The International Journal
of Not-for-Profit Law

Volume 2, Issue 3, March 2000

A quarterly publication of the International Center for Not-for-Profit Law

Table of Contents

Letter from the Editor

Articles

Introduction: "Codes of Conduct for Partnership in Governance: Texts and Commentaries"
By Tatsuro Kunugi and Martha Schweitz

On the Establishment of Social Organizations Under Chinese Law
By Ge Yunsong

Australia's Nonprofit Taxation Reforms
By Myles McGregor-Lowndes

Reviews

Codes of Conduct for Partnerships in Governance: Text and Comments
Edited by Tatsuro Kunugi and Martha Schweitz
Reviewed by Catherine Shea

Case Notes

Central and Eastern Europe: Croatia | Poland | Serbia

Middle East and North Africa: Egypt

Newly Independent States: Azerbaijan

North America:
the United States

South Asia:
India

Country Reports

Asia Pacific:
Australia
| East Timor |
New Zealand
| the Philippines | Vietnam

Central and Eastern Europe: Regional | Kosovo | Romania

Latin America:
Regional | Belize | Brazil | Venezuela

Newly Independent States:
Russia | Ukraine

Middles East and North Africa: Sudan

North America:
Canada
| Mexico |
the United States

South Asia:
India

Sub-Saharan Africa:
Cameroon | Kenya |
Sierra Leone
| South Africa | Tanzania | Zimbabwe

Western Europe:
France | Germany |
the United Kingdom

Self Governance

Law and Governance-- A Lesson in Limits
By Leon Irish and Karla Simon

Trends in Self-Regulation and Transparency of Nonprofits in the U.S.
By Robert O. Bothwell

The Role of Governing Boards in Fostering Accountability
By Crispin Gregoire

Financial Implications Affecting Nonprofit Nongovernmental Organizations Today
By Michael A. Freedman

International Grantmaking

Grantmaking by U.S. Foundations in Canada: A Canadian Lawyer Provides a Plain Language Primer
By Blake Bromley

Community Philanthropy

Community Philanthropy Initiative of the European Foundation Centre

Transatlantic Community Foundation Network

New Website Buergerstiftung.de

Partnerships

General | Brazil | Kenya | Russia

- - - - - - - - - -

Editorial Board

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On the Establishment of Social Organization Under Chinese Law

By Ge Yunsong

After China began to reform and open to the outside world, politics became more open than before in many aspects. The government had controlled almost everyone’s every action, but this situation has changed a lot. The freedom and rights of the people are increasingly protected under the law. As one instance, Article 35 of the Constitution of China prescribes the freedom of association.

According to Article 2 of the Regulations on the Registration and Administration of Social Organizations of the People’s Republic of China[1] (hereinafter referred to as the Regulations), social organizations are non-profit-making organizations composed of citizens (individual members) or organizations (unit members) who volunteer to perform activities in accordance with its articles of organization for the realization of their common desires. Obviously, it is an important aspect of the freedom of association for citizens to freely establish social organizations. In recent years, the number of social organizations has increased dramatically, and they are acting out an increasingly important role in society.

This paper will discuss the requirements and procedures for the establishment of social organizations in the Regulations, as well as other related rules (most of them are provisions of administrative organs).[2] However, the rules concerning associations organized by foreign individuals and organizations do not fall within the scope of this paper.[3]

  1. Requirements of the Establishment of Social Organizations

According to Article 10 of the Regulations, in order to establish a social organization, 6 requirements must be satisfied. From the words used in this article, if any requirement is not fulfilled, the application for the establishment shall be rejected. The following is a brief analysis of these requirements.

  1. Possession of more than 50 individual members or 30 unit members; a total of more than 50 members are required if a social organization consists of both individual and unit members

This is the minimum requirement of the number of members of a social organization. As to the reason why the Regulations require such a large number, officials of the departments of State Council who drafted the Regulations explained, “if a social organization has too few members, it can’t be representative.”[4] In my point of view, social organizations are established voluntarily by individuals and organizations to fulfill their common desires. Apart from this, they need not represent anything. Only under some special circumstances may public policy require a social organization to have a representative membership, such as trade unions and chambers of commerce.

This requirement makes the establishment of a social organization more difficult.

  1. Possession of a standardized name and corresponding organizational structure

As to the ‘standardized name’ requirement, paragraph 2 of Article 10 of the Regulations provides that ‘the name of a social organization shall be in conformity with the provisions of the laws and regulations, and shall not breach social ethics and morality’. The name of a social organization shall correspond with its scope of business, the location of members and areas of activities and shall precisely reflect the characteristics of the organization. This provision is quite general, and the administrative organ has great discretionary power in deciding this matter.

The Regulations do not provide directly what constitutes a ‘corresponding organizational structure’. But Article 14 of the Regulations refers to a members’ assembly (or members’ congress), an executive organ, responsible persons and a legal representative.

  1. Possession of a fixed domicile

The proposed social organization shall have a place over which it possesses a right of ownership or tenancy, in which to house its daily operations.

  1. Possession of a full-time staff suitable for the organization’s business

According to this requirement, a social organization’s application for establishment will be rejected if the organization wants to employ only part-time employees to save money. Is this requirement necessary?

Additionally, the staff should be suitable for carrying out the organization’s business activities under this provision. Everyone hopes that the staffs of all organizations are suitable for their work. But if the law imposes suitability as a requirement of the establishment of a social organization, how can this provision be applied? More importantly, the documents required for the application for establishment do not include documents concerning the suitability of employees under the Regulations. The Regulations do not provide any penalty regarding the deficiency of the staff. So, in effect, this provision is of no use. The situation with the requirement of full-time staff is similar.

  1. Possession of lawful assets and sources of funding: a national social organization shall have a business fund of more than 100,000 yuan, while a local social organization and a trans-administrative-district social organization shall have a business fund of more than 30,000 yuan

This provision mainly concerns the minimum value of the property that a social organization should have. Although the amount is not very high, it sometimes creates a difficulty for many organizations.

  1. Possession of the ability to bear civil liabilities independently

Perhaps no one really knows what the ‘ability’ required by this provision is. If it means that a social organization should have enough property to pay its debts, this has been provided by the previous requirement. What, then, does it mean?

