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Authored by Nevena Urosevic, Associate Director of Legal Affairs

In early May, the Chinese legislature released the second draft of its new proposed law on the operation of foreign NGOs[1] in China, the first of its kind. The “Overseas NGO Management Law”[2] would essentially govern the management of overseas NGOs, which include charities,[3]  and would drastically change how foreign charities work in China.

The purpose of the new legislation is to standardize and provide a clear legal framework for activities carried out by overseas NGOs[4] within China.

In order to conduct activities within China, overseas NGOs must apply to the relevant Public Security department before commencing any such activities. They may either apply to:

  1. Become a legally registered representative office; or
  2. Obtain a temporary activity permit.

Prior to applying for registration or a temporary activity permit, overseas NGO will be required to obtain the consent of the local Professional Supervisory Unit.

The following chart sets out the requirements and particularities of both methods of operation in further detail:

Procedural Step Registered Representative Office (“RRO”) Temporary Activity Permit (“TAP”)
Pre-registration consent Both must obtain the consent of the local Professional Supervisory Unit (“PSU”)
Application/Registration Both must apply to the relevant/local Public Security department (“registration management office”) within 30 days of receiving approval from the PSU
Decision rendered Within 60 days of receiving application Within 30 days of receiving application
Duration of registered status Maximum of 5 years Maximum of 1 year
Renewal of registration 1.       Approval from PSU

2.       New application to the registration management office within 60 days before the expiration of the existing registration

 
Activity Plan Activity plan detailing project descriptions and how funding will be used must be submitted yearly before November 30 Before commencing a project, registration documents, TAP, and a description of the project to be submitted to municipal and higher level public security authorities
Fundraising Both are prohibited from conducting fundraising activities or accepting donations in China
Bank Account Must use the bank account that was filed with registration management authorities to handle money inside China Must use their Chinese partner organization’s bank account to handle funds in China [an independent account record should be kept, and the money used as agree upon]
Employment To recruit staff or volunteers in China, an RRO must commission a local foreign affairs service unit to carry out their employment matters. Overseas personnel must not account for more than 50% of the total number of staff employed at a RRO. Recruitment of volunteers to be done through their Chinese partner organization.

 

This chart gives only a brief overview of the numerous stipulations and rules that charities must follow if they wish to operate in China. It is interesting to note that the entity responsible for regulating and overseeing charities is the Public Security department. The law also specifies that:

“Overseas NGOs that conduct activities in China shall operate according to Chinese laws; not threaten China’s security or national and ethnic unity; must not harm China’s national interest, societal public interests, or the legal rights of other groups and citizens; and must not disrupt public order and morality. Furthermore overseas NGOs must not engage in or fund for-profit activities or political activities. They also must not illegally conduct or fund religious activities.”[5]

The law also provides for a wide discretion in the mechanisms that will be used to monitor charities and supervise their activities. The law provides for a wide range of sanctions if a charity fails to fulfill its duties under the law, or is suspected thereof. Such sanctions include:

  • Accessing bank accounts of organizations or individuals related to an investigation;
  • Large fines
  • Revocation of charitable status
  • Detention
  • Deportation

This law seems to indicate a certain concern with current NGO operation in China and significantly broadens and institutionalizes government control, supervision, and interference with respect to overseas NGOs. There are many new operational rules for charities to abide by and all charities will be subject to much scrutiny. For charities that wish to commence or continue operating in China, it will be important to understand the new legal landscape, if indeed this bill becomes law.

[1] NGO is the acronym for non-governmental organization(s)

[2] Translated by China Development Brief

[3]NGO Law Monitor: China”, The International Center for Not-for-Profit Law, updated: May 24, 2015.

[4] An overseas NGO is described as an NGO established outside of mainland China (see Article 2)

[5] See Art. 5 of the Overseas NGO Management Law

Noteworthy is provided for general information purposes and does not constitute legal or professional advice. Every organization’s circumstances are unique. Before acting on the basis of information contained in this blog, readers should consult with a qualified lawyer for advice specific to their situation.

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