Ministry of Civil Affairs of the People's Republic of China
The Interim Measures for the Management of Value-Added and Investment Activities of Charitable Organizations has been approved by the Ministry of Civil Affairs on October 25, 2018. It is hereby promulgated and will be implemented on January 1, 2019.
Minister Huang Shuxian
October 30, 2018
Interim Measures for the Management of Value-Added and Investment Activities of Charitable Organizations
Article 1 In order to regulate the investment activities of charitable organizations, prevent the use of charitable property risks, and promote the sustainable and healthy development of charitable organizations, these Measures are formulated in accordance with the Laws and Regulations of the Charity Law of the People's Republic of China (hereinafter referred to as the Charity Law).
Article 2 These Measures shall apply to the charitable organizations registered and recognized by the civil affairs departments of the people's governments at or above the county level (hereinafter referred to as the civil affairs departments).
Article 3 Charitable organizations shall take charitable activities for the society as their purpose, fully and efficiently use charitable property, and carry out investment activities on the premise of ensuring that the annual charity activities meet the statutory requirements and the donated assets are paid in full and on time.
Charitable organizations should follow the principles of lawfulness, security, and effectiveness in investing activities. The proceeds from investment should be used for charitable purposes.
Article 4 The investment activities referred to in these Measures mainly include the following situations:
(1) directly purchasing asset management products issued by financial institutions such as banks, trusts, securities, funds, futures, insurance asset management institutions, and financial asset investment companies;
(2) Directly investing equity through initiating establishment, mergers and acquisitions, and participation in shares;
(3) Entrusting the property to an institution supervised by the financial supervision and management department for investment.
Article 5 The property that a charitable organization may use for investment is limited to non-restrictive assets and limited assets that are not required to be disbursed during the investment period.
Property that is not funded by government-funded property and donation agreements accepted by charitable organizations may not be used for investment.
Article 6 When investing in asset management products, charitable organizations shall carefully select and purchase products that match the risk identification capabilities and risk tolerance capabilities of the organization.
Where a charitable organization directly invests in an equity, the business scope of the invested party shall be related to the purpose and business scope of the charitable organization.
Where a charitable organization conducts an entrusted investment, it shall select an institution that is qualified to engage in investment management business in China and that manages prudent and high reputation.
Article 7 Charitable organizations shall not engage in the following investment activities:
(1) directly trading stocks;
(2) directly purchasing commodities and financial derivatives products;
(3) investing in life insurance products;
(4) Providing loans to individuals and enterprises in the name of investment;
(5) Investments that do not comply with national industrial policies;
(6) Investments that may expose the Organization to unlimited liability;
(7) Investments that violate the purposes of the organization and may damage reputation;
(8) Other activities prohibited by national laws and regulations such as illegal fund-raising.
Article 8 Charitable organizations shall stipulate the following contents in the financial and asset management system:
(1) The basic principles of investment compliance;
(2) Investment decision-making procedures and management processes;
(3) Relevant duties of the decision-making body, the executing agency and the supervisory agency in the investment activities;
(4) Negative list of investments;
(5) Standards for major investments;
(6) Investment risk management degree;
(7) Suspension, termination or withdrawal mechanism of investment activities;
(8) Investigating the accountability system for illegal investment.
Article 9 The financial and asset management system of a charitable organization and a major investment plan shall be approved by more than two-thirds of the members of the decision-making body.
Article 10: The promoters, main donors, responsible persons, directors, directors, and other individuals or organizations that have control, joint control, or significant influence relationship with charitable organizations, and their interests and charitable organizations' investment behaviors When linking, you should not use the relationship to damage the interests of charitable organizations.
Article 11 A charitable organization shall promptly recover the principal and income due, and conduct accounting in a timely manner in accordance with the law.
Article 12 Charitable organizations shall establish special archives for investment activities and fully preserve the information on decision-making, execution and management of investment. The special file is kept for at least 20 years.
Article 13 Charitable organizations shall reasonably establish a stop-loss mechanism based on the level of risk of investment activities and the extent of the losses they can bear.
Charitable organizations can establish a risk reserve system.
Article 14 When conducting charitable activities, charitable organizations, their responsible persons, directors and staff members shall abide by the provisions of laws and regulations and the articles of association of the organization, and strictly perform their duties of loyalty, prudence and diligence.
When a charitable organization commits an illegal or illegal activity in carrying out an investment activity, and the property of the charitable organization is lost, the relevant personnel shall bear corresponding responsibilities.
Article 15 The person in charge of a charitable organization and a staff member shall not participate in a part-time job or receive remuneration from a company invested by a charitable organization, but may be entrusted by a charitable organization to participate in the shareholders' meeting and the board of directors of the invested enterprise as a shareholder representative, director or supervisor.
Article 16 The civil affairs department may require charitable organizations to make explanations on investment activities, risk control, internal management, etc., and may conduct interviews if necessary.
Article 17 Charitable organizations shall use the property that cannot be used for investment for investment, and the civil affairs department shall impose penalties in accordance with the relevant provisions of Article 99 of the Charity Law. The charity organization violates the provisions of these Measures, and the civil affairs department can give a warning and order it to be corrected within a time limit.
Article 18 The financial and asset management systems and major investment situations of charitable organizations shall be disclosed to the public in accordance with the law and subject to social supervision.
Article 19: Funds that are not recognized as charitable organizations, social organizations that have the qualification for pre-tax deduction of public welfare donations, and social service organizations shall comply with the provisions of these Measures.
Article 20 These Measures shall come into force on January 1, 2019.