In general, Article 10 of the Regulations is obscure, and some of the requirements are impossible to apply.

II. The Procedure to Establish a Social Organization (1): Application for the Approval of the Preparations the Competent Business Units

In light of Article 9 of the Regulations, in applying for the establishment of a social organization, the matter shall be subject to the examination and consent of the competent business unit.

The competent business units (hereinafter referred to as CBU) are, as paragraph 2 of Article 6 defines, ‘the relevant departments of the State Council and those of local people’s governments at and above the county level as well as organizations authorized by the State Council or those by local people’s governments at and above the county level shall be the competent business units over Social Organizations of trades, academic disciplines or lines of business. The CBU shall be responsible for the pre-examination prior to the application for the preparation for the establishment, changes in registration, cancellations in registration and for the preliminary examination of the annual verification of Social Organizations, and for the supervision and guidance of social organizations’ activities being conducted in accordance with the law and the articles of organization and so forth.

The areas of business and business scopes of Social Organizations determine the CBU. Article 7 of the Regulations stipulates the jurisdiction of the registration and administration organs (hereinafter referred to as RAO). In fact, this stipulation can also apply to the CBU. That is to say, national social organizations’ CBU shall be the departments of State Council or organizations authorized by the State Council, and local social organizations’ CBU shall be departments of local governments or organizations authorized by local governments. Jurisdiction depends on business scope: for example, the judicial administration organs take charge of the jurisprudential social organizations. Most CBU are departments of governments and departments of the Chinese Communist Party (CCP) at and above the county level. Organizations authorized by the governments to act as CBU include other social organizations, companies and so on.

Since the examination and consent of the CBU is the prerequisite for the establishment of social organizations, no Social Organizations can be established legitimately without having found the appropriate CBU.

Is it possible that an appropriate CBU cannot be found? Though this question sounds a little strange, it is worth mentioning. Xu Ruixin, Vice Minister of Civil Affairs, once said, in reference to an existing social organization, ‘if the administration of the CBU has after a period gone beyond its power, or due to institutional reforms, the CBU has changed its scope of power, or, if the social organization doesn’t abide by the guidance, supervision and administration of the CBU, then the CBU may propose to the RAO to terminate its role as the CBU of that social organization. If the social organization fails to find an appropriate CBU within the regulated time, then, according to the provisions of the Regulations, the RAO shall dissolve the social organization for its disqualification.’[5]

This quote not only concerns the dissolution of social organizations, but the establishment of the social organizations. That is to say, if for some reason, there are gaps in the scope of power of different departments of governments relating to the affairs of being CBU over one kind of social organization, is this an adequate excuse to refuse the establishment of such kind of social organizations? Freedom of association is one of the basic constitutional rights, its scope can only be restricted by law, and has nothing to do with the internal division of administrative functions. Therefore, if situations like this emerge, how finding a CBU for a proposed social organization should be the duty of the government, and the applicant should have no obligation to ‘search’ for such a unit. Otherwise, the scope of freedom of association is subject to the existence of competent authorities.

The sponsors of a social organization, first of all, must submit the application for the preparation for the establishment to the CBU. The Regulations have no explicit provisions of what documents should be submitted to the CBU in the application, and have no explicit provisions of the time limit in which the CBU shall decide to approve or disapprove. The reason may be that the RAO still has the complete rights to fully examine whether the establishment of a social organization is in accordance with the law. The examination of the CBU has no binding effect on the RAO; it is only a preliminary examination. The RAO is authorized to reexamine the items that have been examined by the CBU and to make an independent decision, so the law has no explicit provisions of the examination of the CBU. Logically, one can refer to Article 11 and Article 12 of the Regulations, which stipulate the documents that the sponsors should submit to the RAO and the examination procedure.

If the sponsors consider the disapproval of the CBU to be against the law, they may institute an administrative reconsideration according to the Administrative Reconsideration Law or institute an administrative litigation according to the Administrative Litigation Law.

III. Procedure to Establish a Social Organization (2): Application for the Preparation for the Establishment to the RAO.

According to Article 9 of the Regulations, in order to establish a social organization after the application is approved by the CBU, sponsors shall apply to the RAO for the approval of the preparations.

The registration and administration organs, according to paragraph 1 of Article 6 of the Regulations, refer to the civil affairs department of the State Council (the Ministry of Civil Affairs) and the civil affairs departments of local governments at and above the county level. The RAO shall be responsible for the registration and record of the establishment, changes and cancellation of social organizations, for conducting annual verification of social organizations, for supervising and verifying the cases relating to the violation of these Regulations by social organizations and for imposing administrative punishments on social organizations whose conduct violate these Regulations.

The RAO having authority over a specific social organization may be determined with guidance from Article 7 of the Regulations, which states that national social organizations shall be registered and administered by the RAO of the State Council, local social organizations shall be registered and administered by the RAO of government in places where they are located, and trans-administrative-district social organizations shall be registered and administered by the RAO at the next higher level of government common to the districts involved.

  1. Documents required in applying for the preparation for the establishment

  In the light of Article 11 of the Regulations, the following documents shall be submitted to the RAO:

A. An application form for the preparation

The Application Form for the Preparation for the Establishment of Social Organization, which is produced under the supervision of the Ministry of Civil Affairs, includes items such as domicile, amount of business fund, area of business, sources of fund, number of members, purpose, business scope, the basic information of sponsors and proposed responsible persons, etc. This form shall be filled out before the application is made.

B. The approval documents of the CBU.

C. A capital verification report and the certificate for the use right of site.

This requirement demonstrates that the entire business fund must be paid and the sponsors must have a right to use to a site for the proposed social organization before the application for the preparation to RAO. Is this requirement necessary? At this point in the process, there is still a long way to the actual establishment of the social organization, and business is forbidden from being carried out at this time. So, if the application is rejected by the RAO, the sponsors will bear the loss. Even if the social organization is ultimately established successfully, the fund and estate must remain unused during the period of application, and loss is inevitable.

