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Published online by Cambridge University Press: 07 December 2021
The passage of the Charity Law signals the beginning of a new era in the legal regulation of charities in China. Its provisions reflect the increasing autonomy of charitable actors in exercising their management rights and the reduced control of the government over the use of charity resources. The shift of the state's attitude towards its relationship with the charitable sector brings new insights into the governance of charities in China. This article highlights the public-private law hybrid nature of the new legislative arrangement for charities and outlines the policy dynamics underlying its operation and development. It argues that the hybrid nature of the Charity Law was intentionally created by legislators, and the design of the governance framework for charities should therefore be responsive to this new legislative arrangement. Following on this reasoning, the article explores the implications that analysis of the hybrid nature of the Charity Law has for the governance of charities in China. It identifies the parties relevant to charity governance, the way in which they interact, and the governance principles that can be applied to charities.
Assistant Professor, School of Law, City University of Hong Kong.
1 中国慈善事业发展指导纲要（2011–2015 年）[Guidelines for the Development of China's Charitable Causes (2011–2015)] (Ministry of Civil Affairs, People's Republic of China, 15 Jul 2011), pt 2; 国务院关于促进慈善事业健康发展的指导意见 [Guiding Opinions of the State Council on Promoting Healthy Development of Charitable Causes] (State Council, People's Republic of China, 24 Nov 2014), pts 3–4.
2 中华人民共和国慈善法 [Charity Law of the People's Republic of China], adopted 16 Mar 2016 by the National People's Congress.
3 Lee, Rebecca, ‘Modernize Charity Law in China’ (2009) 18 Pacific Rim Law & Policy Journal 347Google Scholar, 372.
4 See Section A of Part III below.
5 王思斌 (Wang Sibin), ‘慈善法将有力促进社会工作事业发展 [Charity Law Will Effectively Promote the Development of Social Work in China]’, 中国社会报 China Social News (29 Apr 2016).
6 For the purpose of this article, ‘charities’ here encompass charitable organizations (cishan zuzhi 慈善组织), public welfare trusts (gongyi xintuo 公益信托) and charitable trusts (cishan xintuo 慈善信托). The major forms of charitable organizations under the Charity Law include foundations (jijin hui 基金会), social associations (shehui tuanti 社会团体) and social service agencies (shehui fuwu jigou 社会服务机构).
7 Australian Charities and Not-for-profits Commission, ‘Governance for Good – The ACNC's Guide for Charity Board Members’ (Jul 2013) 3 <https://bower.org.au/wp-content/uploads/2020/02/Governance-for-Good-the-ACNCs-guide-for-charity-board-members.pdf> accessed 29 Jul 2021.
8 北京大学非营利法组织研究中心 (Peking University Law School Nonprofit Organization Law Research Center), 中国非营利组织法的基本问题 [Fundamental Issues of the Non-Profit Organization Law in China] (中国方正出版社 [China Fangzheng Press] 2006) 126.
9 广东省民政厅关于社会组织法人治理的指导意见 [Guiding Opinions of the Department of Civil Affairs of Guangdong Province on the Governance of Social Organizations] (Department of Civil Affairs of Guangdong Province, People's Republic of China, 10 Apr 2015), s 2.
10 On the existing limited literature that touches upon these questions, see, eg, 韩丽欣 (Han Lixin), 中国慈善组织治理法治化研究 [Research on the Governance of Chinese Charities] (法律出版社 [Law Press] 2015) 104–123; 赵俊男 (Zhao Junnan), ‘中国慈善事业治理研究 [Study on the Governance of Charitable Causes in China]’ (PhD Thesis, Jilin University 2013) 29–38.
11 The term ‘sound’ used in this provision of Charity Law is ‘jianquan 健全’: Charity Law, art 12.
12 ‘China’ in this article refers to the People's Republic of China, excluding the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan Region.
13 John H Farrar, Corporate Governance in Australia and New Zealand (Oxford University Press 2001) 3.
14 Tomasic, Roman, ‘Good Corporate Governance: The International Challenge’ (2000) 12 Australian Journal of Corporate Law 142Google Scholar, 143.
15 The Treasury of the Australian Government, ‘Development of Governance Standards – Consultation Paper’ (Dec 2012) 5 <https://treasury.gov.au/sites/default/files/2019-03/Governance_Standards_Consultation_Paper.pdf> accessed 29 Jul 2021.
16 David O Renz & Fredrik O Andersson, ‘Nonprofit Governance: A Review of the Field’, in Chris Cornforth & William A Brown (eds), Nonprofit Governance: Innovative Perspectives and Approaches (Routledge 2014) 18.
