29 December, 2016
On 28 April 2016, China’s Standing Committee of the National People’s Congress issued the Law of the People’s Republic of China on the Administration of Activities of Overseas Non-Governmental Organisations within the Territory of China (the “Law”), which will take effect on 1 January 2017.
On 28 November 2016, the Ministry of Public Security of China (“MPS”) issued the Guideline on the Registration of Representative Office and Record-filing of Temporary Activities of Overseas Non-Governmental Organisations (the “Guideline”). The aim of the Guideline is to supplement the Law and facilitate the process of registration or record-filing by overseas non-governmental organisations (“Overseas NGOs”).
Prior to the issuance of the Law and the Guideline, in the absence of relevant laws and regulations, Overseas NGOs relied on the Interim Provisions on the Administration of Foreign Chambers of Commerce, the Regulation on Foundation Administration (the “Regulation”) or their agents while operating in China. While the issuance of the Law and Guideline largely clarifies the statuses and circumstances of Overseas NGOs, it also sets a large number of restrictions.
Overseas NGOs should be aware of the following key aspects of the Law and Guideline:
The definition of Overseas NGOs.
Prior to the issuance of the Law, there was no formal definition of Overseas NGOs in China. Much scholarly ink has been spilled over the definition of Overseas NGOs, but it remains unsettled. However, this is dealt with by the Law where article 2 defines Overseas NGOs as non-profit, non-governmental social organisations that are legally formed abroad, including foundations, social groups, think-tanks and other non-profit, non-governmental social organisations.
The scope of Overseas NGOs’ activities.
The Law provides that Overseas NGOs may conduct activities conducive to the development of public welfare undertakings in such fields as economy, education, science and technology, culture, health, sports and environmental protection, as well as in aspects such as poverty alleviation and disaster relief in accordance with the Law. Such activities shall abide by Chinese laws and may neither endanger China’s national unity, security and ethnic solidarity nor damage China’s national interests, public interests and the lawful rights and interests of citizens, legal persons and other organisations. In addition, Overseas NGOs shall not engage in or fund for-profit activities or political activities in China, or illegally engage in or fund religious activities.
The department that will be responsible for the registration, approval and supervision of Overseas NGOs.
According to Articles 6 and 7 of the Law, MPS and the public security authorities of provincial governments are the registration administrative authorities for the activities of Overseas NGOs in China. The relevant departments and entities of the state council and the relevant departments and entities of provincial governments are the competent business authorities for the activities of Overseas NGOs in China.
The process by which Overseas NGOs are to conduct their activities in China.
There are two feasible ways for an Overseas NGO to conduct its activities in China. One is to register its representative offices (“ROs”) in China. The other is to file a record of its temporary activities in accordance with the Law.
Not every Overseas NGO can register its ROs in China; only Overseas NGOs that meet the following conditions may, according to their business scope, activity areas and the needs for conducting activities, apply for the registration of ROs in China:
- having been legally established abroad;
- being capable of assuming civil liabilities independently;
- the purposes and business scope provided in the articles of association are conducive to the development of public welfare undertakings;
- have existed abroad for two years or longer and substantively conduct activities; and
- other conditions as prescribed by laws and regulations.
Overseas NGOs not registered as ROs in China shall cooperate with China’s state organisations, people’s organisations, public institutions and social organisations (the “Chinese Partners”) and carry out a record-filing of their activities with the relevant authorities.
Overseas NGOs that do not register their ROs or conduct temporary activities without filing their records shall not conduct, or conduct in disguised form, activities in China; or authorize or fund directly or in disguised form any other entity or individual inside China to conduct activities in China.
The procedure for Overseas NGOs to register ROs in China or to file a record their temporary activities.
Overseas NGOs that meet the aforesaid requirements to establish ROs shall undergo the following procedure mentioned below.
First, approval shall be obtained from the competent business authorities. The scope of the competent business authorities currently remains unclear, but according to Article 11 of the Law, the MPS and the public security authorities of provincial governments will, in conjunction with the relevant departments, issue a directory of the aforesaid competent business authorities. After obtaining the approval from the competent business authority, Overseas NGOs shall submit an application to the registration administrative authority for the registration of ROs.
For Overseas NGOs that are approved to register their ROs, the registration administrative authority shall issue a registration certificate thereto and make an announcement to the public. Alternatively, Overseas NGOs that are rejected from registering their ROs will be informed. It remains unknown whether there would be any process of review or appeal against a rejection.
Overseas NGOs that have not registered any ROs in China but intend to conduct temporary activities in China shall cooperate with their Chinese partner to do so. The Chinese partner shall file the necessary documents with the registration administrative authority for the area of the proposed temporary activities at least 15 days before the temporary activities are carried out.
The responsibility of Overseas NGOs.
Since ROs are not legal entities, Overseas NGOs shall be liable for all liabilities of their ROs’ behaviors in China, and such liabilities will not cease even after the cancellation of their ROs in China. The enforcement of an RO’s liability onto the Overseas NGO is an issue to be addressed separately.
Other controls on ROs.
On top of having their scope of activities limited, ROs are also required to submit their activity plans for the upcoming year to the competent business authority and file their records with them within 10 days after obtaining approval from the registration administrative authority. The RO’s activities shall be wholly compliant with the submitted activity plans. In addition, an RO shall, before 31 January of each year, submit a report on the work done for the previous year to the competent business authority. After the competent business authority has issued its opinions on the report, the RO shall submit the report to the registration administrative authority before 31 March for annual inspection.
Overseas NGOs who are not registered in China but are carrying out temporary activities shall conduct activities in their recorded names. The Overseas NGO and its Chinese partner shall submit in writing the information on the activities and use of funds, among others, to the registration administrative authorities within 30 days after the conclusion of the temporary activities.
Conclusion
There is no denying that the new released Law and Guideline have to some degree standardized the current situation of Overseas NGOs in China. However, more relevant laws and regulations are still required to supplement them, such as a catalog of the activities and projects of Overseas NGOs as mentioned in Article 34 of the Law. We look forward to the issuance of such laws and regulations and will provide updates on them accordingly.
For further information, please contact:
Yu Lan, Duane Morris & Selvam
LYu@duanemorrisselvam.com