D. Basic information and testimonial of identification of the sponsors and the proposed responsible persons

According to official interpretation, this means the sponsors and proposed responsible persons shall submit the resume, testimonial of identification, prior record of rewards or punishment and so on. The resume shall be attached with the examination opinion of the personnel department of the unit this person belongs to, accompanied by an official seal.[6] As to the meaning of the attached examination opinion of the unit, an important order of the Ministry of Civil Affairs may be referred to. The Notice on the Examination and Issuing New Certificates in the Reexamination and Rectification of Social Organizations by the Ministry of Civil Affairs (3 November 1998) provides that, ‘the responsible persons shall pass the examination of the personnel department of the unit they belong to and the CBU, and be approved, then be elected in accordance with the procedure under the articles of the social organization.’ Though this Notice regulates social organizations established under Reexamination and Rectification process, the proposed social organization must follow the same rule in practice. So, if somebody wants to be a sponsor or proposed responsible person, the approval of the unit he/she belongs to is necessary. But this requirement is not listed in the Regulations. In my opinion, this provision is beyond the scope of the authorized power of the RAO.

E. The draft articles of the proposed social organization

According to Article 15 of the Regulations, the draft articles shall contain the organization’s name, domicile, purposes, business scope, governance structure, qualifications of its members and their rights and duties, qualifications of its responsible persons, procedure for revising its articles, procedure for termination and the disposal of its assets thereafter, etc.

The articles of a social organization are its constitution. It is the foundation of the existence and business of the social organization. But stipulations in the Regulations relating to it are so simple. In November 1998, the Ministry of Civil Affairs issued Model Articles of Social Organization (hereinafter referred to as Model Articles). The Model Articles are much more definite than the Regulations. Though it is just a ‘model’ and sponsors should have the right to ignore it, the Ministry of Civil Affairs looks upon it as somehow compulsory, and requires social organizations to follow its main content.

  1. Examination of the Application for the Preparation by the RAO

Under Article 12 of the Regulations, the registration authority shall come to the decision of approving or rejecting the application for the preparation of establishing a social organization within 60 days of receipt of all the valid documents specified in Article 11. If the application is rejected, an explanation shall be given to the sponsor.

It should be noted that the documents the RAO having received must be ‘all the valid documents’. Therefore, any document which the sponsor files is not complete, or does not meet the requirements, or there are some main documents being invalid, then the RAO is entitled to demand the sponsor to file the complete and valid documents, and then make a decision within 60 days. If the documents do not meet the requirements of law, the RAO should have the power to reject the application. Although this is not provided expressly, it is evident in the provisions of Articles 9 and 11.

The examination by the RAO in the process of preparation is the most decisive step of the establishment procedure. ‘Examination can be catalogued into procedural examination and substantial examination. The purpose of procedural examination is to see whether the documents filed are complete or not, and whether there are obvious mistakes. Substantial examination is the most important work in the registration procedure. The purpose of which is to, from an over view, check whether the social organization proposed satisfies the need of the construction of the socialist material and spiritual civilization, whether it is authoritative and representative in the field concerned. From these factors, a conclusion of whether the establishment of the social organization proposed is necessary is drawn. The items of examination include whether the name of the social organization proposed is in consistent with its business scope, the location of the members and areas of its business, whether it has a place for daily operation, and whether it has adequate funds from legal sources. Having accomplishing this step of examination, in order to confirm and examine the authenticity of the documents filed, a further practical investigation should be taken’.[7]

In accordance with Article 13 of the regulations, there are several reasons for rejecting an application for the preparation of establishing a social organization, they are listed and elaborated as follows:

A. Existence of evidence indicates that the purpose and business scope of the proposed social organization is not in conformity with the provisions of Article 4 of the Regulations.

Article 4 of the Regulations provides that ‘social organizations shall abide by the Constitution, laws, administrative regulations and the state policies, and shall not oppose the basic principles established by the Constitution, shall not endanger the unification and security of the State and the unity of the races, shall not infringe upon the interests of the State, public and social interests and lawful rights and interests of other organizations and citizens, and shall not breach social ethics and morality. Social organizations shall not be engaged in any commercial affairs for profit.’ From the meaning of the Article itself, the principle established hereof is one that social organizations already established should follow in their activities. But, at the same time, Article 13 provides that an application for the establishment of a social organization is to be rejected if the proposed social organization will violate this principle in its future activities.

There are several points to be discussed about the reasons for the rejection of application.

  1. ‘Social organizations shall abide by the Constitution, laws, administrative regulations and the state policies’. In a rule-of-law state, there is no doubt that social organizations shall, as all other citizens and organizations, abide by the Constitution, the laws and the regulations in their activities. However, this Article provides that social organizations shall abide by the state policies. What are the state policies? It seems that scholars have done little research about this problem.[8] In practice, the ministries of State Council always regard all the instructions issued on their behalf as ‘policies’. Nevertheless, there is not any regular system in regard to the announcement or publication of these ‘policies’. Some of them, for some reason, may be announced occasionally (mainly by compilation of these ‘policies’ by the competent authorities),[9] and some of them are not made open to the public at all.[10] It seems to be a violation of the principle of rule of law that the social organizations are obliged to abide by these ‘policies’, especially those which are not announced.
  2. The meaning of ‘the basic principles established by the Constitution’. In the field of constitutional study, there are theoretical conclusions of principles of the Constitution. For example, in one textbook of constitutional law, the principles of socialist constitution are concluded as the principle of power belonging to the people, the principle of the protection of the citizens’ rights, the principle of the socialist rule of law, and the principle of democratic centralism.[11] However, the principles in Article 4 refer to the Four Fundamental Principles, i.e. adherence to the leadership of the Chinese Communist Party, adherence to the guidance of Marxism-Leninism, Mao Zedong Thought and Deng Xiaoping Theory, adherence to the people’s democratic dictatorship, and adherence to the socialist orientation.[12

    Freedom of speech is protected by the Constitution; therefore thoughts cannot constitute a crime. So having the thought of objecting the Four Fundamental Principles is still within the scope of personal freedom. However, it is difficult to distinguish whether the dissemination of thoughts against the Four Fundamental Principles is illegal, or just the commission of a ‘political mistake’.[13] No matter whether or not it constitutes a crime, the RAO will reject the application of those social organizations engaged in activities against the Four Fundamental Principles. In 1990, when the State Council decided to reexamine and rectify all the social organizations, a decision of ‘resolute dissolution’ of the social organization ‘against the Four Fundamental Principles and continuously spreading the thought of bourgeois liberalization’ was made.[14]When the State Council decided to reexamine and rectify all of the social organizations again in 1997, it was declared that social organizations ‘spreading the thought of bourgeois liberalization’ were to be dissolved.[15] Therefore, the government prohibits the spreading of thought by social organizations that contradicts the Four Fundamental Principles. This may be regarded as an explanation of the concept of ‘shall not oppose the fundamental principles established by the Constitution’.