17 PG Turner, ‘The Entitlements of Objects as Defining Features of Discretionary Trusts’, in Richard C Nolan, Kelvin FK Low & Tang Hang Wu (eds), Trusts and Modern Wealth Management (Cambridge University Press 2018) 247.
18 ibid.
19 ibid.
20 汉语大字典编纂处 (Office of Chinese Dictionary Compilation), 现代汉语词典 [Modern Chinese Dictionary] (四川辞书出版社 [Sichuan Dictionary Press] 2014) 276; 中国社会科学院语言研究所 (Institute of Language Studies, Chinese Academy of Social Sciences), 现代汉语词典 [Modern Chinese Dictionary] (7th edn, 商务印书馆 [The Commercial Press] 2016) 482.
21 See J A Simpson & E S C Weiner (eds), The Oxford English Dictionary (VI) (2nd edn, Clarendon Press 1989) 710; Lesley Brown (ed), The New Shorter Oxford English Dictionary on Historical Principles (Volume 1 A-M), vol 2 (4th edn, Clarendon Press 1993) 1123.
22 Shleifer, Andrei & Vishny, Robert W, ‘A Survey of Corporate Governance’ (1997) 52 Journal of Finance 737CrossRefGoogle Scholar, 737. See also Williamson, Oliver E, ‘Corporate Finance and Corporate Governance’ (1988) 43 Journal of Finance 567CrossRefGoogle Scholar, 588–589; Bebchuk, Lucian, Cohen, Alma & Ferrell, Allen, ‘What Matters in Corporate Governance?’ (2009) 22 Review of Financial Studies 783CrossRefGoogle Scholar, 823–824.
23 Paul Ali, Rosemary Teele Langford & Ian M Ramsay (eds), Corporations Law (LexisNexis Butterworths 2016) 290. See also Brown, Philip, Beekes, Wendy & Verhoeven, Peter, ‘Corporate Governance, Accounting and Finance: A Review’ (2011) 51 Accounting & Finance 96CrossRefGoogle Scholar, 153; Sloan, Richard G, ‘Financial Accounting and Corporate Governance: A Discussion’ (2001) 32 Journal of Accounting and Economics 335CrossRefGoogle Scholar, 340–341.
24 Ali, Langford & Ramsay (n 23) 292–293.
25 Chenxia Shi, Political Determinants of Corporate Governance in China (Routledge 2012) 25; Farrar, John H, ‘Developing Corporate Governance in Greater China’ (2002) 25 University of New South Wales Law Journal 462Google Scholar, 463.
26 Wei, Yuwa, ‘An Overview of Corporate Governance in China’ (2003) 30 Syracuse Journal of International Law and Commerce 23Google Scholar, 24.
27 上市公司治理准则 [Governance Codes for Listed Companies in China] (issued 30 Sep 2018 by China Security Regulatory Commission, People's Republic of China), art 3.
28 周雪光 (Zhou Xueguang), 中国国家治理的制度逻辑：一个组织学研究 [The Institutional Logic of Governance in China: An Organizational Approach] (三联书店 [Joint Publishing] 2017) 15, 17.
29 中共中央关于坚持和完善中国特色社会主义制度,推进国家治理体系和治理能力现代化若干重大问题的决定 [Decision of the Central Committee of the Communist Party of China on Several Major Issues Concerning Upholding and Improving the Socialist System with Chinese Characteristics and Promoting the Modernization of the National Governance System and Governance Ability] (issued 31 Oct 2019 by Central Committee of the Communist Party of China), pt 1.
30 肖滨 (Xiao Bin), ‘中国国家治理现代化战略定位的四个维度 [Four Perspectives in Modernized State Governance in China]’ (2015) 2 中国人民大学学报 [Journal of Renmin University of China] 13, 13.
31 See Section A of Part II above.
32 ‘Responsible persons’ here refer to individuals who are responsible for managing a charity. They can be members of a charity's governing body (including committee members or directors) or trustees (including insolvency administrators).
33 Given that the United Kingdom has three legal systems: English law, applying in England and Wales, Northern Irish law, applying in Northern Ireland, and Scots law, applying in Scotland. When English law is referred to in the article, it particularly means the law of England and Wales.
34 赵廉慧 (Zhao Lianhui), 信托法解释论 [Interpretative Theory of Trust Law] (中国法制出版社 [China Legal Publishing House] 2015) 533–534.
35 Jonathan Garton, Public Benefit in Charity Law (Oxford University Press 2013) [6.09].
36 Hubert Picarda, The Law and Practice Relating to Charities (4th edn, Bloomsbury Professional 2010) 225.
37 Kathryn Chan, The Public-Private Nature of Charity Law (Hart Publishing 2016) 62.
38 ibid 80. See also Matthew Harding, Charity Law and the Liberal State (Cambridge University Press 2014) 88–89; Mary Synge, The ‘New’ Public Benefit Requirement: Making Sense of Charity Law? (Hart Publishing 2015) 79.
