Recently, we are requested to provide legal advice on the qualifications for the legal representative of a company. This question may not be paid enough attention of many people, however, since China has strengthened the compliance management for enterprises, and cracked down the dishonesty behaviors. While legal representative as the person who legally represents a company, is authorized with many rights of the company, and at the same time, will be personally responsible for the company’s non-compliance or illegal behaviors under some circumstances. Therefore, there are limits on the qualification of legal representative provided by law. And here, we will discuss these qualifications for legal representative of a company (non-listed company).
Subject to relevant laws,
the candidates for the legal representative of a company shall be its chairman of board of directors, executive director or its manager
. Therefore, the legal representative shall firstly, take such positions in the company which proposes to appoint her/him as the legal representative. Further to this, as the directors, supervisors and other senior officers of a company, they shall comply with laws, administrative regulations, and the articles of association and shall owe duties of fidelity and due diligence to the company. They are prohibited to conduct any activities which breach their duties of fidelity and due diligence to the company, as well as any activities which have conflict interests with the company.
Here, I want to invite your attention to this pre-condition of the legal representative of a company. Since I found that under some circumstances, the legal representative is removed from the position as the chairman of board of directors/executive director, or general manager, however, still serve as the legal representative. This is inconsistent with the provisions of law.
Further to the aforementioned requirements, the qualifications for the legal representative of a company are as below:
- Has full capacity of civil conducts;
- Who is not serving criminal sentence or being taken criminal compulsory measures;
- Who is not the person wanted by a public security organ or a state security organ;
- In the event of being convicted of any criminal offence in the nature of corruption, bribery, disseizin, misappropriation or disrupting the economic order of the socialist market, five years has been elapsed since any penalty imposed has been completed, or in the event of being deprived of political rights due to any crime, five years have elapsed since the penalty was completed; or in the event of being sentenced to a criminal penalty due to any other crime, with the execution period having expired for more than three years;
- In the event of serving as former director, factory director or manager of a company or enterprise which has been declared bankrupt and liquidated in circumstances where he was personally responsible for the bankruptcy of the company or enterprise, three years have elapsed since the bankruptcy and liquidation of the company or enterprise was completed;
- In the event of serving as former legal representative of a company or enterprise which has had its business license revoked and has been ordered to close its business operations due to any violation of law in circumstances where the former legal representative was personally liable for the revocation of the business license, three years have elapsed since the date of revocation; and
- Has no significant unpaid due debts;
- Who is not under any other circumstances provided by the law of China, which shall not serve as the legal representative of a company.
If a person who has not fulfilled the qualifications provided by the laws was appointed as the legal representative, the appointment for such person is invalid, such person who has been appointed to take such positions shall be removed accordingly.
What’s more, under some special circumstances, the person involved shall not serve as the legal representative of any company within the statutory period, and in the event that the appointment has been made and enforced, such person shall be removed and corresponding registration shall be changed accordingly. Any application for registering such person as the director, supervisor or any other senior officer will not be accepted by the competent authorities.
In conclusion, ask a lawyer for legal advice on the qualifications of the legal representative of your company before making the appointment.