    Opposition of the fundamental principles established by the Constitution, which is stated in paragraph 1 of Article 13 of the Regulations as a reason for rejecting the application for the establishment of a social organization, can logically be divided into two types. They are discussed respectively as follows.

    First, a purpose that is in contradiction to the Four Fundamental Principles is expressly stated in the application. In such a case, the application will, without doubt, be rejected.[16]

    Second, notwithstanding the purpose of the proposed social organization stated in the application is in conformity with the requirements of Article 13, there is somehow ‘evidence’ showing that its purpose and business scope is in contradiction to the Four Fundamental Principles. An example of such a case is where several persons apply to establish a football fans society, but it is found by the police department that the sponsors attempt to conduct activities for the secret purpose of opposing the rule by the Communist Party. The application for the establishment of such a social organization will be rejected.

    Nevertheless, there may be a case where sponsors personally bear thoughts against the Four Fundamental Principles, or have taken part or are taking part in activities that contradict the Four Fundamental Principles, but there is not any evidence showing that the purpose of the proposed organization is to carry out activities against the Four Fundamental Principles. In such a case, can the personal aspects of the sponsors be regarded as ‘evidence showing’ the aim of the proposed social organization is against the Four Fundamental Principles? There is not yet any explanation of this question. However, such social organizations are in fact prohibited from being established as a result of the practices of the government. For example, officials from Shanghai said, ‘in March 1994, some released persons from reform through labor (laogai) or reeducation through labor (laodong jiaoyang), who kept in touch with the promoters of the June Fourth Movement, applied to organize the Human Rights Society of Shanghai. Its purpose was to advocate the ‘thoughts of human rights’ of the west countries, and amend the Constitution, and so on. We rejected them resolutely.’[17] In my opinion, the reasoning of the government is not totally unreasonable. But, to a certain extent, such reasoning involves a kind of guessing, as the social organization set up by these people is not certain to take part in illegal activities. If a social organization is prohibited from being established due to such a reason, the individuals involved are deprived the right of association without any criminal procedural action, which is a violation to the spirit of the Constitution.
  3. Other situations under Article 4 of the Regulations. Other situations under paragraph 1 of Article 4 of the Regulations are actually constitutional duties imposed on citizens (Articles 52—54 of the Constitution). In practicing the right of association, citizens at the same time have the obligation to comply with the duties imposed by the Constitution. This Article of the Regulations is just emphasizing this point.

These situations are also subject to the same legal matters as those related to ‘the fundamental principles established by the Constitution’ discussed above.

Paragraph 2 of Article 4 of the Regulations prohibits a social organization from participating in profit making affairs; therefore, a social organization must not aim at making a profit.[18]

B. No need for the establishment of a social organization due to the existence of other social organization whose business scope is either identical or similar to that of the proposed social organization in the same administration area

According to the Notice on Matters Concerning the Regulations On the Registration and Administration of Social organization adopted by the Ministry of Civil Affairs on 30 December 1989, the ‘identical’ hereof means the names, the natures, the purposes, the missions and so forth being identical or basically identical. For example, ‘The Association of Young Photographers of China’ would be identical with ‘The Chinese Young Photographers Association’. The word ‘similar’ refers to the case where the name and the personnel structure is not totally the same, but the businesses of the organizations belong to the same field.[19]

The purpose of this provision is to ‘avoid social organizations from being excessive in number, developing without planning, overlapping of business among the organizations, enrolling members repeatedly and making members suffering excessive economic burden. Also, it may cause malicious competition among the organizations, which in turn leads to all kinds of shortcomings for society.’[20] This kind of examination is an attempt to put social organizations into the track set up by the government.

In the practice of examination, the RAO have gone much further than the stipulation of this subparagraph.

A text showing the official view states, ‘As to the establishment of social organizations, the need of economic development and improvement of society should be taken into account. There should also be reasonable overall planning, and no organization against it is allowed to be established.’ Therefore, the establishment of a social organization is not only restricted by the rule that organizations with identical or similar business scope shall not exist simultaneously in the same administrative area; it should also comply with the requirement that the establishment of a social organization should be beneficial to the construction of the socialist material and spiritual civilization. It is also required that the establishment should meet the necessity of the reforming and opening policy. Moreover, social organizations must be representative within its field of business. The establishment of a social organization can only be permitted provided that it satisfies all the requirements above.[21] There are some decisions made by the Ministry of Civil Affairs showing the restrictions discussed above. For example, the Reply On Matters in the Application for Establishing Social Organizations, which was issued by the Ministry of Civil Affairs on 27 October 1990, expressly requires the establishment of sodality must be beneficiary to the unification of the nation and the unity of all races, to the social and economic stability, and to the development and prosperity of scientific, cultural and academic affairs. Any application for the establishment of alumni associations of fellow provincials or townsmen and other social organizations of the similar nature shall be rejected as a rule.

C. Sponsors or proposed responsible persons are still or were once under the criminal penalty of deprivation of political rights, or without full capacity for civil conduct.

This requirement concerns the qualifications of the sponsors and the proposed responsible persons.

A person without full capacity for civil conduct is, as defined by Articles 12 and 13 of the General Principles of the Civil Law, a minor or mentally ill person.

