Research On Control System Of Charitable Trusts

With the implementation of the Charity Law of the People's Republic of China(hereinafter referred to as “the Charity Law”)in September 2016,the word of “Charitable Trust” was clearly defined and the development of charitable trust was strongly supported.Since then,charitable trusts have developed quickly.In July 2017,the "Charitable Trust Management Measures" was issued,and it also supports the development of charitable trusts.According to Article 44 of the Charity Law,a charitable trust refers to the act of trustor entrusting its property to the trustee according to law for charitable purposes,and the trustee shall manage and dispose of it in the name of the trustee and carry out charitable activities according to the wishes of the principal.At the same time,the Charity Law also changed the establishment of charitable trust from "approved by the public welfare institution" to "putting on file".Objectively,this change makes the establishment of charitable trusts easier than before,reflecting the state's encouragement of charitable trusts.Since then,charitable trusts have sprung up,and their total property is huge.As of March 4,2020,according to the information published by the National Charitable Information Publicity Website,there are 306 charitable trusts,with a total property scale of 3,316,744,000 yuan.With the state's support for charitable trusts and a series of preferential policies,charitable trusts have developed rapidly,but at the same time,there are many problems,especially the problem of imperfect control system of charitable trust related to charitable purposes.The nature of charitable trust is established for charitable purposes,but the current definition of charitable purposes is too broad,and the supervision of the civil affairs department is limited to prior and ex post supervision,which may result in charitable trusts violating charitable purposes and the public interest.Charitable trust originated in medieval England.It began to develop in the 17 th and 18 th centuries and prevailed in common law system.In 1922,the concept of charitable trust was introduced in Japan,which was far earlier than that in China.They all can provide good experience for the improvement of charitable trust system in China.This paper includes the introduction,four chapters and the final conclusion.The first chapter introduces the concept and development of charitable trust,the change of the conditions of charitable trust from approval to filing system and the worrying situation of violation of charitable purpose.The second chapter is the defects of the relevant provisions of charitable purpose in charitable trust,it mainly list the vague definition of charitable purpose,the fuzzy judgment standard of whether the beneficiary is an interested party,the lack of control system related to charitable purpose in the establishment of charitable trust and the lack of control system related to charitable purpose in the operation and management of charitable trust.The third chapter is improving the internal control system related to charitable purposes,it mainly introduces the use of the internal supervisor system of charitable trust.The government shall perfect the existing supervisor system,set up the conditions for the appointment of charitable trust supervisors,clarify their right of revocation and prosecution,and establish a system for reporting charitable trust supervisors to civil affairs departments.Chapter four is improving the external control system related to charitable purposes,it mainly introduces whether it is necessary to set up charitable committees in China and how to refine the information disclosure system of charitable trusts.Finally,the content of the article and the conclusions reached are summarized.In the first half of this paper,the present situation of charitable trust in China is introduced through the concept and development of charitable trust,the establishment conditions of charitable trust and the phenomenon of violation of charitable purposes in practice.Charitable trust in China is in a rapid development stage.It can be established simply and enjoys national preferential policies.Now the establishment of charitable trust has become a popular trend.But the current system of supervision of charitable trusts cannot match its rapid development,especially in the supervision of its charitable purposes.The filing system of the establishment stage is difficult to realize the substantive supervision role of the functional organization,and the supervision in the actual operation process is even more inadequate.At the same time,when the law defines the purpose of charity,the social public interest is not fully taken into account,and the unclear definition of the beneficiary of interest may lead to the failure of the purpose of charity.Therefore,the second half of this paper focuses on possible ways to improve the existing regulatory system.At present,in the establishment of charitable trusts,supervisors are not mandatory,but can be set up selectively.Moreover,there are no laws or regulations that specify the composition,rules of procedure and qualifications of the supervisors.In charitable trust,without the existence of supervisor system,the trustee's management and disposition of charitable trust property will not be reasonably restrained.The trustee may neglect and relax in the process of fulfilling his fiduciary duty,while the supervision of the civil affairs department is mainly prior or ex post supervision,which is difficult to effectively supervise the trustee's performance of fiduciary duty.At the same time,in view of the inadequate supervision of charitable purposes by civil affairs departments under the filing system,the supervisor system can also better fill this gap and perform supervisory duties on non-charitable purposes that may arise in charitable trusts.A possible proposal to address this issue is the establishment of conditions for appointment of a charitable trust supervisor,who is required to have no interest and expertise with the trustee.At the same time,the right of revocation and prosecution of charitable trust supervisors shall be clarified,and the reporting system of charitable trust supervisors to civil affairs departments also shall be established.In addition,many scholars proposed to introduce the charity commission system as a unified national regulatory body in the study.The charity commission system comes from the UK,where the charity commission is the central regulator of charitable trusts.It is an important way to ensure the effective operation of charitable trusts.It is also a proxy for the public to supervise charitable trusts,because with the supervision of charity commission,the public is more reassured about charitable trusts.The supervisory duties of the charity commission include the registration of charitable trusts,the investigation of the operation of charitable trusts,the supervision of the financial situation,the application of the principle of seeking approximation,the replacement of trustees,etc.The supervisory functions of charity commission are indeed very clear and conducive to the realization of charitable purposes of charitable trusts.However,if our country directly introduces the unified system of charity commission based on the British experience,the charitable trusts will have to face different regulatory bodies,including civil affairs departments,charity commission and,if the charitable trusts also have supervisors,they will also have to face supervisors and even multiple supervisors,which makes communication and coordination between them more costly and difficult.At present,the Mercy Union has set up an organization called charity commission,but it is only a trade union not a supervisory subject,mainly for the conduct of academic research on charitable trust.Instead of re-establishing the new system of charity commission,it is better to clarify the supervisory functions of the existing civil affairs departments,to refine the supervisory system,and to do a good job of supervising charitable trusts so that the purpose of improving communication efficiency and reducing communication costs can be reached.In the control system,the work of supervising whether charitable trusts have violated charitable purposes is very important.We should make good use of the information disclosure system and further require the trustee to establish trust books and timely report the operation of the trust and open related information to the public.After the trust property is open and transparent,it will be clear whether the charitable trust has violated the charitable purposes.The obligation to report on time is a supplement to information disclosure,which can make regulators and the public more comprehensive about the current situation of trusts,which is conducive to supervising charitable trusts to achieve charitable purposes,reducing the occurrence of violations of charitable purposes,and even eliminating such occurrence.In the face of these problems,we should give full play to the supervisory role of the supervisor system for charitable purposes.On the premise of understanding the shortcomings of the current charitable trust supervisor system,we should clarify the rights and obligations of the supervisor through laws and regulations and set up professional conditions for the supervisor.Finally,In order to perfect the existing control system,we should give full play to the supervisory role of the supervisor system within the charitable trust to realize the charitable purpose,and prevent the occurrence of the violation of the charitable purposes.When such occurrence happens,we should be able to detect and correct the situation as soon as possible.The successful application of charity commission in British law has shown us the benefits of establishing a unified charity commission system,but this system may not be directly introduced into China.Instead of reestablishing the new system of charity commission,it is better to clarify the supervisory functions of the existing civil affairs departments,to clarify and refine the supervisory system,to further refine the information disclosure system of charitable trusts while improving communication efficiency and reducing communication costs,and to do a good job in supervising charitable trusts.