1. Should communication and cooperation between schools, hospitals, scientific and engineering technology research institutions or academic organizations overseas and their counterparts in China be subject to the Law on the Management of the Activities of overseas NGOs within Mainland China?
Briefly speaking, it should not.
This law has a clear definition of overseas NGOs, which refers 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, scientific and engineering technology research institutions and academic organizations are not subject to this law, but should obey China’s relevant rules and regulations.
As stipulated in Article 5 of this law, 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. Furthermore, 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 does the Law on the Management of the Activities of Overseas NGOs within Mainland China influence overseas foundations’ funding to mainland NGOs?
Overseas NGOs have to legally register and establish a representative office or file for temporary activities.
As stipulated in Article 9 of this law, overseas NGOs that conduct 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. It is prohibited for overseas NGOs that have not registered and established a representative office or filed for temporary activities to conduct or covertly conduct activities within China, or commission or covertly commission any domestic Chinese units or individuals to conduct activities within China. If the overseas foundation still hasn’t established a representative office by next year, its Chinese partner should file for temporary activities (the duration of the temporary activities shall not be more than one year. Where there is a genuine need for an extension, a new filing must be made).
3. Can overseas NGOs conduct charity activities within Mainland China in the form of registered companies to escape the regulations of the Law on the Management of the Activities of Overseas NGOs within Mainland China?
No, they can’t.
As stipulated in Article 9 of this law, it is prohibited for overseas NGOs that have not registered and established a representative office or filed for temporary activities to conduct or covertly conduct activities within China, or commission or covertly commission any domestic Chinese units or individuals to conduct activities within China.
Also, according to Article 5, overseas NGOs that conduct activities in Mainland China must not engage in or fund for-profit activities. Therefore, strictly speaking, overseas NGOs are prohibited from conducting for-profit activities within Mainland China by investing to set up companies.
4. If the answer to the previous question is negative, will a foreign invested company be investigated for its overseas background? For example, for whether it has a principal-agent relationship with overseas NGOs?
If this foreign invested company indeed conducts activities within Mainland China on behalf of overseas NGOs, it will be sanctioned.
As stipulated in Article 46 of this law, where 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 entrustment or funds; work directly or indirectly as their agents; or help process program operation funds for them, they will be subject to administrative sanctions.
5. What is the meaning of “activity” as defined in the Law on the Management of the Activities of Overseas NGOs within Mainland China? Is there any requirement on the scale of the activity?
There are requirements on the contents of the activity rather than on scale.
As stipulated in Article 3 of this law, overseas NGOs that work in fields such as the economy, education, science and technology, culture, health, sports, environmental protection and in areas such as poverty alleviation and disaster relief may carry out activities that legally aid the development of public welfare in accordance with this law.
As stipulated in Article 5 of this law, 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.
6. What are the dos and don’ts for foreign invested companies in funding overseas NGOs to conduct activities in Mainland China?
Overseas NGOs must file for temporary activities or establish a representative office in Mainland China. As stipulated in Article 46 of this law, where units and individuals within China work with overseas NGOs despite knowing that these overseas NGOs have not registered or filed their temporary activities, they will be subject to administrative sanctions. Funding overseas NGOs to conduct activities in Mainland China can also be considered as a form of cooperation.
By the way, as stipulated in Article 21 of this law, unless otherwise regulated for by the State Council, overseas NGOs and their representative offices in China shall not conduct fundraising activities within China. But the final law does not stipulate that they can’t “accept donations from within Mainland China” like the Second Draft of this law did.
7. Can companies act as Chinese partner organizations of overseas NGOs? How can Chinese partner organizations assist overseas NGOs to obtain temporary activity permission?
No, they can’t. As stipulated in Article 16 of this law, only the following four types of organizations can serve as Chinese partners: Chinese state authorities, mass organizations, public institutions and social organizations. Neither individuals nor companies can serve as Chinese partner organizations.
When overseas NGOs wish to conduct temporary activities, the Chinese partner organizations shall go through approval procedures according to national regulations and file documents to local registration management authorities within 15 days, and shall submit the following documents to the registration management authorities:
(1) Proof of the legal establishment of the overseas NGO;
(2) A written agreement between the overseas NGO and the Chinese partner organization;
(3) Documents showing the name, aim, location and period of the temporary activity;
(4) Project funding, proof of funding sources and the bank account of the Chinese partner organization;
(5) Approval documents acquired by the Chinese partner organization;
(6) Other documentation required by other laws or regulations.
Where temporary activities are required due to emergencies such as disaster relief, the filing period is not limited by the previous article.
Further explanations by the government will be needed to determine which national regulation Chinese partner organizations should base themselves on to apply for an approval document, and to whom social organizations should apply for an approval to cooperate with overseas NGOs.
8. What are the dos and don’ts for foreign invested companies to carry out cooperative projects with overseas NGOs in Mainland China?
Check the registration certificates of the representative offices of the overseas NGO. Hire a lawyer to do a due diligence investigation on the history of the representative office of the overseas NGO, and make sure the office has no criminal record.
9. How does an overseas NGO establish a representative office in Mainland China? What are the requirements?
- Overseas NGOs that meet the following requirements may apply to register and establish a representative office in China according to the scope of their work and the location and needs of their activities:
(1) The NGO was lawfully established outside of Mainland China;
(2) The NGO is independently able to assume civil liability;
(3) The NGO’s aims and scope of activities as stipulated in the organizational charter are beneficial to the development of the public benefit sector;
(4) The NGO has been in existence for a continuous period of at least two years outside of Mainland China and has conducted substantial activities during that time;
(5) Conditions provided by other laws or regulations.
- The procedures to establish representative offices:
(1) The approval documents and a list of Professional Supervisory Units shall be published by the Public Security Department of the State Council and provincial level public security authorities, together with relevant departments.
(2) Overseas NGOs shall apply to register a representative office with the registration management authorities within 30 days of formally identifying and getting approval from a Professional Supervisory Unit.
The registration management authorities that review the application of overseas NGOs to establish a representative office in China may commission experts to conduct a review if this is deemed necessary.
The registration management authorities shall issue a decision within 60 days of receiving an application.
- NGOs shall submit the following documents to the registration management authorities:
(1) A completed application form;
(2) Documentation and other evidence that the overseas NGO meets the conditions set out in Article 10 of this law;
(3) Identification documents for the chief representative of the proposed overseas NGO representative office, a CV and proof or a statement that shows that he or she has no criminal record;
(4) Documentation that states the address of the overseas NGO’s proposed representative office.
(5) Documentation that shows the funding sources of the overseas NGO;
(6) Documentation that shows an agreement from a Professional Supervisory Unit to supervise the overseas NGO’s proposed representative office;
(7) Any documentation and material required by other laws or regulations.
10. How about overseas NGOs that have already registered as private non-enterprise units in Mainland China. Will the law have any impact on them?
The impact will be minimal. According to Xinhua News, the second draft of this law had offered in its “Special Regulations” chapter the ways for overseas NGOs to establish or cooperatively establish foundations and societal organizations (民办社会机构) within Mainland China. But some members of the Standing Committees of the NPC and other departments suggested that the aforementioned chapter should be deleted because, as is stipulated in the law, there are only two ways for an overseas NGOs to operate in China: set up representative offices or carry out temporary activities.
After research and discussion, the law committee of the NPC then suggested that the “Special Regulations” chapter be deleted.
The few foundations and social service organizations that have already been registered with the departments of Civil Affairs by overseas NGOs may be retained.