The criminal penalty of deprivation of political rights refers to the penalty prescribed by Articles 54-58 of the Criminal Code. Article 54 provides that the deprivation of political rights includes the deprivation of the right to associate. Therefore, a person receiving this kind of criminal punishment is prohibited from acting as sponsor or responsible person. However, under paragraph 3 of Article 13 of the Regulations, a person is permanently forbidden from being a sponsor of responsible person, once he or she is sentenced to this kind of criminal punishment.[22] This provision has indeed amended the provision of the Criminal Code. In precise words, it prolongs the time of the criminal penalty of deprivation of political rights under the Criminal Code. Paragraph 3 of Article 62 and paragraph 3 of Article 67 of the Constitution stipulate that only the National People’s Congress and the Standing Committee of the National People’s Congress are authorized to amend the Criminal Code. As an administrative regulation adopted by the State Council, it is hard to say that such a provision is in conformity with the Constitution and the Criminal Code. It violates the basic principle of nullum crimen sine lege.

The above-said qualifications are not all, there are more required by the regulations.

Under paragraph 2 of Article 14, the legal representative of a social organization is prohibited from being the legal representative of another social organization at the same time. An application, therefore, shall be rejected if the proposed legal representative is already a legal representative of another social organization. In addition, leading officials of government agencies and the Party are forbidden, as provided by another regulation of the State Council, from being the legal representative of any social organization.[23]

In addition, the Ministry of Civil Affairs, in practice, requires the responsible person to be qualified politically. For example, at the Working Convention of Social Organizations of Nine Provinces held in March 1991, the head of the Bureau of Social Organizations Administration of the Ministry of Civil Affairs requested that some principles are to be adhered to. The first of these is that the main responsible persons of social organizations shall politically adhere to the Four Fundamental Principles. This is the most important principle in guaranteeing that the political direction of social organizations will not go wrong.[24] Notwithstanding paragraph 3, Article 13 does not provide that an application for establishment made by an organization with sponsors or proposed responsible persons who are not in conformance with the political expectation of the government must be rejected. This situation may be treated as to be included in cases provided by paragraph 1 of Article 13, and is then regarded as a reason for rejection.

D. Fraud or falsification are resorted to in applying for the preparation

For example, where the capital verification report or the certificate for the use right is falsified.

E. The existence of other situations stated by law or administrative regulation being the reason for forbidding the establishment of a social organization

Under circumstances like this, obviously the application for the preparation shall be refused. The sources of law setting out such situations are limited to laws and administrative regulations. It follows that the situations are only effective to be the legal reasons for rejecting an application for establishment, if they are set out by laws adopted by the People’s National Congress or by the Standing Committee of the People’s National Congress and by administrative regulations adopted by the State Council. Neither the departments of the State Council nor the local People’s Congresses nor the local administrative agency are authorized to adopt such rules. This provision was not existed in the Regulations 1989. It is a new rule under the Regulations 1998. It is of great significance for controlling administrative power, and for avoiding arbitrary restriction on the freedom of association by regulations of governments of different levels. Now, the effectiveness of many of those limitations made before the Regulations 1998 came into force should be queried and revised. Unfortunately, adequate attention is not yet paid by the Ministry of Civil Affairs or by other departments and committees.[25]

Under Article 12 of the regulations, the RAO should come to the decision of approval or rejection, as the case may be, within 60 days of having received all the valid documents filed by the sponsors. In the case of rejection, an explanation of reason should be given to the sponsors. In accordance with the Administrative Reconsideration Law and the Administrative Litigation Law, the sponsors are entitled to appeal by way of administrative reconsideration or bring an administrative litigation against the RAO.

IV. Procedure to Establish a Social Organization (3): Accomplishment of Preparation and Application For Establishment

Under Article 14 of the regulations, the social organization in preparatory state shall, within 6 months from the date its application for the preparation is approved by the RAO, convene a members’ assembly or a members’ congress to adopt its articles and elect its executive organ, responsible persons and legal representative. During the period of preparation, the proposed social organization is forbidden from any activity irrelevant to the preparation for the establishment. But there are no stipulations in the Regulations about procedure of the members’ assembly of members’ congress.

If the content of the Articles adopted by the members’ assembly or the members’ congress differs from the content of the draft of the Articles filed for the application for the preparation, or if the responsible person finally elected is not the person who was proposed in the application of preparation, the legality of the work carried out for the preparation of establishment is not in any way affected.

Under Article 14 of the Regulations, upon the accomplishment of the preparation of the establishment, the proposed social organization shall apply for establishment registration to the RAO. For the purpose of establishment registration, the documents to be filed, as Article 16 of the Regulations provides, are the application form for registration and ‘relevant documents’. According to the official explanation, ‘relevant documents’ is referred to the Articles adopted by the members’ assembly or members’ congress, the document identifying the approval of registration by the CBU, the list of members of the board of directors or the standing board of directors, and other documents the RAO regard as being necessary.[26] What is the ‘document identifying the approval of registration of the CBU’? Does it mean that before applying for establishment registration to the RAO the examination and approval by the CBU is necessary? Or is it just referred to the one showing the approval by the CBU, for the preparation for the establishment, so that no more approval by the CBU is needed? The second answer is unreasonable, since the RAO have already received a copy of it when the proposed social organization applies for the preparation for the establishment. And taking into account the wording of the regulations and its explanation, it is obvious that the second answer is wrong. So, the first answer is right, that is, after accomplishing preparation for the establishment, the proposed social organization shall apply to the CBU for approval, and then apply for the establishment registration to the RAO. However, this interpretation of the Regulations clearly contradicts the stipulations of the Regulations. It should also be noted that the scope of ‘other documents the RAO regard as necessary’ must not be interpreted to exceed the limitation of reasonableness. It should be limited to the documents related to the work of preparation, e.g. the resolution of the members’ congress, the resolution of the board of directors and so forth.

The Regulations lack the stipulations about how the RAO should examine the documents filed by the sponsors. Nevertheless, Article 16 states, ‘Registration shall be granted to the proposed social organization that is free from all situations provided in Article 13 of these Regulations, whose preparation work reaches all the requirements and whose articles are complete’. So, there are three requirements for a social organization to be registered: free from situations provided in Article 13, the preparation work reaching the requirements, the content of the Article being complete.

