This chapter analyses the practice of regulatory oversight of charitable trusts. It first analyses the powers and responsibilities assigned to each of the regulators and the relationship between them in law. This analysis shows that the vagueness of the law creates scope for regulators to consider extra-legal factors when engaging with the law. Next, the chapter examines the regulatory practice in light of China’s particular political, social, and economic conditions. The findings from semi-structural qualitative interviews point towards three factors that are especially influential in the decision-making of regulatory officials: the regional development agenda, the tension between regulatory capacity and regulatory objectives, and the regulators’ perceptions of risk. The chapter provides an in-depth analysis of each factor and highlights the regional differences in regulatory practice caused by these factors.

This chapter introduces the legal definition of ‘charitable trust governance’ and outlines the hypothesis, research questions, and research methods of this monograph. This monograph first defines the governance of charitable trusts as a set of mechanisms that ensure the trustee of a charitable trust complies with its duties. Based on this definition, Chapter 1 explains the hypothesis to be demonstrated in the rest of the monograph; that is, the governance framework for Chinese charitable trusts can only be fully understood in light of relevant laws, administrative practices, and private actions undertaken by trust parties. Three research questions are accordingly outlined to direct the study: (a) how has the charity law helped shape the governance structure of charitable trusts?; (b) how have regulators implemented the legal regulatory framework?; and (c) what private actions have trust parties taken when engaging with the law? Based on these questions, the chapter finally explains the methods adopted in the study: (a) textual analysis; (b) translation of Chinese sources; and (c) semi-structured qualitative interviews.

This chapter sums up the key research findings, and concludes with recommendations for further research. The key findings concern three inter-related respects that shape the governance structure for charitable trusts – legal, administrative, and contractual. Next, based on the problems and deficiencies identified in the current legislative framework, this chapter highlights three areas where future research may be required. The first relates to the reform of governance rules concerning Chinese charitable trusts. The second area lies in the broad implications that reforms for charitable trusts may have for other institutional bodies (e.g., foundations and social associations) pursuing charitable causes in China. The third area concerns the assessment of the charitable trust model’s potential in fulfilling the state’s goal of promoting charitable undertakings.

This chapter explores the use of contractual tools by trust parties. Trust parties have perceived three types of risk in the creation and ongoing management of charitable trusts: the vagueness of the law, public scrutiny, and regulatory scrutiny. These risks motivate trust parties to use contract clauses to re-adjust the legislative framework of charitable trusts, and two levels of relationship are accordingly regulated in this practice. The chapter first analyses the horizontal relationship between settlors and trustees. Based on a review of the charitable trust contracts collected, insights are offered into the common contractual arrangements and how trust parties use these arrangements to reallocate their powers and duties. The chapter then examines the hierarchical relationship between regulators and trust parties. It is found that regulators are disposed to guide the use of contract tools between trust parties. This approach entitles regulators to tightly control the use of charitable trusts so as to advance the state’s public welfare goals to the largest extent.

This chapter analyses the legal nature of the charitable trust model and the implications that such analysis has for the governance of charitable trusts. It is found that, in Chinese charitable trusts, private law norms are always subordinated and subject to public law norms, and that charitable trusts are always operated in alignment with the public welfare policy of the state. Aside from governance in law, the chapter also identifies the connection between governance and practice, based on the fact that trust parties and regulators tend to adopt strategies to protect their interests from being adversely affected in the implementation of the law. In light of the ways in which trust parties and regulators engage with the law and the hybrid nature of charitable trusts, this chapter finally proposes three perspectives that are relevant to the understanding of charitable trust governance: legal, administrative, and contractual. These perspectives are then expanded upon in Chapters 3–5.

This chapter discusses the relationship between trust parties in law. The discussion centres on the new legal framework that legislators have created for the governance of Chinese charitable trusts. It focuses on two main aspects: (a) the assignment of powers and duties to settlors and trustees; and (b) the undetermined legal nature of beneficiaries. This chapter delves into these two important aspects of governance by examining the relevant legislative provisions. Such an examination helps, first, to identify the ways in which the new charity law has helped shape the governance structure of Chinese charitable trusts; and second, to identify areas where the legal governance framework provides clear guidelines and where it is vague, has gaps, or creates risks for parties in terms of the lawful performance of their roles.

The purpose of orders of specific performance of a contract and of injunctions is to compel the performance of legal obligations. Many, though not all, of the considerations relevant to an order granting specific performance of a contract are also germane to the award of an injunction. Matters such as inadequacy of damages, hardship and the ability of a court to supervise the execution of its own orders are relevant to both remedies (see textbook chapter 3). Underlying the principles governing these orders are policy questions relating to the nature and limits of judicial coercion to which monetary remedies, such as damages, do not usually give rise. These questions include: to what extent can private law (as opposed to the criminal law) restrict individual freedom, including a person’s freedom to select his or her employment; can a court compel parties whose commercial relationship has broken down to cooperate with each other; and what are the limits of a court’s power to prevent wrongdoing, for example where the wrong is likely to occur outside a court’s jurisdiction but will cause damage within its jurisdiction?

Many trusts are established specifically to facilitate investment activity. Many managed investment schemes and most superannuation funds, for instance, employ the legal architecture of the trust. Parties may also create specialised trust structures that are not open to the public in order to arrange their investment affairs. The trust is a convenient device to enable a collection of investor monies under the management control of a party with experience and skills in the business of investing. The need for a trustee to invest trust assets can arise in other circumstances. The most obvious of these is where the trust is expected to exist for some time and has assets that are not specifically nominated in the trust instrument as assets that must be held by the trustee. In this situation, a trustee is likely to be subject to a duty, implied from the circumstances of the trust, to invest unallocated assets. This chapter examines the rules that apply to the investment of trust funds. It takes the statutory regime as its starting point but also illustrates the interplay between the statutory and general law rules that apply in different contexts.