What Is A Legal Representative?

In China, the role of a legal representative is intimately linked with the country’s corporate governance framework. When a company is established in China, it is mandatory to designate a legal representative who acts as the public face of the company and represents it in all legal matters.

The legal representative wields significant decision-making power, including the ability to execute contracts, open bank accounts, and make investments on behalf of the company. Therefore, they are responsible for ensuring that the company operates in a lawful and ethical manner, safeguarding employees, customers, and the environment. Typically, the legal representative holds a position as the chairman of the board, director, or general manager.

To qualify as a legal representative in China, one must satisfy Chinese laws and regulations. This encompasses being over the age of 18 without a criminal record and possessing full civil capacity. Both Chinese citizens and foreigners are eligible to be legal representatives. The process of appointing a legal representative involves several stages. Generally, the board of directors or shareholders nominate a candidate, which is subsequently registered with the Market Regulation Administration. Once registered, this information becomes publicly available, appearing on both public records and the business license.

Despite the advantages of assuming this position, serving as a legal representative carries considerable responsibilities and risks. The legal representative is accountable for the actions of the company and may be held personally liable for any illegal activities or infringements committed by the company. This includes financial liabilities, such as outstanding debts to creditors or taxes owed to the government.

If the company goes bankrupt or defaults on its debts, the legal representative’s name is added to the national defaulter’s blacklist, prohibiting them from purchasing a plane ticket, residing in a hotel, booking high-speed train tickets, entering golf courses, among other things.

Furthermore, legal representatives must comply with specific legal obligations. For instance, they are required to ensure that the company adheres to all relevant laws and regulations, including labor laws, environmental regulations, and tax laws. Failure to comply may result in penalties, fines, or even criminal charges.

Moreover, legal representatives may face reputational risks. If the company becomes embroiled in scandals or controversies, the legal representative may be held accountable, resulting in damage to their reputation.

In conclusion, accepting the role of a legal representative entails careful consideration. While it can provide significant benefits, it also requires assuming substantial responsibilities and risks. Individuals aspiring to this position must familiarize themselves with Chinese law and regulations, and seek advice from legal experts before accepting an offer.