  1. The RAO should examine whether any circumstance stated in Article 13 exists. It is certain that the RAO hold the power of examining substantially as it does in the procedure of examining the application for the preparation for the establishment. As long as the RAO considers it as necessary, it can examine the matters already examined. Of course, the focus of the examination in this procedure should be on the new matters arising in the preparation work.
  2. The RAO should examine whether the preparation work ‘reaches all the requirements’ or not. However, the law in fact has few stipulation related to the preparation work, therefore, the standard that the examination bases on is unclear. Of course, the unclearness of the law practically leaves the matter to the discretion of the RAO.
  3. The RAO should examine whether the Articles of the social organization is ‘complete’. It is hard to say that the content is complete if only the matters listed in Article 15 are covered. It is just a list. In practice, the Model Articles are usually used to judge.

The RAO should finish examination within 30 days of having received all the documents, and make a decision of approval or rejection. In the case where the application satisfied the requirements set out by the Regulations, a decision of approval should be made, and a Certificate for Social Organization as a Legal Person shall be issued to the organization. The social organization is qualified as a legal person on the day of registration (as to the last part of paragraph 2 of Article 50 of the General Principles of The Civil Law). In the case where the registration authority has come to a decision of rejection, such decision should be notified to the applicant.

If the applicant objects to the rejection of the RAO, it is entitled to appeal by way of administrative reconsideration or administrative litigation in a court.

V. Conclusion

The establishment of social organizations is the first step for citizens and organizations to practice their freedom of association. The system for the establishment of social organizations regulated by the Regulations, comparing to that under the totalitarianism system 20 years ago, is undoubtedly a great improvement. Nevertheless, the present system has some obvious shortcomings.

  1. Cumbersome content, difficult to understand.

    As to the matters regulated, the stipulations of the Regulations are overly sketchy; the Ministry of Civil Affairs and other departments of the State Council adopt most of the rules regulating the system. Only a small portion of these rules is adopted in a standardized form, announced publicly and to be enforced as from the date of announcement. Conversely, the majority of these rules are themselves internal documents, which are instructions to the subordinate units from higher authorities. However, many of these internal documents are actually determining the rights and duties on the part of the administrative counter-persons. These rules are not published through any normalized procedure. They may be published, for some uncertain reasons, some time after they are adopted and put into force. This kind of publication is subject to the discretion of the related authorities, and surely there are some not published. However, as we know, these are the most direct and fundamental rules that the administrative authorities, when making the decision, rely on. To comply with the principle of rule of law, the above-said situation must be changed.


  2. Complicated procedure.

    To have a society finally registered as a legal person, a procedure with a triple examination and approval by the CBU and RAO is to be gone through, and every examination is a substantial one.[27]


  3. Excessive restrictions to the establishment of social organization.

    There are not only restrictions to the number of members, amount of business fund and to the qualification of the sponsors and the proposed responsible persons, but also limitations set up by the administration authorities in their administration without basis of law.

    The basic purpose of restrictions by law is to maintain the stability of the society. The maintenance of social stability has always been regarded as the most fundamental task of the government, that is the reason why there are such a great amount of rules, in law and in practice, restricting the purpose, the responsible person’s status and other matters of a social organization based on the consideration of political factors. Under the present social conditions of China, to maintain the social stability is no doubt a formidable mission that, however, is of great essential for the government to shoulder. But how to keep a reasonable balance between the two contradictory values-- the social stability and the people’s freedom of association, would be a worthy topic to probe into.

    The government, on one hand, does not deny that social organizations is the path for people to practice the freedom of association, on the other hand, the government also regards social organizations as a media of accomplishing all sorts of tasks set down by itself. This point of view held by the government leads to the reasonableness and the necessity being the condition of the establishment of a social organization, while the standard of reasonableness and necessity is at the discretion of the government. Despite the question of whether the government has the best ability to decide the right way of the progress of the society, the practice of forbidding the society from searching its own way could hardly help the government to achieve its original tasks. Without competition, the average efficiency of social organizations is hardly to be improved.

    Moreover, some restrictions provided by law are in no sense indispensable. It may be worthy to point out one important amendment made in the Regulations 1998 to the Regulations 1989. Pursuant to Article 14 of the Regulations 1989, a social organization can be a legal person, or it can be an organization without legal personality. And according to paragraph 2 of Article 3 and Article 17 of the Regulations 1998, a social organization must qualify as a legal person, and much more strict requirements are imposed on the establishment of a social organization. Article 35 of the Regulations 1998 prescribes that any unregistered social organization is illegal and shall be dissolved. So the wish of establishing a social organization without legal personality (such kind of social organization is easier to set up and is more flexible) is just a wish. And because the requirements of establishing a social organization are very strict, if someone wants to set up a small social organization with 10 to 20 members, with neither permanent location nor full-time staff, and fund is raised only when activity is to be launched, it would be impossible to be established under the Regulations 1998.[28] Social organizations with legal personality and social organizations without legal personality both have their advantages and disadvantages, they both have their own existing value, and they are more adaptable than each other depending on the type and size of the institution. Therefore, the amendment discussed above has created more limitation on the freedom of association.[29]


  4. Regarding the technique of legislation, many stipulations in the Regulations are too ambiguous.

    This causes the hardship of understanding, also, in many cases, gives the CBU and RAO excessive power of discretion.


  5. Great uncertainty in administration.

    It has only been a short time since the government began to allow the private association, it is natural that the government lacks the experience of the related administration; therefore it is encouraging for the government to grope within the power authorized by law. However, if the competent authorities exceed their power granted and limited by law just in the name of ‘grope’, the legal system will surely be destroyed. It is such a general phenomenon that the competent authorities making up all kinds of rules without complying with the stipulations of the law. For example, the Department of Civil Affairs of the Zhejiang province imposes a compulsory duty on all social organizations to prepay a ‘deposit for civil liability’ and that Department decides the amount.[30]

    Freedom of association is a fundamental human rights acknowledged by most countries, including China, according to the Constitution of China. But as we can see from this article, there is still a long way to go.

