2018.02.05 孙建钢、李新杰
It has been more than one year since the introduction of the Law of the People’s Republic of China (the “PRC”) on the Management of Activities of Overseas Nongovernmental Organization (the “overseas NGOs”) within the PRC (the “Overseas NGO Law”) on January 1, 2017. Based on our experience assisting various overseas NGOs during the past year, as well as our observation, analysis and interpretation of our communications with overseas NGOs and the relevant authorities, we would like to provide an overview of the Overseas NGO Law, with a view to stimulating further opinion on these matters.
I. Review of the Implementation
1. “Building a nest to attract a phoenix”: Hundreds of registrations have been completed continuously.
According to data published by the Overseas NGO Management Office of the Ministry of Public Security of the PRC (“Overseas NGO Management Office”), during 2017 (i) 305 overseas NGOs from 29 countries and regions set up their representative offices (“ROs”) and (ii) there have been 487 records of temporary activities filed by overseas NGOs from 21 countries and regions. The Overseas NGO Law has served as the cornerstone and basis for preliminary guidance for overseas NGOs.
2. “Having everything from all side”: The supporting regulations have been released gradually.
Before the Overseas NGO Law came into effect, the Ministry of Public Security of the PRC (“PSB”), as the authority responsible for registering overseas NGOs, formulated the Guidelines for Registration of Representative Offices of Overseas NGOs and Record-Filing of Temporary Activities (the “Guidelines”) and the Directories of the List of Activity Fields, the Project Catalog, and the Relevant Regulatory Departments for Overseas NGOs (2017) (the “Directories”). Some provincial overseas NGOs Management Offices such as the Shanghai PSB also released their own local directories.
After the Overseas NGO Law came into effect: (i) the State Administration of Taxation issued the Notice on Properly Conducting Tax Registration for Representative Offices of Overseas NGOs; (ii) the People's Bank of China and the PSB jointly released the Notice on Proper Management of RMB Bank Accounts of Representative Offices of Overseas NGOs; (iii) the State Administration of Foreign Experts Affairs and the PSB jointly issued the Notice on Issues Concerning Working Permits for Foreign Staff of Overseas NGOs; and (iv) the State Council Leading Group Office of Poverty Alleviation and Development formulated the Operational Measures Regarding Accepting Applications for Acting As the Professional Supervisory Authority of Overseas NGOs and Optional Measures Concerning Record-filing of Temporary Activities by Overseas NGOs, and the State Forestry Administration of the PRC formulated the Administration Measures for Cooperation and Communication between Bureau Units under State Forestry Administration and Overseas NGOs.
Regulations relating to tax, banking, labor and other areas have reportedly been subsequently introduced, and various professional supervisory authorities listed in the Directories have formulated their own detailed implementation regulations to deal with the requirement to act as a professional supervisory authority.
3. “Gathering in Big Cities”: Beijing and Shanghai take the lead in the volume of registrations
According to the published data , in 2017 there were 106 ROs set up in Beijing and 71 ROs in Shanghai, respectively 35% and 23% of the total amount, which places them significantly ahead of other provinces and cities.
II. Discussion of Hotspots
1. “Selection of Registration Form”: Temporary activities or establishment of ROs
The Overseas NGO Law provides two options for overseas NGOs to carry out activities in China, i.e. they can choose to establish an RO or file records of their temporary activities. Filing records of temporary activities is comparatively simple, requiring less documentation that establishing an RO. As a result, for those overseas NGOs that currently have no plans to undertake regular activities in China, or in the case that an overseas NGO has upcoming planned activities but has not yet formally registered its RO, filing records of temporary activities would be a better choice. However, it should be noted that any such temporary activities will need to be carried out with the cooperation with a Chinese partner. Hence, the opportunity to take the record-filing approach will to some extent depend upon the ability of an overseas NGO to find a proper Chinese partner that is able provide efficient support.
2. “Range of Coverage”: One RO countrywide or multiple ROs in different regions
In theory, both the filing of temporary activities and the registration of a single RO could cover NGO activities across the whole country. For instance, a duly registered RO in Shanghai could carry out activities in various regions, such as Shanghai, Beijing and Shenzhen at the same time, so long as the RO has clearly specified these activities in its application documents and such plans have been registered. However, in practice, we note that some professional supervisory authorities have been hesitant about approving applications from overseas NGOs with multiple activities and/or locations around the country. An overseas NGO would need to consider providing precedents and reasonable explanations to persuade and win the professional supervisory authority’s approval, or based on the need for actual activity necessity, establish more than one RO in different regions and/or to undertake different activities. Throughout the implementation during 2017, we have noted many different precedents, with one single RO covering the whole country as well as multiple ROs located in different regions.
3. “Active or not”: The feedback attitudes of the registration authority and the competent professional supervisory authorities may be different
Compared with the active reactions on the part of public security departments which are acting as the registration authorities, the feedback of various professional supervisory authorities are different. Professional supervisory authorities based in developed regions tend to be more experienced in managing and more open to discussion on foreign affairs, meaning that it is usually easier to gain their approval. There are situations where the activities of an overseas NGO might be subject to the supervision from multiple professional authorities. In these cases, the overseas NGO may, based on the responses of the various professional supervisory authorities, choose the one that best suits its purpose, and maximize the support of this authority.
4. “Change of track”: How to handle pre-existing NGO activities and institutions in China
While the Overseas NGO Law is a brand new law, before its release and implementation, many overseas NGOs had already been active in China, using a variety of mechanisms. Some had been registered as social organizations with the civil affairs departments, some had been registered as representative offices of foreign enterprises with the industry and commerce authorities, and some had even established profit-making foreign-invested enterprises. Among the most frequently discussed issues in relation to overseas NGOs is how to manage these pre-existing activities and organizations.
Generally speaking, in accordance with the Overseas NGO Law, the public security authorities as the unified registration authorities of overseas NGOs, have successively accepted registration from a number of pre-existing NGOs from the departments of civil affairs, industry & commerce authorities, the commerce authorities, and so on, providing that most of the original registration authorities have since become the professional supervisory authorities. However, those overseas NGOs that were registered as foreign-invested enterprises but were not accurately identified need to be aware of the risks of their continuing inappropriate registration and to consider what steps might be required to comply with the new laws.
Since the Overseas NGO Law prohibits overseas NGOs from carrying out profit-making activities or recruiting members in China, overseas NGOs including trade organizations and industry associations now face the problem of how to handle their existing profit-making entities and members in China. In practice, due to the absence of existing laws and supporting regulations, such overseas NGOs will, based on their actual situations, need to make an assessment and then develop a comprehensive solution.
Looking back over 2017, the legal system for overseas NGOs has continued to improve. Looking forward to 2018, the implementation of the laws for overseas NGOs is expected to continue to thrive.
We sincerely hope that you have found our analysis useful. As ever, we welcome your comments and questions on these matters.
