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The LEHMAN, Lee & Xu 
China Law Newsletter keeps you up to date on recent developments in China Law and Legal Practice
China’s New Foreign NGO Law. How Bad is It?
In late April 2016, China passed a new law targeting the establishment and management of foreign NGO’s in China, which will become effective in the PRC on January 1, 2017. Much has been said in foreign media about the restrictive provisions of this new law. How bad is it? And what does this new law mean for foreign NGO’s which already have operations in China?
 
The law applies to the activities of foreign NGO’s within the PRC. But what’s a foreign NGO? The law states that foreign NGO’s include “foundations, social organizations, think tanks, and other non-profit-making and non-governmental social organizations legally established overseas.”
Under the new law, a foreign NGO seeking a permanent presence in China will be required to register a Representative Office. In the alternative, a foreign NGO which only wants to undertake temporary activities within the PRC will need make arrangements with a local Chinese partner.
 
Importantly, Foreign NGO’s that do not have a Representative Office or a temporary arrangement with a Chinese partner not allowed to carry out within the PRC, even in “disguised form.”
Additionally, No PRC company or individual may carry out activities within the PRC as an agent of a foreign NGO.
 
For those which carry out the activities of an unregistered foreign NGO in PRC, penalties include confiscation of illegal property, and detention of up to 10 days at a time.
 
Foreign NGO’s caught carrying out activities in the PRC with establishing a Representative Office or without a Chinese partner to allow temporary activates will be probated from formally establishing their operations in the PRC for 5 years.
For a long time, foreign NGO’s have operated in China by establishing companies to conduct operations in China, or by paying individuals directly to act on behalf of the NGO. Under the new law, these arrangements will be illegal when the new law comes into force.
 
Foreign NGO’s currently operating in these ways are encouraged to seek the advice of a China lawyer immediately to discuss options. Do not wait until December!
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