(Adopted at the 21st Executive Meeting of the State Council on September 9, 1988, promulgated by Decree No.18 of the State Council of the People's Republic of China on September 27, 1988)

Article 1 These Measures are formulated in order to strengthen the management of foundations so as to ensure their healthy development.

Article 2 ``Foundations'', as referred to in these Measures, means non-governmental and non-profit organizations which conduct management of funds donated voluntarily by social organizations or other organizations or individuals either at home or abroad and which are legal person social organizations.

The purpose of foundations is to promote the development of scientific research, cultural education, social welfare and other public welfare undertakings through financial assistance.

These Measures shall not apply to foundations established with government appropriations for scientific research, nor to organizations managing other types of special funds.

Article 3 Foundations to be established must satisfy the following requirements:

(1) The nature and aim of the foundation and the source of funds accord with the provisions of Article 2 of these Measures;

(2) Have a registered capital of at least 100,000 RMB yuan (or at least the equivalent of 200,000 RMB yuan in foreign exchange);

(3) Have a foundation constitution, management organization and necessary financial personnel; and

(4) Have a fixed working place.

Article 4 Foundations may raise funds by soliciting contributions from enterprises, institutions, social organizations or other organizations or individuals either at home or abroad who support the aims of the foundation, provided that the contributions are made on a voluntary basis. Apportionment is strictly prohibited.

Article 5 The leading position of a foundation may not be concurrently held by any active government personnel.

Foundations shall carry out democratic management, institute a strict system for the raising, use and management of funds and publish a balance sheet regularly.

Article 6 Foundation funds shall be used for those activities and undertakings which accord with the aim of the foundation and may not be appropriated for other purposes. Foundations may not operate or manage enterprises.

Article 7 Foundations may place their funds in interestbearing financial institutions, or may purchase bonds, stocks or other securities provided that the amount of stocks purchased from an enterprise shall not exceed 20 percent of the total stock of the enterprise.

Article 8 Foundations are entitled to supervise those accepting an offering of funds with regards to the use of the funds. In the event that the foundation discovers that the use of donated funds violates the agreement reached, the foundation is entitled to reduce or stop the offering of such funds, or to recall funds already offered.

Article 9 The salaries of personnel and the administrative expenses of a foundation shall come from the interest income of the foundations assets or the like.

Article 10 Foreign exchange donated to a foundation from abroad shall be owned by the foundation. Foundations are allowed to open foreign exchange deposit accounts.

Goods and materials donated to a foundation from abroad are exempted from customs duty and shall be owned by the foundation; foundations are entitled to transfer those goods and materials free of charge to assist organizations or individuals who are associated with the aim of the foundation. Such goods and materials may not be sold.

Article 11 Application for the establishment of a foundation shall be submitted to the People's Bank of China for examination and approval by the authoritative administrative department. After examination and approval by the People's Bank, the foundation shall register with and obtain a license from the civil administration department. Only after obtaining qualification as a body corporate by going through the above procedures may a foundation begin its activities.

Application for the establishment of national foundations shall be submitted to the People's Bank of China for examination and approval and shall apply to the Ministry of Civil Affairs for registration, and then be submitted to the State Council for filing. Application for the establishment of local foundations shall be submitted to the local provincial, regional or municipal branch of the People's Bank of China for examination and approval and shall apply for registration to the civil administration department of the people's government of that province, autonomous region or municipality directly under the central government, and then be submitted for filing to the people's government of that province, autonomous region or municipality directly under the central government.

Changes in name, merging or rescission of foundations shall be handled in accordance with the procedures prescribed for their establishment.

Article 12 Foundations shall submit annual reports to the People's Bank of China and civil administration departments concerning their revenues, expenditures and activities. Foundations are subject to the supervision of the People's Bank and civil administration departments.

If any foundation's activities violate these Measures, the People's Bank is entitled to stop payment, freeze foundation funds and order a rectification; the civil administration departments are authorized to issue penalties such as warnings or revocation of the operational license.

Article 13 The People's Bank of China and the Ministry of Civil Affairs shall implement these Measures. They may draw up the necessary rules for implementation.