Roles and Responsibilities of the China Legal Representative
- Author Nicholas Hughes
- Published November 26, 2011
- Word count 479
Every business established in China, whether domestic or foreign, is required to have a legal representative. He/she is the main principal of the company and is the employee with the legal power to represent – and enter into binding obligations on behalf of – the company in accordance with the law or articles of association of the company. Essentially, the legal representative is someone who is appointed to act on the company’s behalf and Article 38 of the General Principles of Civil Law of the People’s Republic of China defines the role as the "responsible person who performs the duties and powers on behalf of a legal person in accordance with the law or the constituent documents of the legal person."
However, foreign investors often have only a limited understanding of the legal representative’s role and are startled when they learn of their power and how difficult it is to replace an un-cooperative one. Legal representatives possess broad powers and potentially unlimited liability. When concluding a contract a legal representative’s acts are binding on the company even if he/she is acting beyond their authorized scope. Failure to properly understand the powers and responsibilities of a legal representative can therefore lead to a situation where foreign investors are held to ransom. In appointing a legal representative, it is vital to bear in mind that the legal representative will essentially have the full keys to the company, cash, and capital.
The supervisor
Amendments to the PRC Company Law require a new company established on or after January 1, 2006 to appoint a supervisor, or board of supervisors depending on the size of the company, whose role is to monitor the activities of the legal representative. Shareholders and employee representatives of a company can act as supervisors. However, members of the company’s board of directors or senior management may not simultaneously serve as supervisors. If a company has a board of supervisors, it must have a proportion of employee representatives which accounts for at least one-third of supervisory membership. The supervisor, like the company’s directors, is not required to reside in or visit China.
The main role of the supervisor is to safeguard and supervise the operation of a company and exercise supervision over the work of directors and senior management. The Company Law gives supervisors an array of powers, such as inspecting the company’s finances, supervising the company directors and senior managers, recommending dismissal of directors or senior managers who violate laws or damage the company’s interests, proposing shareholder meetings, and any other powers specified in the company’s articles of association.
The role of supervisor is very relevant to the potential liabilities of the legal representative as they are permitted to supervise and constrain the legal representative in order to reduce the potential risks of a rogue legal representative acting on behalf of the company.
You can read the rest of this article about China business by Nicholas Hughes, at China-Briefing.com.
The site is contributed to by the FDI China experts, Dezan Shira & Associates.ccounting-tax-reporting.html">tax in China
Article source: https://articlebiz.comRate article
Article comments
There are no posted comments.
Related articles
- Why is SEO for businesses on the Wirral important
- Proton Mail In Vivaldi Email
- Email Deployment
- Search Engine Marketing: Unleashing Its Power for Your Business
- Squarespace email campaigns vs Mailchimp
- Squarespace email campaigns vs Mailchimp
- Commercial Cleaning Services in Auckland: A Deep Dive into Angel Cleaning
- What is CCTLD?
- Why Women of Color Need to Support Kamala Harris
- Email Extractor from CSV
- How to download Gmail email content into a CSV file.
- Is email marketing legit?
- How SEO Can Improve Your Business?
- Mitsubishi Electric proves heat pump compatibility with microbore pipework
- What makes the city of Melbourne such a unique place?
- What is the role of the Royal Society of London?
- Festive Decor with a Global Twist
- Mixer of Styles, The Boho Mid Century Farmhouse
- Explore Cape Town: Group Cape Town Tours With a Private Shuttle
- Exploring Airbnb Cleaning Service in Auckland: History, Trends, and Future Implications
- Chauffeur Car and Driver Hire Services in Cape Town
- Explore the Best Cape Town City Private Tours
- How I Watched My Manifestations Unfold in Realtime Through Tarot
- Your Go-To Lighting Store in Brampton
- Halloween makeup ideas 2024
- The two doctors who made a difference in preventing polio
- Your Guide to Cape Town Airport Transfers
- What lessons were learnt from the 1962 Cuban Missile Crisis?
- Exclusive Interview with Maddox Blackstone
- The Dark Reality of Forced Prison Labor: Why I Stand Behind Proposition 6