Legal Representative: Duties and Responsibilities

Companies in China are required to have a legal representative who acts as the natural persona representing the company's legal persona. Essentially, this individual is directly responsible and liable for the company's actions. Due to this, the role of the legal representative is crucial in a company and entails critical duties and responsibilities.

A legal representative possesses statutory power to represent and bind the company towards third parties. They also represent the company to Chinese officials and submit reports to Chinese regulatory bodies. As the key person of the company, a legal representative must fulfill all acts in accordance with the PRC Company Law. They have a duty of care of a reasonable person towards the company, meaning they must perform duties in the company's best interests. The legal representative is obligated to obey Chinese laws and company laws, as well as provide relevant information to the Board of Supervisors. Loyalty to the company is also required; they must strive to maximize benefits for the company and not other entities. The legal representative is not personally responsible for the company's debts. However, in their capacity as the principal of the company, they can be subject to civil and administrative penalties for any misconduct committed on behalf of the company. The legal representative is held to a higher standard compared to other roles due to their extensive responsibilities. Their personal liability may arise from misconduct in which they are directly involved or from matters they should have been aware of and failed to prevent, even if they were not directly involved.

Therefore, the legal representative faces significant liabilities if they are not vigilant, and they should exercise caution in organizing and overseeing business activities to ensure compliance with the law.