Qualifications and Obligations of Key Roles in a China Company
The key roles in a China company include the director, supervisor, general manager and other senior management personnel of the company. The Company Law of the PRC has set forth their qualifications and obligations in a separate sector. Kaizen hereby summarizes the provisions as follows for your easy reference.
1.
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Who cannot act as the director, supervisor and senior management personnel of a company?
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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, general manager or other senior management personnel of a company:
(1)
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Does not have civil capacity or has only limited civil capacity;
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(2)
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Has 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/she has ever been deprived of 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Was a former legal representative of a company or enterprise, but the business license of this company or enterprise was revoked and this company or enterprise was ordered to close due to a violation of the law, whereby he/she is personally liable for the revocation, and 3 years have not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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Has a relatively large amount of debt which is due but has not been paid.
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2.
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What are the obligations of the director, supervisor and senior management personnel?
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According to the Company Law of the PRC, the director, supervisor and senior management personnel shall comply with the laws, administrative regulations, and bylaw. They shall bear the obligations of fidelity and diligence to the company. No director, supervisor or senior management personnel may accept any bribe or other illegal gains by taking the advantage of his/her powers, or encroach on the property of the company.
3.
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What kind of activities are prohibited for the director, supervisor and senior management personnel of the company?
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According to the Company Law of the PRC, no director, supervisor or senior management personnel may commit any of the following acts:
(1)
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Misappropriating the company’s fund;
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(2)
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Depositing the company’s fund into an account under his/her own name or any other individual’s name;
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(3)
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Without consent of the shareholders?meeting, shareholders?assembly, or the board of directors, loaning the company’s fund to others or providing any guaranty to any other person by using the company’s property as in violation of the bylaw;
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(4)
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Entering a contract or trading with this company by violating the bylaw or without consent of the shareholders?meeting or shareholders?assembly;
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(5)
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Without consent of the shareholders?meeting or shareholders?assembly, seeking business opportunities that belong to the company for himself or any other persons by taking advantages of his/her powers, or operating similar business of the company for which he works for himself or for any other persons;
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(6)
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Taking commissions on the transactions between others and the company into his/her own pocket;
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(7)
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Illegally disclosing the company’s confidential information;
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(8)
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Other acts inconsistent with the obligation of fidelity to the company.
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The income of any director supervisor or senior management personnel from any act in violation of the preceding paragraph shall belong to the company.
4.
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Under what circumstances shall the director, supervisor or senior management personnel be liable for compensation to the company?
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According to the Company Law of the PRC, where any director, supervisor or senior management personnel violates any law, administrative regulation, or the bylaw during the course of performing his/her duties, if any loss is caused to the company, he/she shall be liable for compensation.
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