Research On Legal Issues Of Non-public Fund-style Equity Donation

In recent years,there have been many practices of equity donation in our country.Due to the lag of legal regulation on equity donation,the practice of equity donation faces many difficulties.Non-public fund equity donation is one of the types of equity donation,which has been widely used in the practice of equity donation in China in recent years.This is also one of the future development trends of philanthropy.The promulgation of China's Charity Law in 2016 marks the further legal support for the new donation model of non-public fund-based equity donation.However,the unclear regulations on equity donation and the legal obstacles faced in the practice of equity donation are still worthy of further study.This article introduces the definition and legal development of non-public offering fund type equity donation,and expounds the nature of the donated fund.By citing the practical cases of Cao Dewang,Niu Gensheng,Chen Fashu and others,this paper sums up the legal problems existing in the non-public offering fund-type equity donation at present.First,in practice,the donor still exercises the voting right of the equity after donating the shares,and whether such behavior is justified or not;Second,the information disclosure after voting rights transfer was insufficient.The independence of the donated foundation was greatly affected because of its close relationship with donors.Third,the tax preferential system does not have sufficient incentive effect on non-public offering fund-type equity donation.The development of China's tax preferential system in the area of equity donation is slightly lagging behind,and the tax system still needs to be improved in the area of equity donation.In the practice of non-public offering fund-type equity donation in our country,in order not to lose the control of the company when donating shares,most of the donors have done voting rights transfer.In the end,the donor donated his equity but still exercised his voting rights.Based on the professional exercise of stock rights and the stable consideration of corporate control rights,the author believes that the exercise of voting rights by donors is legitimate,but the exercise of their rights needs to be restricted.This paper proposes the introduction of voting trust,the conversion of donation object into preferred shares and the application of different rights system for the same share to achieve this goal.As the donor has set up a non-public offering foundation for equity donation,the donor himself or his family members often occupy a certain seat in the board of directors of the non-public offering foundation,which has greatly affected the independence of the foundation.The public has a skeptical attitude towards such foundations,believing that the benefactor's benefit delivery under the guise of charity indirectly affects whether the charity attribute of the foundation is clear and whether the entrepreneur's equity donation is really devoted to charity.Charity transparency is the yardstick of charity donation,so information disclosure is especially important in non-public fund equity donation.The information disclosure system of non-public fund equity donation in China needs to be improved.The author thinks that the information disclosure of non-public fund equity donation needs to be improved from the aspects of information disclosure scope,information disclosure responsibilities of grantee and donor,and disclosure responsibilities of major issues.In 2009,the Ministry of Finance issued the " Notice regarding financial issues related to the company's non-profit donation of equity",which recognized the legitimacy of equity donation for the first time.With the opening of the legal gate of equity donation,the corresponding tax system also needs to be improved urgently.As early as the period of Cao Dewang's stock donation,there were many restrictions because of the huge income tax.At present,China's laws stipulate that equity donation is regarded as equity transfer,and the income from equity transfer is recognized at the historical cost of equity acquisition.Tax incentives for equity donation have been legally supported,but the precondition for donors to obtain tax incentives is that the donated foundation has the qualification of pre-tax deduction.The author believes that appropriately lowering the threshold of admission for the foundation's pre-tax deduction qualification and enhancing the identification of public welfare purposes are conducive to promoting the incentive effect of tax incentives in the field of equity donation.All aspects involved in non-public fund equity donation will need special legal regulation due to its particularity.On the issue of voting rights exercise,understanding the donor's demand for control over charitable purposes is the key.However,the transfer of rights means the weakening of charity,which requires the balance of information disclosure mechanism.Reasonable information disclosure is helpful to improve the charity transparency of the donated foundation.In addition,the incentive effect of the tax preferential system cannot be underestimated.Only by grasping the balance between the incentive effect and evading the tax liability can non-public offering fund-type equity donation develop rapidly in a good legal environment.