China Released Guidelines to Foreign NGO Law

To the anticipation of the international community, the Chinese Ministry of Public Security (“MPS”) released formal guidelines to the Law of the People’s Republic of China on the Administration of Activities of Overseas Non-Governmental Organizations in Mainland China (“Foreign NGO Law”) last week.

Generally, these guidelines clarified the registration requirements and procedures for registering a representative office (for activities exceeding one year), or a temporary activity permit (for activities less than one year). A representative office requires application to a local corresponding department which will serve as its “professional supervisory unit.” An application for a temporary activity permit requires a local Chinese partner. In essence, foreign NGOs will be subject to two layers of supervision starting January 1: substantive area regulation by the relevant ministry governing their industry, and operational oversight by the MPS.

The new guidelines also revealed that for applications, the Chinese government authorities will require specific details of a foreign NGO’s funding sources. For those foreign NGOs seeking a representative office, a Chinese bank account along with a tax certificate will also be required. After registration, foreign NGOs must submit an annual inspection report and a certified audit of its accounts.

As many may be aware, the Foreign NGO Law prohibits foreign NGOs from engaging in profit-making or fundraising activities. Unfortunately, the new guidelines provided no clarification on how such terms are defined.

For education activities, the new guidelines re-iterated the same exemption for certain education activities already governed by other "relevant national regulations.” This exemption was initially introduced by Article 53 of the Foreign NGO Law. Inquiries with local authorities indicate that a joint guidance between the Ministry of Education and the MSP appears to be in progress and is expected to be released soon.

Earlier in November, the MSP published statements on its website indicating it will not allow any “transition” or “grace period” for implementation. They expect applicable foreign entities to register and comply starting January 1, 2017.