On The Regime Of Incorporated Foundation

The dissertation studies the development approach and structural feature of incorporated foundation regime in both civil law system and common law system, explores the attitude towards such regime in main civil law countries from an unbiased perspective and weighs the advantages and disadvantages of transplanting the regime into China, before drawing the conclusion in seeking theoretical support for incorporated foundation legislation. The research is based on historical, comparative and empirical study as well as economic analysis. In particular, the dissertation demonstrates the legal character and governance structure of incorporated foundation and evaluates systematically the regime of incorporated foundation which has been evolving stirringly. In view of the practical issues concerning China's foundations and non-state nonprofit corporations that have some attributes of incorporated foundation, the dissertation tries to provide theoretical basis and practical approach of establishing the incorporated foundation regime in China by reference to governing experience and legislations in foreign jurisdictions.The dissertation consists of seven chapters, the first of which presents the motivation and objective of the research, introduces its theoretical and practical significance as well as illustrates its structure, research methodology and theoretical innovations. The seventh chapter concludes the main ideas and suggestions, in which the author's own viewpoints can be embodied thorough the selection of materials and the design of structure. Besides those included in the concluding part, the author's viewpoints are also expounded in each chapter of the main section, which consists of five chapters.Probing into the typology of corporations, the second chapter explores the status of incorporated foundation in the typology. It concludes that the classification of incorporated foundation and aggregate corporation is the result of abstracting the society with legal technology and also the most distinctive and valuable classifying mode in civil codes of civil law countries. Thorough comparative analysis, it examines the definition and fundamental legal elements of incorporated foundation, revealing the essential characteristics that make it distinct from aggregate corporation. Meanwhile, this chapter sums up the divergence on whether to accept or reject this classification in Chinese civil law theories and the debates about codification, and argues that the foundations and non-state nonprofit corporations are incorporated foundations in essential sense. That serves as logical premise of the comprehensive study on the function and value of incorporated foundation in the following chapters.The third chapter discusses about the function and value of incorporated foundation. It could be clearly seen from the evolvement of incorporated foundation that the division of incorporated foundation and aggregate corporation is an inevitable result of historical development in civil law countries. The law of trusts in common law system is, to a large extent, the substitute for incorporated foundation regime and assumes similar functions. By jurisprudential analysis, this chapter presents the legal value of incorporated foundation, such as the permanence of will, property security and logic self-sufficiency of the normative system, in order to demonstrate the rationality of instituting this regime. It also elaborates the theoretical basis of incorporated foundation regime from the perspective of legal theory, economics and political science, as well as justifies it by practical needs in China's social life.The fourth chapter is mainly concerned with the issues of internal governance. By referring to the theory of corporate governance, it conducts a comparative study on the governance between profit-generating aggregate corporation and incorporated foundation and explores the significance and theoretical foundation of internal governance of the latter. By studying the internal governance such as endowment constitution, board of directors and board of supervisors in different countries, it clarifies the significance of incorporated foundation's constitution. It further illustrates the effective mechanism of check and balance, separation and coordination between the board of directors and board of supervisors in the peculiar situation where "the proprietor is absent". This chapter also reviews the practical problems concerning internal governance in two de facto incorporated foundations in China, the foundations and non-state nonprofit corporations, thorough empirical studies.The fifth chapter is focused on external governance of incorporated foundation. The source of property and realization of objective of incorporated foundation requires that it bear high social credit. The external functional governance of it is thus obviously more important than internal governance, and the supervision by the government, the stockholders and the society are indispensible to maintain the donors' will and achieve the corporation's tenet. By comparing the governance structure of nonprofit corporation in common law system and that of incorporated foundation in civil law system, this chapter presents not only the forms and means of the external governance of incorporated foundation, but also those of common law systems such as the revenue regulation regime, the Attorney General regime, the report and disclosure regime which are effective and exemplary. After defining the legal status of the stakeholders' supervision, especially the way and effect of oversight by the donors and beneficiaries, this chapter reviews the main problems in the oversight by government and stakeholders over the foundations and non-state nonprofit corporations in China.The sixth chapter deals with the construction of China's incorporated foundation regime. Based on the essence of legal regulation in jurisprudence, the chapter elucidates that legal regulation should bear both value orientation and instrumental means. From that perspective, it analyzes the status quo of legal regulation of incorporated foundation in China and examines the problems in it. Inspired by the comparison of legislative reform concerning incorporated foundation in Japan and the regime of non-profit corporation in the U.S., it elaborates the concrete divergence between incorporated foundations and pro bono trust and discusses the feasible convergence and coordination of the two in the functioning of incorporated foundation. It proceeds to suggest constructing the basic framework of legal regulation mechanism for China's incorporated foundations. The dissertation argues for the establishment in China of the regime of incorporated foundation which has the rationality of value and technique. With regards to the legislative mode, it alleges that future civil code should explicitly formulate incorporated foundation regime and adopt the classification of incorporated foundation and aggregate corporation, that the code should provide for general issues concerning incorporated foundation while particular statutes regulate the special foundations such as medical corporation, education corporation and religious corporation, that current foundations should be integrated into incorporated foundation and geared to pro bono trust, that unified governmental supervision system should be established benefiting from the experience of non-profit corporation governance in the U.K. and U.S.. At the same time, the dissertation studies the rationales for institutional design of incorporated foundation, and makes constructive suggestions towards the concrete institutional arrangements in China, ranging from internal governance to external regulation and revenue administration. This chapter is hence no doubt the priority among all in the dissertation.