to Article 46 of the law, when units and individuals within China work with overseas NGOs despite knowing that these overseas NGOs have not registered or filed their temporary activities; accept their authorizations or funds; work directly or indirectly as their agents; or help to process program operation funds for them, they will receive administrative penalties.
5. What is the “activity” as exactly defined in the Law on the Management of the Activities of Overseas NGOs within Mainland China? Is there any requirement on scale?
There is no requirement on scale, but there are requirements on contents.
According to Article 3 of this law, activities that overseas NGOs can conduct within China according to law include:
(I) Activities related to economy, education, science and technology, culture & health, sports, and environmental protection and others fields;
(II) Activities benefiting the development of public welfare undertakings in poverty relief, and disaster rescue aspects.
According to Article 3 of this law, activities that overseas NGOs are not allowed to conduct within China include:
(I) Engagement in or funding of profit-earning activities;
(II) Engagement in or funding of political activities;
(III) Illegal engagement in or funding of religious activities.
6. When foreign invested enterprises fund activities of overseas NGOs within China, what points must they pay attention to?
Overseas NGOs must file record for temporary activity or have already set up representative office within China. This is because, according to Article 46 of the law, if units within China work with overseas NGOs despite knowing that these overseas NGO have not registered representative office or filed their temporary activities, they will also receive administrative penalties. Funding activities of overseas NGOs within China can be deemed as a form of cooperation.
By the way, according to Article 21 of this law, “Unless otherwise prescribed by the State Council, overseas NGOs and their representative offices must not raise funds within China”. Nevertheless, unlike what is prescribed in the second draft, it does not prescribe they cannot “receive donation within China.”
7. Can enterprises act as Chinese partner organizations of overseas NGOs? How do Chinese partner organizations help overseas NGOs apply for permission for temporary activities?
No, they cannot, according to Article 16, there are only four kinds of Chinese partner organizations can do this: Chinese state authorities, mass organizations, public institutions, and social organizations. Individuals and enterprises cannot act as partner organizations.
When overseas NGOs conduct temporary activities, the Chinese partner organizations must apply for approval in accordance with national regulations, and file record at the local registration management authorities at least fifteen days before the temporary activities. The following documents and materials must be submitted:
(I) Documents and materials certifying legitimate incorporation of overseas NGOs;
(II) Written agreements between overseas NGOs and Chinese partner organizations;
(III) Documents related to name, aim, area and duration of the temporary activities;
(IV) Documents certifying the source of project expenses, and funds and bank accounts of Chinese partner organizations;
(V) Documents of approval obtained by Chinese partner organizations;
(VI) Other documents and materials prescribed by laws and administrative regulations.
When it becomes necessary to conduct temporary activities in an emergency such as disaster relief, or rescue, the record-filing time is not subject to restriction of the article above.
Which country’s regulations should be followed when Chinese partner organizations apply for approval? When social organizations wish to cooperate with overseas NGOs, to whom should the application be sent? This still needs the state government to give further clarifications.
8. When foreign invested enterprises and overseas NGOs representative office need project cooperation in China, what points should they pay attention to?
It is required to check the representative offices’ registration certificate of overseas NGOs. It must hire lawyers to organize due diligence of such representative offices of overseas NGOs, in order to ensure there is no previous noncompliance or criminal records.
9. How do overseas NGOs set up representative office within China? What are the requirements?
(I) What requirements must overseas NGOs meet when setting up representative office?
If overseas NGOs can meet the following requirements, they can apply to register and set up representative office within China based on business scope, activity area and needs for conducting activities:
1) Legally incorporated in overseas countries;
2) Able to independently bear civilian liability;
3) The aim and business scope as prescribed by its Articles of Association can benefit the development of public welfare undertakings;
4) With existence record overseas for more than two years and with substantial record of activities;
5) Other requirements prescribed by laws and administrative regulations.
(II) Procedures for setting up representative offices are as follows:
1) The catalogue of business supervising units issuing approval of application by business supervising units will be jointly published by the public security department of the State Council, the public security organs of provincial level people’s government in conjunction with relevant departments
2) Overseas NGOs intending to apply for setup registration with public security departments must, within 30 days after receiving approval from business supervising unit, apply for registration for setup of representative office with the registration management authorities.
The registration management authorities will audit the application for the representative offices’ setup, and organize experts for appraisal if necessary.
The registration management authorities must make the decision of granting registration or rejecting registration within sixty days after accepting application.
(III) What application documents must be submitted to the registration management authorities?
1) Letter of application;
2) Certifying documents and materials in compliance with Article 10 of this law;
3) ID certificate, personal profile and no criminal records certificate or statement of the chief representative of the proposed representative office;
4) Documents certifying the address of the proposed representative office;
5) Documents certifying sources of the funds;
6) Approval documents from business supervising units;
7) Other documents and materials prescribed by laws and administrative regulations.
10. If overseas NGOs have set up private non-enterprise unit within China, will there be any impact?
There is little impact.
According to Xinhua News Agency, furthermore, the Second Draft has a “Special Provisions” chapter, which prescribes rules on the exclusive setup or partnership setup of foundation or private social organizations by overseas NGOs within China. Some members of the Standing Committee and departments suggested that, this law has already prescribed that overseas NGOs can only adopt two approaches of setting up representative office and conducting temporary activities in order to conduct activities within China, so this chapter should be deleted.
To this end, upon studying the issue the Legislative Affairs Commission of the NPC proposed to delete the “Special Provisions” chapter.
There are a few foundations and social service organizations already registered and set up at the civil administration department by overseas NGOs, they can be kept intact. |
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