On Regulation Of The Fundation's Profits Transfer Behaviors Through Litigation In China

Foundation is a social organization with independent legal person qualification,which can provide charity for the society.Foundation has developed for more than 30 years in China and now has played a significant role in the charitable sector in China.Foundation which is not for the commercial purposes adhere to the principle of"taking property from the public and making it into full use to the public.The perfection degree of self-management of foundation will has great influence on the supply efficiency of public charitable service for the public.However,there is a problem which can not be ignored is that foundation deviates from its original charitable purposes and hollowed out the foundation's property by some people by the way of profits transfer behaviors including:unfair related party transactions,illegal investment behavior,as well as direct corruption,abuse,etc.Transfer behaviors of foundation's profits are rooted in the incomplete property right structure and imperfect governance structure itself.As a trustee,foundation can control the using of foundation's property,but the actual beneficiaries of foundation's property are unspecified trust beneficiaries.because of this,foundation does not have owners who have complete ownership to foundation's property.The absence of complete ownership owners leads to the absence of rights subject in the internal governance of the foundation.In addition,although the foundation follows the governance structure model of the company to set up the board of supervisors to supervise the management of the foundation,but the foundation's supervisors can not play an effective supervisory role because of the lack of incentives measures,weak supervision means and the narrow scope of supervision.The incomplete property ownership structure and the imperfect governance structure lead to the failure of self governance of the foundation.Strengthening the external supervision can avoid the self governance failure of the foundation.However,our country has always been adhering to administration-oriented supervision mode,this model has great flaws and can not ensure to realize the legislative purpose effectively due to the insufficiency of dual administrative system and the weakness of administrative measures.There is a good choice to improve the governance of foundation and that is make the foundation legislation can be litigated and make up for the lack of administrative supervision through litigation.It is also an inevitable choice that making foundation legislation can be litigated to develop the law's function.Public interest litigation also supports litigation of the foundation's profits transfer behaviors.It is also a common practice in the Anglo American law system to standardize the management of the foundation and prevent the occurrence of corruption through litigation.In order to make the legislation of foundation has the possibility of litigation,the law can grants charitable donors,client,procuratorial organs,foundation supervisors and internal staff of the foundation the rights to litigate.In order to regulate' foundation's profits transfer behaviors effectively,the law can allow them to file donors litigation,client litigation procuratorial organs' public interest litigation,supervisors representative litigation and internal staff whistle-blowing litigation.Taking into account the fact that regulating foundation's profits transfer behaviors through litigation is to protect the public interest,both the foundation and the plaintiff should be protected.While avoiding disruption of the normal activities of the foundation,the law should provide litigation relief for the plaintiff to ensure that the proceedings can play a practical role.At the same time,it should be avoided that the plaintiff and the defendant colluded to damage the legitimate rights and interests of the foundation.First of all,in order to facilitate the plaintiff to supervise the normal operation of the foundation through litigation,the law could stipulates that the plaintiff enjoy the rights to relief litigation costs and the plaintiff's burden of proof applies the principle of reversion of burden of proof.Secondly,in order to prevent the plaintiff from abusing the right of litigation and damaging the legitimate rights and interests of the foundation,the specific litigation activities should follow the principle of advanced administrative reviewing and advanced pretrial conference.Finally,in order to avoid that the plaintiff and the defendant colluded to damage the public interest,mediation and settlement agreement which both the plaintiff and the defendant agree should follow mandatory announcement procedure and accept social supervision.When the plaintiff withdraws the accusation,it should subject to a compulsory review by the court.