Skip to main content

Legal Liabilities of China WFOE’s Legal Representative – Business China

By
On your way to form a Wholly Foreign Owned Enterprise(WFOE) in China, you will be requested to name one legal representative to be listed on the business license. We will elaborate the legal concept, the appointed requirement and the legal liabilities of the legal representative in China company registration.

Legal Liabilities of China WFOE’s Legal Representative – Business China

The Legal Concept of Legal Representative

According to the Provisions of the General Provisions of the Civil Law of PRC, in accordance with the provisions of the Articles of Association of the law, the legal representative is the person who represents the company to take in charge of the exercise of the establishment's functions (article 38).

The legal representative system is a kind of legal representative system which is derived from the traditional leadership system of China's state-owned enterprises. China adopts and implements a single legal representative system.

Generally, the legal representative and the enterprise do not need to sign labor contract, they have no labor contract relationship and is not subject to labor law and labor contract law adjustment.

Who can be Appointed as the Legal Representative?

The legal representative of the company shall be the chairman, executive director or manager in accordance with the provisions of the Articles of Association of the company and shall be registered according to law (company law, 2005, article 13)

Rights and Duties of Legal Representative

The civil liability of the legal representative stipulated in the general provisions of the civil law

  • To bear civil liability for business fault;
  • The legal representative shall be responsible for the civil tort liability which may be borne by the property of the unit or entity;
  • Civil sanctions imposed for illegal ACTS - fines, detention;


Legal liabilities of the legal representative as the senior management of the company 

The directors and senior managers shall not have the following ACTS:

  • Misappropriating company funds;
  • To open an account in the name of the company or in the name of another individual;
  • In violation of the provisions of the articles of association of the company, without the consent of the shareholders' meeting, the general meeting of shareholders or the board of directors, the company's funds may be lent to others or provided with the company's property to guarantee others;
  • To enter into a contract or trade with the company in violation of the provisions of the company's articles of association or without the consent of the shareholders' meeting or the general meeting of shareholders;
  • Without the consent of the shareholder meeting, use the position for themselves or others seek belong to the company's business opportunities, proprietary or for others and for the same kind of business;
  • Accept other people's commissions for dealing with the company as their own;
  • Disclose company secrets without authorization;
  • Other ACTS that violate the duty of loyalty to the company.







Labels:

Comments

Post a Comment

Popular posts from this blog

How to Navigate China's Accounting and Bookkeeping

By
Based on PRC Company Law and PRC Accounting Law, each foreign-invested company, such as China Wholly Foreign Owned Enterprise (China WFOE or China WOFE), Joint Venture (JV), Representative Office (RO or Rep Office) all required to do China company’s accounting and bookkeeping on time. When to Apply for Tax Registration for trading companies in china ? Please note it that although China company’s business license, local tax certificate and national tax certificate have been combined into one. China companies should apply for tax registration within one month after the issue of the business license. When to Apply for General VAT Taxpayer or Small-scale VAT Taxpayer? Chinese enterprises shall apply for the general vat taxpayer or small-scale vat taxpayer application within one month from the date of applying for the tax registration. When to Start Filling Taxes? In the month of tax registration and taxpayer application. When to Do Company Annual Renew? Chinese companies should ta...
Post a Comment
Read more

China Company Formation: Choosing Correct Business Scope for Your China Company

By
What is Business Scope? ​Business scope is an indispensable part of China company formation , which is not the same for western countries in most cases. Business Scope is the scope of business products and services you can engage in. It is a legal boundary for the enterprise to conduct business inside China legally. Once the scope of business is approved and registered, the enterprise shall have the right capacity within this scope, and the enterprise shall also assume the obligation of not exceeding the scope of operation. To sum up, the approved business scope of the enterprise is the legal limit to distinguish the lawful operation and illegal operation of the enterprise. The Significance of Business Scope It is unfamiliar for many foreign investors that the business scope of your China company is closely related to invoices issue. In other words, the enterprises can only apply for the invoices under the specific business scope content. That is why to having a business p...
Post a Comment
Read more

Overall Scheme Plan of the China (Guangdong) Free Trade Zone

By
China (Guangdong) Pilot Free Trade Zone (hereafter referred to as GDFTZ) was formally approved by the State Council and established on 31 December, 2014. China (Shanghai) Pilot Free Trade Zone comprises four areas under the special administration of Customs-- Nansha Area of Guangzhou, Qianhai & Shekou Area of Shenzhen, Hengqin Area of Zhuhai. The entire zone covers a combined 116.2 square kilometers. China (Guangdong) Pilot Free Trade Zone marks a major milestone in the nation's commitment to forge ahead with domestic reforms and wider opening to world markets, in line with global economic trends. Depend on Hong Kong and Macao, serve the mainland and face the world, GDFTZ is to become a demonstrative area for deep collaboration between Guangdong, Hong Kong and Macao, a crucial hub of 21st century’s maritime silk road and pilot area for next round of economic reforms nationwide. Nansha Area of Guangzhou , emphasizes on shipping logistics, finance, international trade, high-end...
Post a Comment
Read more