39 Garton (n 35) [5.25]; Hilary Delany, ‘The Law Relating to Charitable Trusts – Judicial Guidance and Statutory Intervention’ (2011) 33 Dublin University Law Journal 196, 208; Linda Sugin, ‘Rhetoric and Reality in the Tax Law of Charity’ (2016) 84 Fordham Law Review 2607, 2632.
40 Charity Law, art 58.
41 社会组织登记管理机关行政执法约谈工作规定（试行）[Provisions on the Interview Works in the Administrative Law Enforcement by Social Organization Registration and Administration Organs – for Trial Implementation] (issued 16 Mar 2016 by Ministry of Civil Affairs, People's Republic of China), arts 2–15.
42 Charity Law, arts 71–74.
43 ibid art 98.
44 GE Dal Pont & Stefan Petrow, Law of Charity (LexisNexis Butterworths 2010) para 13.2; Ofrex (George Drexler) Foundation (Trustees) v IRC (1965) 3 All ER 529, 530.
45 Bath and North East Somerset Council v HM Attorney General [2002] EWHC 1623(Ch) para 25; Garton (n 35) [2.19].
46 Pont and Petrow (n 44) [3.29].
47 Garton (n 35) [6.08].
48 Charity Law, art 40.
49 ibid art 42.
50 慈善信托管理办法 [Administrative Measures for Charitable Trusts] (issued 10 Jul 2017 by China Banking Regulatory Commission and Ministry of Civil Affairs, People's Republic of China), art 38.
51 ibid.
52 ibid art 11. In contrast, the appointment of a trust supervisor is mandatory in the context of public welfare trusts. See 金锦萍 (Jin Jinping), 公益信托与慈善信托专论 [Legal Issues on Charitable Trust] (社会科学文献出版社 [Social Sciences Academic Press] 2020) 121; 吕鑫 (Lyu Xin), ‘从公益信托到慈善信托：跨国移植及其本土建构 [From Public Welfare Trusts to Charitable Trusts: Transnational Transplantation and Local Construction]’ (2019) 10 社会科学战线 [Social Science Front] 199, 204; 金锦萍 (Jin Jinping), ‘慈善信托的规制之道 – 兼评<慈善信托管理办法> [Regulation of Charitable Trusts – Comment on <Administrative Measures for Charitable Trusts>]’ (2017) 16 中国社会组织 [China Social Organization] 23, 24.
53 Charity Law, art 31.
54 Kai Lyu, ‘Re-Clarifying China's Trust Law: Characteristics and New Conceptual Basis’ (2015) 36 Loyola of Los Angeles International and Comparative Law Review 447, 456.
55 Tey Tsun Hang, ‘Reservation of Settlor's Powers’ (2009) 21 Singapore Academy of Law Journal 517, 524.
56 Arthur Underhill et al, Underhill and Hayton Law Relating to Trusts and Trustees (17th edn, LexisNexis Butterworths 2007) 943.
57 Lynton Tucker et al (eds), Lewin on Trusts (19th edn, Sweet & Maxwell 2015) 1266.
58 慈善组织保值增值投资活动管理暂行办法 [Interim Measures for the Administration of the Investment Activities for Value Preservation and Appreciation of Charitable Organizations] (issued 30 Oct 2018 by Ministry of Civil Affairs, People's Republic of China), art 4.
59 ibid art 6.
60 See generally, ibid.
61 ibid art 14.
62 吕鑫 (Lyu Xin), ‘慈善募捐的自由与限制 – 美国经验的启示 [Freedom and Restriction of Charity Fundraising – Lessons from the US Experience]’ (2011) 4 浙江学刊 [Zhejiang Academic Journal] 144, 152.
63 吕鑫 (Lyu Xin), ‘分配正义：慈善法的基本价值 [Distributive Justice: The Basic Value of Charity Law]’ (2018) 5 浙江社会科学 [Zhejiang Social Sciences] 41, 47.
64 Charity Law, art 28.
65 ibid art 26.
66 ibid art 98.
67 Miu Chungyan et al, ‘Charity Development in China: An Overview’ (2007) 17 Asia Pacific Journal of Social Work and Development 79, 83.
68 See Section B of Part III above.
69 Anthony J Spires, ‘Contingent Symbiosis and Civil Society in an Authoritarian State: Understanding the Survival of China's Grassroots NGOs’ (2011) 117 American Journal of Sociology 1, 8.
70 ibid.
71 关于<中华人民共和国慈善法（草案）>的说明 [Explanations on the Charity Law of the People's Republic of China (Draft)] (Standing Committee of the People's Congress, People's Republic of China, 9 Mar 2016), pt 1.