About the Author 

Ge, Yunsong, LL.B., LL.M., Lecturer of law at Law School, Peking University, Beijing, P. R. China. E-mail: ysge@law.pku.edu.cn

Notes

[1] On September 1950, former Government Administration Council of the Central People’s Government promulgated Interim Regulations on the Registration of Social Organizations. The purpose of the Regulations is to reexamine and control the social organizations that were established before 1949. After this task was achieved, these Regulations were still valid, but the government no longer enforced them. On 25 October 1989, the State Council promulgated the Regulations on the Registration and Administration of Social Organizations, these Regulations constructed a new system of administration of social organizations. To enforce these Regulations, the Ministry of Civil Affairs (the Registration and Administration Organ of social organizations) adopted many rules in this field. On 25 October 1998, the State Council enacted the new Regulations on the Registration and Administration of Social Organizations, which amended some rules of the Regulations 1989. But the basic system is not changed. So those rules adopted under the Regulations 1989 shall be valid as a rule. Of course, those rules in accordance with articles of the Regulations 1989 which were amended by the Regulations 1998 have to be reexamined.

The Regulations on the Registration and Administration of Social Organizations 1998 is the most important document governing social organizations.

[2] There are many laws concerning specific kind of social organizations, such as the Trade Union Law, the Red Cross Association Law, the Regulations on the Administration of Foundations, etc. This paper doesn’t discuss special problem of these social organizations under these laws.

[3] The Regulations only apply to social organizations formed by Chinese individuals and organizations. This paper only deals with problems under the Regulations. Chinese law doesn’t prohibit foreigners from establishing social associations in general, but only chamber of commerce can be organized in accordance with the Interim Regulations of the Foreigners’ Chamber of Commerce. Other kinds of associations are still forbidden to be established by foreign individuals, companies and other organizations under current Chinese law. There are many associations of this kind, and the government doesn’t try to dissolve them in practice, unless they attempt to do something involving politics.

[4] The Department of Politics and Law of the Office of Law of the State Council & the Bureau of Administration of Non-governmental Organizations of the Ministry of Civil Affairs (ed.), the Interpretation of the Regulations on the Registration and Administration of Social Organizations and the Interim Regulations on the Registration and Administration of Private Non-enterprise Units, Beijing: Press of Society of China, 1999, p.30. The authors of this book are all officials and have attended the work of drafting the Regulations.

[5] See Xu Ruixin, Explanation on Several Matters in the Administration of Non-governmental Organizations, in the book, Bureau of Administration of Non-governmental Organizations of the Ministry of Civil Affairs, ed. the New Selected Regulations and Policies on the Administration of Non-governmental Organizations, restricted publication, p. 90-91.

[6] See the Interpretation of the Regulations on the Registration and Administration of Social Organizations and the Interim Regulations on the Registration and Administration of Private Non-enterprise Units, op. cit. supra, p.34.

[7] Wu Zhongze & Chen Jinluo, ed. Administration of Social Organizations (shetuan guanli gongzuo). Beijing: Press society of china, 1996, p. 54. This book is one of the ‘Civil Affairs Administration Works Series’, whose publication is organized by the Ministry of Civil Affairs. The chief editor of the Series is DuoJi Cairang, the Minister of Civil Affairs, and the chief editors of the book are the former and current head of the Bureau of the Administration of NGO, a department of the Ministry of Civil Affairs. Therefore, this book can be regarded as a source of the official view. The context of the book shows the practice of the social organization administration.

Notwithstanding it is said in the text that the matters concerned is examination under the Regulations 1989, examination under the Regulations 1998 is of no difference to the former. So, the quotation hereof can still be used to explain the present practice.

[8] Since it is provided under Article 6 of the General Principles of the Civil Law that ‘Civil activities must be in compliance with the law; where there are no relevant provisions in the law, they shall be in compliance with state policies’, therefore, civil law scholars have already made some effort to discuss “state policies”, but, on the whole, there is still not much achievement on the topic. See Xu Guodong, Interpretation of the Basic Principles of Civil Law (minfa jiben yuanze jieshi), Beijing: University of Politics and Law of China Press, 1992, p.124 set eq.

[9] For example, in the Administration of social Organizations, op. cit. Supra, some important regulations and “policies” are published. So do the ‘Collection of Laws and Regulations Related to Civil Affairs of the People’s Republic of China’(zhonghua renmin gongheguo minzheng fagui daquan) produced by the Regulations Office of the Ministry of Civil Affairs and published by the Research Institution of the Ministry of Construction.

[10] The reason may be that some of the policies involve state secret, or some of the policies do not, though, involve state secret are regarded as not important. Even under the latter circumstance, the competent authorities would not be in breach of its duty, as there is not any duty imposed on these authorities to promulgate their internal documents. The Notice On the Strengthening of the Administration of Social Organizations and Private Non-enterprise Units (zhong ban fa [1996] No. 22) adopted by the General Office of the Central Committee of CCP and the General Office of the State Council, which is mentioned in many other documents, has never been promulgated. The reason may be it is a confidential document.

[11] See Wei Dingren, ed. Constitution (xianfaxue), Beijing: Peking University Press, 1994, p.25-27.

[12] This is how the official explanation defines the principles provided in Article 4. See the Interpretation of the Regulations on the Registration and Administration of Social Organizations and the Interim Regulations on the Registration and Administration of Private Non-enterprise Units, op. cit. supra, p. 18.

[13] It is a crime to provoke subversion of the government (paragraph 2 of Article 105 of the Criminal Code of China), but the definition of such crime is not very clear that there is difficulty in distinguishing whether such crime is committed or not. See Yang Chunxi, ed. Study of Chinese Criminal Law (zhongguo xingfa lun), Beijing: Peking University Press, 1994, p. 312.

[14] See the Notice Regarding the Transferal of Request for Instructions Concerning the Reexamination and Rectification of Social Organizations forwarded by the Ministry of Civil Affairs, an order of the General Office of the State Council (9 June 1990), and the Request for Instructions Concerning the Reexamination and Rectification of Social Organizations’ by the Ministry of Civil Affairs (18 May 1990).

[15] See the Notice Regarding the Transferal of Opinions Concerning the Reexamination and Rectification of Social Organizations Forwarded by the Ministry of Civil Affairs, an order of the General Office of the State Council (8 April 1997), and the Opinions Concerning the Reexamination and Rectification of Social Organizations by the Ministry of Civil Affairs (28 January 1997).

