For foreigners considering starting their companies in China, they will found that they are encountering some confusing concepts they never dealt with before, such as registered capital, legal representative, business scope etc.  In the following weeks, we are going to explain them one by one.

Today, let’s talk about legal representative firstly, for which, no real equivalent concept could be found in common law countries.

According to Civil Law of PRC, each company incorporated in China has to have one legal representative, which is the person who acts on behalf of a company in exercising its functions and powers according to the laws and the company’s articles of association. In another word, a legal representative is a natural person appointed to act on the company’s behalf. The legal representative could be the company’s Chairman, Executive Director ( if no Boarding of Directors ) or General Manger.

It means, the legal representative is entitled to execute contracts or handle transactions on behalf of the company and the company will bear the consequences whatever the legal representative do in it's name.

However, to be alegal representative does not only mean power,  legal representative has to be responsible for the consequence of company’s activities at the same time. Meaning, holdingth is position also undertake substantial risk to themselves. Legal representatives will bear civil, administrative and even criminal liability for wrongful acts – both the company’s and their own. 

Let's see how the laws say:

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