The Legal Representative of a China Company
1. What is a legal representative in China?
According to the Civil Code of the PRC, the legal representative of a legal person refers to the person in charge who conducts civil activities on behalf of the legal person in accordance with the provisions of laws or the bylaws of the legal person.
The legal consequences of civil activities conducted by the legal representative in the name of the legal person shall be assumed by the legal person. Any restriction on the legal representative’s right of representation imposed by the bylaws or the supreme organ of the legal person shall not be set up against bona fide apposite parties.
Where the legal representative of a legal person causes damages to any other person in the performance of duties, the legal person shall assume civil liability for such damage. The legal person may, after assuming such civil liability, claim reimbursement from the legal representative at fault in accordance with the laws or its bylaws.
2. Who can act as the legal representative of a China company?
According to the Company Law of the PRC, the legal representative of a company shall be assumed by the chairman of the board of directors, executive director or manager. A China company can only have one legal representative and the legal representative must be a natural person.
3. Who cannot act as the legal representative of a China company?
According to the Company Law of the PRC, anyone who is under any of the following circumstances shall not assume the post of a director, supervisor, senior manager or legal representative of a company:
(1)
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Being without civil capacity or with only limited civil capacity;
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(2)
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Having been sentenced to any criminal penalty due to an offence of corruption, bribery, encroachment of property, misappropriation of property or disrupting the economic order of the socialist market and 5 years have not elapsed since the completion date of the execution of the penalty; or he has ever been deprived of his political rights due to any crime and 3 years have not elapsed since the completion date of the execution of the penalty;
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(3)
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Was a former director, factory director or manager of a company or enterprise which was bankrupt and liquidated, whereby he/she was personally liable for the bankruptcy of such company or enterprise, and 3 years have not elapsed since the date of completion of the bankruptcy and liquidation of the company or enterprise;
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(4)
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Was the legal representative of a company or enterprise, but the business license of this company or enterprise was revoked and this company or enterprise was ordered to close due to a violation of the law, whereby he/she is personally liable for the revocation, and 3 years have not elapsed since the date of the revocation of the business license thereof;
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(5)
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Having a relatively large amount of debt which is due but has not been paid.
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4. Can one person concurrently act as the legal representative of other companies?
The legal representative is also a director or manager of the company. The obligations of the directors and senior management as set forth in the Company Law of the PRC shall be applied to the legal representative as well. Thus, a person shall not act as the legal representative of competing companies at the same time without the consent of the shareholders.
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