72 Adam S Chodorow, ‘Charity with Chinese Characteristics’ (2012) 30 UCLA Pacific Basin Law Journal 1, 4.
73 Spires (n 69) 9.
74 See Section B of Part III above.
75 See Section B of Part III above.
76 See Section A of Part III above.
77 Charity Law, art 54.
78 See Section C of Part III above. See also Anna Jane High, ‘Grassroots NGO Regulations and China's Local Legal Culture’ (2013) 9 Socio-Legal Review 1, 11.
79 许琳 (Xu Lin) & 王扬笛 (Wang Yangdi), ‘从慈善需要到慈善行为 [From Charitable Needs to Charitable Behaviour]’ (2020) 50 西北大学学报 (哲学社会科学版) [Journal of Northwest University (Philosophy and Social Sciences Edition)] 140, 144.
80 王振耀 (Wang Zhenyao), 现代慈善与社会治理：2013 年度中国公益事业发展报告 [Modern Charity and Social Governance: the 2013 Annual Report of the Charitable Sector in China] (社会科学文献出版社 [Social Science Academic Press] 2014) 205.
81 ibid 207–208.
82 The Charity Law prescribes three scenarios under which a person cannot work as the responsible person: see Charity Law, art 16.
83 See Part V.
84 Mike Eastwood, Charity Trustee's Handbook (Directory of Social Change 2017) 29.
85 Australian Institute of Company Directors, Good Governance Principles and Guidance for Not-for-Profit Organizations (Sep 2016) 38 < https://www.companydirectors.com.au/~/media/cd2/resources/director-resources/nfp/pdf/nfp-principles-and-guidance-131015.ashx > accessed 13 Aug 2021.
86 Eastwood (n 84) 69–70.
87 Yvonne D Harrison, Vic Murray & Chris Cornforth, ‘The Role and Impact of Chairs of Nonprofit Boards’, in Chris Cornforth & William A Brown (eds), Nonprofit Governance: Innovative Perspectives and Approaches (Routledge 2013) 79.
88 Newland, Sara A, ‘Innovators and Implementers: The Multilevel Politics of Civil Society Governance in Rural China’ (2018) 2018 China Quarterly 22Google Scholar, 32.
89 Bruce R Hopkins & Virginia C Gross, Non-Profit Governance: Law, Practices, and Trends (John Wiley & Sons Inc 2009) 75; Eastwood (n 84) 41.
90 韩丽欣 (Han Lixin) (n 10) 202.
91 Australian Charities and Not-for-profits Commission, ‘ACNC Governance Standards Guidance’ (Aug 2013) 4 <https://www.nfplaw.org.au/sites/default/files/ACNC_governance_standards_guidance_PDF_554KB_0_0.pdf> accessed 29 Jul 2021.
92 Hopkins & Gross (n 89) 76; Eastwood (n 84) 110–113.
93 Eastwood (n 84) 23.
94 Hopkins & Gross (n 89) 75.
95 ibid 76; Eastwood (n 84) 108.
96 Australian Institute of Company Directors (n 85) 34.
97 Cho, Young Nam, ‘The Politics of Lawmaking in Chinese Local People's Congresses’ (2006) 187 China Quarterly 592CrossRefGoogle Scholar, 595; Biddulph, Sarah, Cooney, Sean & Zhu, Ying, ‘Rule of Law with Chinese Characteristics: The Role of Campaigns in Lawmaking’ (2012) 34 Law & Policy 373CrossRefGoogle Scholar, 394; Jing, Hui, ‘The Duty of Loyalty in Chinese Trust Laws’ (2020) 13 Journal of Equity 347Google Scholar, 348–349.
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99 See, eg, 基金会管理条例 [Regulations on Administration of Foundations] (issued 3 Aug 2004 by State Council); 社会团体登记管理条例 [Regulations on Registration Administration of Associations] (issued 6 Feb 2016 by State Council).
100 See, eg, 长沙市慈善事业促进条例 [Regulations of Charity Promotion in Changsha City] (issued 1 Sep 2012 by Standing Committee of the People's Congress of Changsha City); 江苏省慈善事业促进条例 [Regulations of Charity Promotion in Jiangsu Province] (issued 1 May 2010 by Standing Committee of the People's Congress of Jiangsu Province); 宁波市慈善事业促进条例 [Regulations of Charity Promotion in Ningbo City] (issued 1 Oct 2011 by Standing Committee of the People's Congress of Ningbo City); 浙江省实施<中华人民共和国慈善法>办法 [Measures for the Implementation of the Chinese Charity Law in Zhejiang Province] (issued 30 Nov 2018 by Standing Committee of Zhejiang Provincial People's Congress).