[16] This reason for rejection of the application is not expressly stated in paragraph 1 of Article 13. However, since the applications of those social organizations proposed to set up with nominally legal purpose shall be rejected, if there is evidence proving they are going to be engaged in illegal activities (this situation will be discussed next), then, it is definite that the applications of those social organizations proposed to set up with express illegal purpose shall be rejected. This method of interpretation is called ‘natural interpretation’. See Liang Huixing, the Hermeneutics of Civil Law, Beijing: University of Politics and Law of China Press, 1995, pp. 217-219.

[17] See Feng Guoqin (the Vice Mayor of Shanghai), Strengthen the Administration of Social Organizations, Make Social Organizations be effective, Strive for the Stability of Society and Politics (yifa qianghua, shetuan guanli, chongfen fahui shetuan zuoyong, wei weihu shehui zhengzhi wending er buxie nuli), in the New Selected Regulations and Policies on the Administration of Non-governmental Organizations, op cit. supra, p. 114. Of course, from the wording hereof, the purpose of the ‘Human Rights Society of Shanghai’ in the application seems to be illegal, but ‘advocate thoughts of human rights’ itself is not illegal. The legally established Foundation of the Development of Human Rights of China has its purpose of ‘sponsoring human rights research, education and advocacy’ expressly written in the article. Moreover, the advocacy of amending the Constitution is also legal. A great number of discussions take place before the Constitution is amended; these discussions are no doubt legal. Therefore, the decision of the competent department of the Shanghai government is not based on the purpose of the proposed social organization being illegal, but in fact is based on which the sponsors for a long time have possessed the thoughts and acts against the Four Fundamental Principles. As a result, the proposed social organization is presumed that it will carry out such illegal activities. About what was the actual reason the local government expressed in rejecting the application, I have no way to know.

[18] On the other hand, Chinese law allows a social organization to gain rewards for the service it provides and to gain profits by setting up enterprises. But the income shall be used in the way in accordance with paragraph 2 of Article 29 of the Regulations, and shall not be distributed to its members. See the Notice Regarding Matters of the Social Organizations’ Business Activities by the Ministry of Civil Affairs and the State General Administrative Bureau for Industry and Commerce (10 July 1995).

[19] The Notice is to interpret the provision under paragraph 3 of Article 16 of the Regulations 1989, i.e. ‘identical or similar social organizations shall not be established repeatedly in the same administrative region’. Although the provision under paragraph 2 of Article 13 of the Regulations 1998 is different in wording with it, in fact they are the same in content. Therefore, the Notice should still be valid.

[20] See the Interpretation of the Regulations on the Registration and Administration of Social Organizations and the Interim Regulations on the Registration and Administration of Private Non-enterprise Units, op. cit. supra, p. 36.

[21] See the Administration of Social Organizations, op. cit. supra, pp. 49-52.


[22] The reason for this provision is that it can ‘help the social organization follow a correct political direction, establish a good reputation in society, and gain the trust of the society.’ See the Interpretation of the Regulations on the Registration and Administration of Social Organizations and the Interim Regulations on the Registration and Administration of Private Non-enterprise Units, op. cit. supra, pp. 36-37.

[23] See the Notice Regarding the Restriction of Leading Officials of Government and Party being Responsible persons of Social Organizations by the General Office of the Central Committee of CCP and the General Office of the State Council (2 July 1998).

[24] See the Summary of the Working Convention of Social Organizations of Nine Provinces Held by the Ministry of Civil Affairs, in Guidance to the Work of Social Organizations, ed. by Zhang Lingeng, Hangzhou: Zhejiang Renmin Press, 1992, p. 177.

[25] The Ministry of Civil Affairs has never revised the effects of the documents promulgated before. Moreover, many provisions in the newly promulgated documents have exceeded the scope of the Regulations 1998.

[26] See the Interpretation of the Regulations on the Registration and Administration of Social Organizations and the Interim Regulations on the Registration and Administration of Private Non-enterprise Units, op. cit. supra, p. 43.

[27] Even more, under the official interpretation discuss above, there shall be one more examination.


[28] The social organizations without legal personality, under the Notice on the Examination and Issuing New Certificates in the Reexamination and Rectification of Social Organizations by the Ministry of Civil Affairs, shall reach the requirements of a legal person of social organization specified in the Regulations 1998 within a year of the promulgation of the new Regulations, and shall register again. Otherwise, they shall be dissolved.

[29] The reason for this policy adopted by the State Council in the Regulations is not very clear. The Interpretation of the Regulations on the Registration and Administration of Social Organizations and the Interim Regulations on the Registration and Administration of Private Non-enterprise Units, op. cit. supra, p. 16, shows ‘the reason for this provision is to make them carry out activities in a better way’. Once in a speech addressed by Meng Xuenong, the Vice Mayor of Beijing, the matter was mentioned, which may be helpful in learning about the official view on the matter. According to his speech, a lot of work had been done on the administration of social organizations by the Beijing government. One of which was promoting all social organizations in the Beijing to reach the requirements of legal person, and making them change into legal persons. Therefore, the quality of the social organizations in the Beijing was raised.’ Since 1992, Beijing government had adopted some regulations on this, in accordance with which the registration of new social organizations without legal personality was nearly stopped, and many efforts was made to encourage those social organizations without legal personality changing into legal person’. See the New Selected Regulations and Policies on the Administration of Non-governmental Organizations, op. cit. supra, p. 101.

We may ask such questions: is ‘quality’ the difference between social organizations with and without legal personality? Does the government have the responsibility and power to force a social organization to improve its quality?

[30] It is provided in the Notice on Matters Relating to the Application for the Establishment of Social Organizations with Legal Personality, which was promulgated by the Department of Civil Affairs of the Zhejiang Province, ‘Social Organizations with legal personality shall pay a deposit for civil liability. The amount of the deposit depends on the need of the bearing of civil liability by the social organization. It is now fixed at 5000 yuan to be the minimum. The deposit shall be deposited in the bank account opened by the Department of Civil Affairs of Zhejiang Province. The capital and interests of the deposit belong to the social organization. The interests are calculated and paid annually’. See Guidance to the Work of Social Organizations, op. cit. supra, p. 210. I can’t find any basis in law for this provision.

 

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